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Tesco gears up for massive new pricing offensive

Tesco is set to unveil a major shift in pricing strategy, as the UK’s largest supermarket gears up for a price war this Christmas.

A dramatic new offensive – due to begin next week – could see it switch emphasis from promotions, which Tesco has reportedly come to see as unhealthy, to permanently low prices.

The supermarket giant, which will release its first-half results at the start of next month, is believed to be concerned at recent losses in market share to rivals including the resurgent discounters Aldi and Lidl.

It has also come off worst in a series of high-profile PR battles with Asda over the latter’s Price Guarantee campaign.

In a related move, Tesco is known to be preparing to ramp up the way it uses its Clubcard loyalty scheme. The changes are likely to feature heavily in any new price war.

Tesco, which is said to have bought a large amount of PoS material for the launch of the campaign, will brief store managers across the country over the next few days. Store managers have been told to cancel any time off they had booked for this weekend.

A source close to Tesco said: “Given last week’s Kantar numbers showing a 0.4% drop in market share to 30.4%, Tesco will want to stop the slide. Indeed, in the Kantar commentary they said they were sure Tesco would not want their market share to drop below 30%.

The source added: “Given the discounters seem to be picking up share, this is where the focus will be.”

One Tesco store manager told The Grocer: “We have been told to make sure we are available this weekend and we understand something big is happening on Monday.

“The assumption is that it’s a price offensive.”

Source: Ian Quinn - The Grocer

22 September 2011
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