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The new Tesco Price Promise – cliche or smart PR

The Tesco Price Promise – cliché or smart PR ? March 2013

The Tesco Price Promise launched this week re-ignited price wars between the supermarket and put the spotlight firmly on Tesco. In October last year Tesco announced its first fall in profits for nearly 18 years, by 11.6% to £1.7bn; a headline; Tesco’s recent performance has also not been helped by the horsemeat scandal, which as the UK’s leading supermarket, meant that Tesco found itself at the centre of the crisis. A crisis which continues and which is having a visible impact on sales and the way shoppers shop.

It is not surprising then, that Tesco have announced a new consumer price deal under the banner ‘Tesco Price Promise’ this week using £10 as its headline grabber. The question is, is will it turn consumers on ? In a recent consumer survey completed in a major dairy category, Taste / Flavour was always considered ahead of Price by shoppers.

However Britain’s major supermarkets still, all continue to push a low pricing agenda. This is perhaps not surprising when 59% of UK consumers consider standard or value private label options when doing their Grocery Shop (although this is lower than the rest of Europe suggesting potential room for  growth) (Nielsen Global Survey of New Product Purchase Sentiment, Jan 2013).

What the promise does do, however is bring Tesco’s value proposition to the for-front of consumers’ minds, which is the gist of what Chris Bush is getting at with his comment ‘More than ever, in today’s climate we know customers want to rely on us to offer best possible prices’ (the Grocer 16th March P.15). Also this message is re-enforced at a key time in the interaction between shopper and the supermarket: at the till. It will also create some re-assurance at a time when consumers are not feeling particularly adventurous (40% of Britons are less like to consider new products in the current economic climate (Nielsen Global Survey of New Product Purchase Sentiment, Jan 2013).

But is there significant difference between the Tesco Price Promise and the other supermarkets offers in the eyes of the consumer; this is where I do agree with the Adam Leyland’s assessment in his editors column that the devil will be in the detail and adding Private Label attempts to create a point of difference but also makes things complicated; especially as Retailers when working with Private Label manufacturers both look for and insist on a tangible point of difference in a product range hence the difficulties when comparing private label across the market.

However with consumers being savvy at the moment and also wanting simplicity (55% of Which? members preferred simple price reductions in its recent report on Britain’s supermarkets), I tend to agree with the Grocer article, in that the Tesco Price Promise wont drive further sales; but I also don’t think it will have a significant impact on customer loyalty, as consumers are bombarded with a great deal of value messages at the moment; but I do think it will help re-enforce Tesco’s credentials with its core shoppers which is the first step in turning around recent woes and driving growth.