Tesco appear to be dusting off an old favourite with the launch of “Farm” branding, priced to compare to Lidl and Aldi, every day low priced produce and fresh meat. The branding is not overtly positioned as value but sits comfortably within the Tesco hierarchy as “Nightingale Farms”, “Rosedene Farms” amongst others.
The changing face of food retail in the UK is an ever present media story where the next big thing is continually sought. Tesco’s new range is hardly a revelation in food retailing, but it does tap into the customer’s state of mind, waiting for the next opportunity to save money.
Aldi and more recently Lidl have been leading the curve over the last four years. They may not have the market share of the big 4 but the impact they have had has been titanic. They have made the British food shopper more promiscuous and made saving money on their faux brands a subject of inverted snobbery, you’re not cool if you’re not saving money. Well done, but every action has a reaction and whilst Sainsburys look to diversify, purchasing Argos and a relationship with Netto, and Morrisons and Asda engage in price wars, Tesco seem to be following the mantra, ‘if you can’t beat them join them’.
This route was tried previously under the much maligned Philip Clarke era but this time we believe it is not the only response, it is could be just one tactic of many. So far the “Farm” range consists of unprocessed products, meaning the complexity and cost is not only much easier to manage but the end product is also much less likely to be compromised in quality. Something that the previous “discounter brands” failed in delivering.
It remains to be seen if the value “Farm” range is enough for the customer to forego their trip to the discounter. As long as the quality is retained and the price is as competitive as it is now [Baby new potatoes 89p, Celery 49p, Back bacon £1.35, bag of 4 peppers 79p, strawberries punnet £1.19] then the chances are slightly better than they were before. If the volume on these lines is big enough, margin can be healthy, as there is little production to add cost.
It all sounds like a good idea and having sampled two of the lines they are as good as I get at my local farm shop, so no complaints. My one concern would be the fact that this alone is not enough, it might be step one in operation “recover discounter leakage” but they are going to need some more steps. All big journeys start with that single step however and it looks like the right path is being chosen, keep crunching the gravel Tesco.