Lance Batchelor, the former Tesco UK marketing director, is happy to discuss the retailer's repositioning, despite having moved to the role of chief executive of the Tesco Telecoms business in the autumn. After all, the fast-talking, sharp, but amiable, 44-year-old put in place much of the supermarket's marketing activity in the past year.
Batchelor claims Tesco has a unique ability to adapt to changes in consumer confidence, describing it as 'a goalkeeper standing balanced to see what will happen'.
He adds: 'When times were good, it was the only middle retailer that could move to the upper end. Now times are tougher, it's the only brand that can move from the middle downward.'
He talks proudly about Tesco as a 'brave' business and refers frequently to its chief executive, Sir Terry Leahy. 'He is an extraordinary man - a strong leader who remains balanced. He is extremely open-minded to new things, but is rigorous. He has the most amazing ability to "helicopter", talking about interest rates in Poland one minute and how big a bunch of radishes should be the next,' says Batchelor.
Rigour is a characteristic Batchelor also aspires to, professionally and personally. This desire for exactness is not surprising, given his career path: several years in the Royal Navy before moving into marketing roles at big companies including Procter & Gamble and Vodafone.
'One is always playing off past experiences. The most seamless change was from the Navy to P&G - on Friday I was a nuclear submarine navigator and on Monday I was assistant brand manager of Fairy Non-Bio. The change was light as both are big, structured, professional organisations that rigorously train their people. You know where you sit in the machine. Tesco is also rigorous and professional about everything it does.'
Despite Leahy's own pledge not to obsess about the competition, the pressure from lower-price supermarkets is making Tesco sit up and take note. It even built a replica Aldi retail environment in its development building to help 'plug holes' in its own offer.
Batchelor insists Tesco is not a brand that needs a 'false identity as a chirpy Northern housewife or posh snooty Southerner', but admits its budget rivals are 'having a lovely time' in the current economy. 'The message that we are sending our customers is that there is no need to go to Aldi or Lidl.'
Despite having an insight team of 30 with a multimillion-pound budget and Leahy's early warning that things would take a turn for the worse, altering a corpo-rate machine the size of Tesco is not swiftly done. 'We were working on the Discount line and sharper pricing for several months and restructuring to be more nimble and trade-driven,' says Batchelor.
Tesco has slashed prices on gadgets, toys and food for Christmas, and in September launched its Discount Brands line to fend off competition from cheaper rivals. While Tesco claims this is stimulating footfall, it is also having an unwelcome effect on sales, pushing growth down to just 2% for the three months to 22 November, a level not seen since the early 90s recession.
Despite a 25% year-on-year boost in marketing budget this year, Tesco's market share has slid by 0.4% in the past three months. Customers trading down to its Value lines have diluted revenues. Batchelor remains optimistic, though. 'We think that is a good investment because we are retaining their loyalty,' he says. 'When the good times come, we can trade them up again.'
Batchelor took up his Tesco Telecoms job in September after Andy Dewhurst retired due to ill-health. With Tesco unwilling to draft in a new senior manager, Batchelor was given the option of moving into the role, which he describes as his 'dream job', and one that appealed before he joined Tesco. In a conversation with Leahy about which parts of the business interested him, Batchelor pinpointed telecoms, dotcom and marketing. 'Terry was keen to bring in a marketing director with some outside perspective, so that was the obvious one. It was a brilliant way to get to know Tesco.'
Batchelor lists the opportunities that the role presented: Clubcard, one of the biggest and most sophisticated customer databases; a £70m above-the-line marketing spend; and the chance to evolve one of the best-known consumer brands in the UK. 'What Tesco is going to be in five to 10 years time is a fascinating problem and opportunity for a marketer,' says Batchelor.
He laid the groundwork for his latest move with a fresh brand identity for Tesco Mobile. Previously the brand was closely modelled on Tesco's Value line. 'Customers were confused about what Tesco Mobile was,' he says. 'They thought it was about selling phones rather than a standalone network choice. In store six months ago, it was recessive; now you can't miss it.'
Print and outdoor ads have promoted the new Tesco Mobile, and it has seized opportunities to piggyback on the main Tesco brand. 'Rather than go head-to-head with operators with massive budgets where our message would be drowned out, we can focus every pound invested more tightly.'
Batchelor does not expect to compete easily with significant operator rivals, but the early signs are good. In the past five years, mobile services have been expanded into Tesco superstores, petrol stations and online. Tesco Mobile has also entered the pay-monthly SIM arena with £15, £20 and £25 tariffs to add to its existing base of 2m prepay customers.
Despite his short tenure in this role, Batchelor is no mobile novice, having spent four years at Vodafone before joining Tesco. 'It was interesting working with a brand that scale. How do you make it stand for something that it not just "big'"?' he asks.
He is bold in his criticism of rival operators' marketing plans. 'I think after two decades of investing, cumulatively, several billion pounds, the amount of differentiation that has been achieved by those brands is remarkably limited and disappointing. When you see a brand differentiate itself like Orange did in the early 90s, Vodafone did in the late 90s and O2 has done recently, you see the rewards.'
However, he notes, success is not ultimately about marketing, but rather good customer service. 'Word gets out,' he adds confidently.
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