March 10, 2013 / 4:26 PM / 4 years ago

Tesco takes on rivals with instant vouchers in new price pledge

4 Min Read

LONDON, March 10 (Reuters) - Tesco, Britain's biggest grocer, will on Monday launch its first major push on prices under new UK boss, Chris Bush, as it battles to win back market share lost to rivals.

The company said on Sunday that its new "Price Promise" will compare at the tills the overall cost of a basket of branded, own-label and fresh food against the same or equivalent products from Wal-Mart's Asda, the No.2 grocer, third-placed J Sainsbury and No.4 Wm Morrison.

If the comparison shows the Tesco basket would have been cheaper elsewhere, a coupon for the difference in price, up to a maximum of 10 pounds ($15), will be issued automatically when customers receive their shopping receipts.

Online shoppers will receive their coupons by email.

"We're the first major retailer in the UK to compare our prices against the branded and own-label prices of our competitors and give customers an automatic coupon for the difference," said Bush, who took over the running of the British business from group CEO Philip Clark in January.

Tesco has tested the till-based scheme in Northern Ireland. Previously, customers were able to receive Price Promise coupons by logging on to a web-based scheme.

The new Price Promise will also cover promotions including "half price" and "buy one, get one free" offers at Tesco and at other grocers.

Sainsbury has operated a similar "Brand Match" scheme for about 18 months, but this covers branded products only.

Asda has a "Price Guarantee" that offers to refund customers the difference, via a voucher, if an online price-comparison website does not show that their shopping is at least 10 percent cheaper than it would be at a rival's.

Price Isn't Everything

Shore Capital analyst Clive Black said in a note last week that Tesco's competitive issue in Britain was not only about price and value.

"While they are variables that are certainly relevant, they also sit alongside brand perception, store service levels, product quality and the attractiveness of its outlets," he said.

The new pricing initiative is Tesco's first since it launched its "big price drop" in September 2011, dubbed the "big price flop" by analysts.

Last April Tesco launched a 1 billion pound ($1.5 billion) turnaround plan for its home market in response to its first profit warning in 20 years.

In January Clarke said that the company was "back on form" in Britain with underlying sales growth of 1.8 percent in the six weeks to Jan. 5.

Though that was Tesco's strongest sales growth in three years, it was against a weak performance in the previous year. With inflation running at more than 2 percent, it still represented a volume decline.

Industry data for the 12 weeks to Feb. 17 showed that Tesco lost market share in the weeks following the horsemeat scandal.

The scandal, involving a number of retailers, erupted in January when tests carried out in Ireland revealed that some beef products also contained horsemeat, triggering recalls of ready meals and damaging confidence in Europe's complex food industry.

However, market researcher Kantar Worldpanel said that Tesco's dip in market share had more to do with the grocer promoting heavily in the same period of the previous year.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below