Tesco, Britain's biggest retailer, will next month abandon a price-match scheme that gave shoppers instant reductions on branded goods at the till, saying that its focus is on lower regular prices.
Tesco said on Monday that, by cutting prices, it had made the scheme redundant.
Narrowing The Price Gap
All of Britain's Big Four grocers – Tesco, Sainsbury's , Walmart's Asda, and Morrisons – have been trying to narrow the price gap with German discounters Aldi and Lidl, which have won market share from them over the last decade.
Tesco said that its 'Brand Guarantee' scheme, launched with much fanfare in 2015, will cease on 16 July.
The scheme offered Tesco customers a price match on branded goods when they bought ten or more items, including at least one eligible branded product, in larger stores or online, with the difference refunded at the checkout. Prices were compared with Sainsbury's, Asda and Morrisons.
'As a result of our continued investment in simpler, lower everyday prices, fewer than one in eight transactions today receives any refund at all,' Tesco noted. 'At the same time, [the] majority of customers now tell us they would prefer lower everyday prices instead.'
Hundreds Of Price Cuts
Tesco said that, in the last month, it has cut the price of over 260 products, such as bacon, orange juice and chopped tomatoes, by 10%-50%.
It noted that it planned cuts on 'dozens' of other products over the next two weeks.
Shares in Tesco have increased by 56% over the last year, as its trading has outperformed that of rivals and investors have warmed to its purchase of wholesaler Booker.
Sainsbury's, which in April agreed a £7.3 billion takeover of Asda, scrapped a similar 'Brand Match' scheme in 2016.
Sainsbury's and Asda have noted that combining forces will enable their prices to be lowered by about 10% 'on many of the products customers buy regularly'.
Customers 'Up In Arms?'
Martin Lane, the managing editor of Money.co.uk, commented on the scheme's scrapping by saying, "The news Tesco is ditching their brand guarantee might have loyal Tesco customers up in arms.
"The promise of lower prices across the board might sound appealing, but there's no longer a guarantee you couldn't get cheaper elsewhere."
Lane recommended that shoppers compare the price of the average weekly shop in different supermarkets, as the expansion of discounters into Central London has created a lot of choice. He said that Tesco will have difficulty competing with Aldi and Lidl if it doesn't offer "true value".
"It will be interesting to see if this move will help Tesco customers because the current system can be confusing, and scrapping the scheme might help people to make an easier comparison," Lane concluded.
News by Reuters, edited by ESM. Additional reporting by Karen Henderson. Click subscribe to sign up to ESM: European Supermarket Magazine.
