A new price-matching scheme by Tesco that offers shoppers an automatic discount at the till rather than a voucher could be a gamechanger for the supermarket industry, analysts have claimed.
Tesco has revamped its Price Promise price-matching scheme as Brand Guarantee, which will immediately reduce the price of a customer’s shop at the till if it would have been cheaper at Asda, Morrisons and Sainsbury’s.
Matt Davies, the chief executive of Tesco UK and Ireland, said the scheme was designed to remove the “stressful and awkward” voucher system, where shoppers are handed money-off coupons for their next shop rather than an immediate discount.
To qualify for Brand Guarantee, shoppers must buy a basket containing at least 10 different products, including at least one branded product, such as Heinz baked beans. The promotion is only available in Tesco’s largest stores and online, so Tesco Express convenience stores are excluded. The scheme does not include own-label goods.
All out at checkouts too - a comprehensive launch certainly. pic.twitter.com/uaqJDFk1ud
— Steve Dresser (@dresserman) October 12, 2015
Nick Bubb, retail analyst, said: “There is a lot of smoke and mirrors about most supermarket price-cutting campaigns, but the new Tesco Brand Guarantee scheme could be a gamechanger for the industry, as it does away with money-off coupons in favour of an instant discount at the till, and it will be interesting to see how Sainsbury’s etc respond.”
Bubb said that the fact Tesco had not announced the new promotion in a stock market statement suggested the cost of Brand Guarantee will not be material or that the company will offset the costs by putting up the price of own-label products.
Shares in Tesco fell by 1.25% to 202.25p in early trading on Monday.
Clive Black, analyst at Shore Capital, said: “Such a move will mean that Tesco is no longer dishing out reams of paper at the till, which will be a saving in-store in its own right.
“Additionally, the price perception of Tesco may by default improve as the plethora of coupons will not be telling its customers just how expensive it is.
“Whilst so, we have a big problem with all this stuff in that shoppers have, in the main, moved on. British shoppers know that the limited assortment discounters [Aldi and Lidl] are cheaper than the superstores and to focus only on matching prices of the big four is simply myopic to our minds.
“Why not scrap what was an increasingly meaningless ‘price promise’ altogether and just have confidence in the reality of Tesco’s price file?”
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