Tesco has announced that it will end its Brand Guarantee scheme on July 16th in order to strengthen funding in everyday low prices.
Price investment stepped up
The move follows significant investments in price, particularly in fresh lines towards the end of Q1, and more generally across its product offer. These investments mean that fewer than one in eight transactions now receives any refund. Tesco is committed to further price cuts with dozens more reductions on popular products set to to be implemented over the next two weeks.
Own brand renewal accelerates
Following the successful introduction of 'farm brands', Tesco is now replacing its entry level ambient private label range with a number of exclusive private label brands. Tesco has now renewed almost 30% of its 10,000 SKU strong own brand offer and it expects to complete the programme by the end of this year.
Shifting value priorities
Tesco's move fits into a broader shift in strategy by major retailers to establish their own price lists and offer sharper pricing on a stronger private label offer. Rival Sainsbury's scrapped Brand Match in April 2016 while the Asda Price Guarantee is now a much less prominent aspect of Asda's value positioning. This shift in focus also reflects a drive by the Big Four to reassure shoppers on their value positioning versus the discounters, rather than each other, to protect their market share.
Price investments lessen importance of Brand Guarantee
Commenting on the move Alessandra Bellini, Tesco Chief Customer Officer, said: “Since Brand Guarantee launched in 2015, we have continued to invest in simpler, lower everyday prices. As a result, the scheme is far less relevant for our customers today, and so we are withdrawing it as we focus on offering customers even more straightforward value for money at the shelf edge.
“In recent weeks, we’ve already reduced the prices of over 260 popular products, including own brand and branded favourites, and we’ll continue to work hard to offer our customers great quality food at great prices.”
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