More examples of a sharper Tesco
9 June 2017
The election shaped up to be quite a laugh, as I write this, we've a hung parliament, not predicted at all until the poll of polls at 10pm.
More uncertainty in the markets, but the hard Brexit might just be dodged it seems which would give heart to us all in terms of trade and the various elements that are entwined in the market....
Long way to go of course. But more for us all to talk about and it makes inflation, value and the wider picture ever more interesting. More uncertainty, more sterling weakness and more of a depressed view perhaps.
Tesco as we know have landed a number of price cuts, almost by stealth if you consider there has been no price comms in the press by Tesco since Dave Lewis took charge.
Aside from one advert which showed that prices hadn't been raised as much as Tesco versus the market. This was via a Bloomberg study, but showed their clear position as the "EDLP" retailer of choice.
Sure, they have a sprinkling of promotions, but continue to work hard at both planks of their value proposition.
Brand match covers the wider comparable lines, meaning they remain strong on promotions. Plus the redemption is 100% as the discount is applied instantly at the checkout.
However they have pushed the own label package consistently, changing merchandising plans to feature own label and cutting the prices as the range benefits from greater sales (volumes) which presumably aids the buying price for Tesco.
In turn, this enables Tesco to invest the margin in lower prices which narrows the gap between themselves and the discounters. Doesn't close it necessarily, but narrows it.
In the landscape of inflation and press stories all about uncertainty and the like, any price cut goes against the grain. In a way the smaller nature of the cuts (c. 3p on Lasagne) says more to customers about the permanent nature of the cuts.
Plus their messaging is strong; a simple barker shows a cross out price, indicating the lower price is now charged. No promotion and the core label remains the standard colour, indicating this is a permanent cut.
But we have covered these lines; own label, seemingly discounter comparable ones given the broad nature of the core products.
Their move to adding 'weekly helps' is very notable, these appear to be a package of 4/5 big deals across the ambient / fresh / frozen categories. They have also sharpened their pencil on Produce, taking on Aldi with a package of Produce cuts each week seemingly.
Tesco have also worked ever so hard at their PR and wider perception in the market and indeed, community. Their work on PR and branding appears to have firmly put the likes of horse meat and the accountancy crisis firmly behind them.
Examples of their work are everywhere; but their support of Pride was notable, it's becoming a more widespread event for everyone to celebrate, both Smirnoff and Skittles have different packs to celebrate the event.
The Skittles work is around the only rainbow being Pride, so their pack is plain white. Perhaps the coloured Skittles shouldn't be sited on this image.... But it's a Tesco exclusive which is good for them, and naturally, the only place to buy these special packs is by visiting Tesco.
In addition, there was a Walkers exclusive deal in the doorway too; another valuable footfall driver.
So:
Exclusive tie ups, with the products only available at Tesco.
Little helps 'stunt' deals which are centred around better than half price or generous multibuys. Designed to drive footfall.
Produce deals sharpening up and replicating the Aldi Super 6 / Lidl Pick of the week. 49p this week in Tesco.
A raft of lower prices across own label Fresh (Meat,Fish) and Ambient lines. Centring on core staples and healthy lines.
Brand guarantee in the background providing a comparative and if Tesco are more expensive, the sum is automatically taken from their shopping bill.
Very interesting that Tesco have fired the gun on price now, are they seeing a shift to discount?
Is the inflationary pressure now worth pushing on given the sentiment in the wider press?
The biggest sign of their move and that the 'tanker' has been moved is their move to EDLP pricing. Their focus remains and it's very impressive to see the execution at the shelf edge.
From the Grocery Insight newsletter archive, first sent to subscribers on 9 June 2017. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.