Tesco Fuel Save - No Petrol Stations for Aldi.
17 March 2014
Tesco Fuel Save. Another metric, another day.
Twitter chatter flagged that last year, Tesco stores in Wales were trialing an 'innovative' way to link Clubcard to loyalty thus giving customers money back from their purchases by the way of fuel discounts.
The mechanic is simple, much like the 'fuel vouchers' of old that were used by Sainsbury's / Safeway, triggering a 'X p' off a litre once a spend threshold was reached.
The difference with the Tesco scheme is that it accumulates the value on the clubcard, so if you spend £200 over the month (in 20 x £10 shops) then you earn the same as if you do it in 2 x £100 shops. That's key.
In this day and age, customers traditionally shop around, they may go to Aldi for some bits, Poundland for bits and then Tesco for everything else.
Locking that loyalty in for the 'everything else' is now the game the supermarkets need to play. The days of the 'big shop' aren't quite gone yet, but they're diminishing.
The ease of acquiring a 'full shop' for retailers is no longer as easy as it once was, in the heyday of the hypermarket, customers would leave with their trolleys laden with consumer goods, Health & Beauty and a food shop.
Fast forward 20 years and there are a plethora of 'non core' retail operators taking parts of the 'shop' from the main chains.
Aldi/Lidl - Trading very well, core staples and Produce in the main as the price gap is significant versus the multiples. However their expanding range of Fresh (inc Meat) is winning more basket spend.
Bargain stores - The likes of Home Bargains are strong in confectionery, seasonal, Health and Beauty and Household - cleaning products etc.
So with those stores capturing spend, the Fuel Save makes sense as fuel is expensive and any alleviation on the budget is appreciated by customers.
It's also a competitive advantage for Tesco versus the aforementioned discounters as they don't have petrol stations.
So the mechanic looks good, ticks the boxes and works well with the clubcard. But the aim is to drive footfall to stores, and the key element here is to ensure stores are in good shape for the new customers.
Naturally, this isn't always the case and store visits have shown a continuing abundance of legacy clearance stock remaining, despite the huge levels of reductions applied.
See below for a bit of Christmas and Halloween(!), along with a lot of Continental Thorntons, all of which has no price attached - it'll never sell.
Fuel save good, high levels of clearance bad.
It is good to see stores getting behind the 'Price down and staying down' mechanic on Produce.
A couple of Twitter accounts have sprung up for Tesco to showcase their great Produce standards, and the 'revolution' is rumoured to extend to a new look for the department in selected stores soon.
Price activity has been detected too, not just 'flagged pricing' but other prices have dropped slightly, across Tomatoes for example there have been reductions across a number of lines.
Produce is a key category and it's great to see Tesco getting behind it, however it will take more than a few price cuts to sustain the momentum of course.
An interesting one to watch, particularly with the price investment and focus on Produce, will it be enough?
We'll look at ranging in the next email, a lot of talk about range reduction but how much is too much?
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From the Grocery Insight newsletter archive, first sent to subscribers on 17 March 2014. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.