Tesco revamped its price match scheme Brand Guarantee last month, raising the stakes in the supermarket price wars. But do price match schemes still have weight in a crowded marketplace and are they really what customers want?
Let’s first try to get the situation straight. Tesco matches Asda, Morrisons and Sainsbury’s. Sainsbury’s matches Asda, which promises a 10% difference to Tesco, Sainsbury’s, Morrisons and Waitrose. Morrisons matches the big three plus Lidl and Aldi, while Waitrose and Ocado compare prices directly to Tesco. In contrast, Aldi and Lidl don’t match anyone.
Confused? You will be when you also consider the range of compensation supermarkets offer their customers once a price difference is established, and the confusing small print that legally applies to each basket spend. Some provide a voucher to be redeemed against your next shop (Ocado, Sainsbury’s and Asda). Waitrose states that it “simply matches prices on the shelf” – not giving refunds at all. In contrast, Morrisons adds complexity by adding the difference in points to your store loyalty card, which then converts into money-off vouchers.
Only Tesco’s new scheme deducts the difference directly and instantly at the till, which is game-changer. However, like the other schemes, it’s still dependent on certain conditions, mainly that your basket must contain 10 different products, one of which is a comparable branded product.
With this much confusion, customers could come to view these schemes as an expected part of their shopping experience, or with cynical suspicion. There’s also a danger that customers could assume the supermarkets are increasing the price on other products to compensate, or that retailers will expect customers to forget to cash in their vouchers.
Recent campaigns from Lidl and Aldi poke fun at their rivals, suggesting an absurd level of complexity and implying a price rise prior to the refunds. In this context, there’s also a worry that these schemes be viewed purely as retail wallpaper.
The reaction varies from customer to customer, as it’s so dependent on personal circumstances and shopping behaviour. A compelling scheme will no doubt tempt a customer when faced with a side-by-side comparison, but today’s customers are less brand-loyal and shop the full range of supermarkets, from discounters through to higher end brands, all in the same week.
It’s one of the reasons why Waitrose’s “pick your own offers” is so successful. It gives the customer the ability to personalise their promotions, giving them more control and flexibility over their shop.
There’s definitely a level of subconscious reassurance offered by price match schemes. The big four certainly can’t afford to ignore this form of value communication while their rivals shout about it.
What’s more important is that retailers consider these schemes as just one of the many tools in their arsenal to communicate their value proposition. Rather than relying on these schemes to do all the heavy lifting, it’s crucial they’re employed alongside a clear pricing and promotional strategy, thereby allowing customers to easily compare prices.
When this communication is honest and genuine it enables supermarkets to build price integrity – and therefore customer trust and loyalty – without having to rely on price matching schemes. In the heat of the supermarket wars, any clarity for customers must surely win brand loyalty.
Carla Heath is managing director at Whippet
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