http://uk.reuters.com/article/2013/10/07/uk-tesco-finest-idUKBRE9960K620131007

This article struck me as particularly interesting this week, as I had spent at least an hour at the grocery store on Saturday trying to shave pennies and dimes off of my grocery bill. In unstable economic times in the UK a current trend in the UK is to minimize on grocery store expenditure, yet TESCO is spending its resources developing higher end products. Its shocking, however reflects an interesting move on TESCO’s part.

In the last 15 years, TESCO has developed itself as the “world’s third biggest retailer” behind Carrefour and Wal-Mart. This has however taken a toll on TESCO’s image domestically in the UK, where Sainsbury’s and Waitrose attract the more affluent clientele and TESCO is perceived as a less desirable brand. As a consumer when I visit England, I choose to shop at Sainsbury’s as opposed to TESCO, which is interesting because at its most basic level they each offer consumers the same brands and in their own products there is little differentiation in quality. TESCO has realized its economies of scale and offers these similar products for less, however there is a stigma of low value attached to TESCO. Brand image is a strong motivating factor it seems in TESCO’s decision to relaunch its “finest” collection which will be a range of expensive food products. It will be interesting to see if it succeeds in this endeavour.

Starbucks is the mecca for most coffee drinkers, who do not hesitate to pay $3.99 for a cup of coffee. Take it from me, who is a ardent coffee enthusiast–the relationship between a coffee drinker and Barista is a sacred one. However, when I learned of Starbucks’ tax evasion scandal I must admit I was disturbed. Starbucks managed to avoid corporate taxes in the UK for five years, and almost every year since it began operating in the UK in 1998.

As a customer I began to question the brand and what they stood for. I had admired Starbucks for a long time with its commitment to Fair Trade coffee and supporting underprivileged coffee growing communities around the world. This soon changed, and I began to question the veneer of friendliness that Starbucks manages to uphold in each of its chains. A question that is probably on a lot of customer’s minds is, “If they don’t pay their taxes, what else have they been lying to us about?”. Publicized crises such as this one, reflect the fragile bond that exists between producers and consumers, and how companies need to maintain their public personas.

http://www.dailymail.co.uk/news/article-2346808/Starbucks-finally-pays-5million-UK-tax-time-years-months-outrage-despite-253million-profit.html

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