This is a copy of an article I have written for MediaTel, published on its site today.
Tesco announced on Monday it is going to create 20,000 jobs over the next two years, and invite existing staff to do apprenticeship placements as part of their current roles.
This is the first attempt by Richard Brasher, Tesco UK CEO, to revitalise the supermarket following its first profit warning in twenty years, and it is coupled with plans for the supermarket to redesign some of the stores in view of declining shopper satisfaction with the shopping experience.
Research we have conducted shows just how much this is needed. As I reported back in December, a gap has been growing between people’s experiences of the supermarket and their desires for a more pleasurable shopping environment and for more enjoyable communications from the brand.
Another topic we picked up is around the importance that Tesco shoppers give to community. Creating 20,000 new jobs is a statement of commitment to local communities. More than a million 16-24 year olds are unemployed, and Tesco has stressed that some of the new jobs would include apprenticeship placements to young unemployed people.
To get a view of what people think about Tesco’s job creation, I had a look at a selection of Twitter Tweets about this news from over the last five days.
The first thing I learned was about what not to tweet. Nearly all of them merely related the news. Given that most people will have already heard about this announcement, these Tweets didn’t add anything new. My guess is that tweets that included a short opinion were much more likely to be interesting to readers.
The most common theme was the opinion was that the news is a smokescreen for recent bad publicity over the Government's work placement scheme. The timing might look slightly suspicious, but this is disingenuous. Talk has been around for a couple of months that Tesco had plans to revive its stores and customer service, and this is good news for old, and hopefully new, Tesco shoppers, as well as for the unemployed.
The second most common theme was the question of how many of these are new jobs? In an interview with Sky News, Richard Brasher stressed that this figure is a net figure and does not include people moving around the business. They are a also a mix of full time and part time posts. This is good news for government in its pursuit of getting lone mums into the workplace, for whom full time jobs are not always suitable. However it is less good news for a job market in which people are predominantly looking for full time jobs.
The third theme, although much smaller, was around how much should Tesco’s investors be concerned? Providing better customer experiences through redesigning interiors and creating all these new jobs will be expensive, and is likely to wipe out profit growth this year. However, Tesco’s moves are strategic. By providing better in-store experiences, the supermarket hopes to keep its existing customers and bring in new, loyal, customers. This means more money moving through the tills and therefore profit growth.
One thing I find interesting about this last theme is just how much investors have become accustomed to short termism. We used to look froward to annual reports. Now we look forward to quarterly reports and minute by minute share movements. It is interesting that following the announcement, the Tesco share price dropped 2%. The good news investors should be taking however is that the supermarket is making important decisions that are likely to impact customer satisfaction, bring in new customers, create loyalty and therefore create future profit growth.