Britain’s biggest supermarket has pledged to deduct the difference at the checkout if a branded grocery shop would have been cheaper at its rivals Asda, Morrisons or Sainsbury.
Tesco UK and Ireland ceo Matt Davies said this brand guarantee replaced price match vouchers, which shoppers had described as “a pain” and unhelpful.
View from analysts
“British shoppers know that the limited assortment discounters are cheaper than the superstores and to focus only on matching prices of the big four is simply myopic to our minds.”
- Clive Black and Darren Shirley, analysts at Shore Capital
“We all know it can be stressful and awkward when you have to rummage through your wallet to find a price match voucher,” Davies said.
‘Never lose out’
“That’s why we’re ensuring that with brand guarantee customers will never lose out on their branded shop by getting money off their bill at the till.”
But Shore Capital analysts Clive Black and Darren Shirley contended that most people did not believe one supermarket when it claimed to be cheaper than another.
“Why not scrap what was an increasingly meaningless Price Promise altogether and just have confidence in the reality of Tesco’s price file,” Black and Shirley said.
‘Simply myopic’
“British shoppers know that the limited assortment discounters are cheaper than the superstores and to focus only on matching prices of the big four is simply myopic to our minds.”
The key to success was “not all about price” but it was also about quality and customer experience, Wagstaff Recruitment founder Ruth Forster told Food Manufacture Group’s LinkedIn forum.
“The Big Four ground themselves down by abandoning all other marketing factors so it’s hardly surprising they’re struggling now,” Forster posted on the Food Manufacturing Network.
“They made the market as price competitive as it is, it should have been obvious it wasn’t a sustainable business model.”
AB World Foods group procurement manager Roy Dagostino added: “If the only differentiator is price, and you can have the difference refunded whatever supermarket you shop at, then it’s no wonder the retailers find themselves in deep trouble.”
Food Manufacture understands that the price match scheme for branded products will be funded by Tesco and will not be paid for by its suppliers.
Meanwhile, Tesco boss Dave Lewis has said sorry to the retail giant’s suppliers for “the bad choices of the past” made in the relentless pursuit of unsustainable profit.
Tesco’s busy week
- Apologises to suppliers for past mistakes
- Pledges to simplify supplier payment terms
- Posts 55% slump in first-half profit
- Announces price match brand guarantee