LONDON Oct 25 Tesco, the world's No. 3
retailer, has launched a price matching scheme in Ireland that
targets discount grocers Aldi and Lidl in
an attempt to reverse market share losses in the country.
According to market researcher Kantar Worldpanel Tesco's
share of the Irish market fell to 26.8 percent in the 12 weeks
to Sept. 15, down from 28.7 percent in the same period of the
In contrast the combined market share of Aldi and Lidl in
Ireland has risen from 9 percent in 2010 to over 14 percent in
Earlier this month Tesco, which has invested 1 billion
pounds ($1.6 billion) in a turnaround plan for its core British
market, reported second-quarter underlying sales declines in all
ten of its overseas markets. Like-for-like sales fell 4.4
percent in Ireland.
Tesco's Price Promise in Ireland, launched on Thursday,
compares the overall cost of over 1,000 comparable groceries
within a basket in Tesco against products from Aldi or Lidl.
If the basket could have been purchased more cheaply at Aldi
or Lidl a voucher of up to 10 euros is issued at the checkout.
Tesco launched a Price Promise in the UK in March. That uses
Wal-Mart's Asda, Britain's No. 2 grocer, J Sainsbury
, the No. 3, and Morrisons, the No. 4, as the
Shore Capital analyst Clive Black said the pricing move in
Ireland could hit Tesco's gross profit margin in the country.
"If the price matching with Aldi and Lidl is sustained then
there is every likelihood that we will be downgrading our
forecasts for Tesco Europe once again," he said.
A spokeswoman for Tesco said the firm had no plans to extend
its existing Price Promise scheme in the UK to cover Aldi and
Lidl. Black said if Tesco did, it would "severely jeopardise"
the firm's UK operating margin goal of 5.2 percent.
Shares in Tesco, up 19 percent over the last year, closed
down 0.2 percent at 370 pence, valuing the business at 29.9
billion pounds ($48.3 billion).