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Trust in Tesco's brand could be lost forever, says business expert

UNIVERSITY NEWS LAST UPDATED : 15 OCTOBER 2014

A business expert at Birmingham City University has warned of the damaging effects to Tesco's brand if it fails to handle the backlash of more senior executives being suspended, following the retailer's £250m profit overstatement.

Ann Brook, Senior Lecturer in Internal Audit, Risk and Assurance at Birmingham City University, said: "Announcing that more senior executives have resigned or been suspended is a necessary step if Tesco has any chance of rebuilding its brand.

"Any firm going through a situation like this is going to be judged on what it does next. One wrong move and Tesco could be facing a massive reduction in sales on the shop floor, as well as the share price reducing even further as more shareholders decide it is time to withdraw," added Ann.

"Tesco's brand before the issue hit the headlines was trusted by many and it is now that Tesco has to rely on the goodwill created by that trust. If Tesco fails to handle and respond to this significant issue in line with the expectations of its shareholders, customers and the regulators, then the trust which is already diminishing could be lost forever.

"While the new CEO and Finance Director may be reluctant to publish more bad news, it is absolutely the right thing to do if Tesco stands any chance of a meaningful survival in this highly competitive market."

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