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Tesco steals rivals thunder

Asda has spent the last 18 months, at least, working with to develop its shiny Price Guarantee website.

So credit has to go to those jackdaws over in Cheshunt who've knocked together their own passable imitation in 10 seconds flat.

One forgives the Heath Robinsonesque feel of the whole affair ( out of respect for the speed of execution: in how many other industries would a FTSE 100 business respond in such haste (less than two months)? On the fmcg side, reactions are often measured in years, and that's just to press enquiries!

It's not just the speed that marks the move out. This is classic Tesco behaviour. Whether it's an organic veg box scheme from Abel & Cole, the launch of the Essential Waitrose own-label range, discounter tertiary brands, or Asda's traction with the APG, Tesco regularly neuters momentum-fuelled ideas and neutralises competitive advantage. The fact these spoilers are often quietly dropped months later underlines the tactical nature of the response.

Much more significant than the website, then, was Tesco's move on price this week. Tesco's basket in The Grocer 33 was £5.78 cheaper than it would have been last week.

It still wasn't enough to match Asda on price, but it's closer than it's been in weeks, and, as Tesco completed the last lap of its financial year, the 2011 marathon clearly kicked off in earnest for the two frontrunners, while Morrisons and Sainsbury's were left trailing by a distance.

What's weird (or scary) is that the race resembles ever-more closely 2008: the new four-week Kantar data shows discounters powering away; Tesco then, and Asda now, are cutting prices and reducing growth; while others choose to benefit from inflation.

If Tesco increased space in 2010 by 6.5%, Sainsbury's 7.9% and Morrisons 3.4%, like-for-likes must be horrible.

Source : Adam Leyland - The Grocer

05 March 2011
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