Tesco is dropping own-label goods from its price-matching scheme, in the latest twist in the supermarket price war.
The retailer’s current scheme, Price Promise, hands shoppers a voucher to spend on future purchases if their whole basket of goods could have been bought more cheaply at Asda, Morrisons or Sainsbury’s.
Under the new Brand Guarantee scheme customers will only get money back if branded goods such as Heinz baked beans or Cadbury’s chocolate could have been bought at lower prices from its three major rivals. Shoppers who buy at least 10 items including one or more branded product will get an instant discount on their shopping.
Tesco said: “We’re always looking at ways to make the shopping trip that little bit easier for customers, including improvements in customer service, updating our product ranges and continuing to offer everyday low prices on the products that matter most.”
Tesco’s latest move comes just days after chief executive Dave Lewis promised further price cuts over the next six months. Revealing that profits had more than halved in the six months to the end of August, he said: “I think there is more deflation to come – some we have to do as we invest ourselves and I don’t see the market changing.”
The company said profits had partly been dented by a near £200m drop in prices at its stores compared with the same period a year ago.
Supermarkets have been competing fiercely on price as they try to win back shoppers from the fast-growing grocery discounters Aldi and Lidl.
Price-matching schemes have played a prominent role in the battle, with all of the major chains offering some form of discount if goods could have been bought more cheaply elsewhere. But, with profits under pressure, schemes have undergone a flurry of changes.
Next month, Morrisons will rejig its loyalty scheme, just over a year after it launched. The supermarket currently awards points if branded or own-label goods could have been bought more cheaply at its big three rivals or Aldi or Lidl. From November, it will become a straightforward points collection scheme based on the total amount spent in its stores.
About a year ago, Sainsbury’s dropped Tesco from its Brand Match scheme – it now only offers shoppers a discount voucher if they could have bought branded items for less at Asda.
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