Tesco has announced it will be stocking fewer consumer electronics in its stores.
The grocer said it is scaling back on tech products to focus on other more profitable categories like food. It has also axed its computer repairs service.
Tesco chief executive Philip Clarke said: “We’re actively withdrawing from non-food categories like consumer electronics. By taking out those high-value low-margin sales, we’ll still make more profit selling food and our business will be better for it.”
“Tesco’s exit from consumer electronics was inevitable,” Target Components business advisor John Coulter said. “As a non-specialist business with nothing other than its ubiquitous presence and price to draw customers, it was playing in a market that demands specialist knowledge, services and customer support to be successful.”
“Tesco, like all big chain retailers, is a master of illusion. Through loss leaders and huge marketing budgets it has duped the public into believing it is good value.”
Tesco had a reputation for selling certain items at below cost price, simply to get customers through the door, who would then spend on other items whilst in store. For example I was trying to source the best price on a tablet for my sister last Christmas and found them cheaper at Tesco than it cost for me to buy from a major distributor. There is no way that Tesco was making any money on the product, but in the end I had to recommend my sister go there to buy it.
Whilst many might say that loss leading is not a bad thing for the end customer in the short term, over the long term if one company is squeezing all the others out of business by selling at prices they cannot compete with, then ultimately you are at the mercy of that company if it wishes to increase prices later.
Furthermore, whilst we can see an argument for the supply of consumer tech, the support of said equipment is definitely a step too far for Tesco. Although Tesco will still be selling computers, people still need to get them repaired somewhere and we believe the level of knowledge and service provided by small companies to be of great importance in this sector.
To be honest, the build quality of the supermarket computers we have dealt with has been very poor, so ultimately you get what you pay for and the same surely applies to computer repair!