tesco brand guarantee

Where next for price matching?

tesco brand guarantee

The grocers are rethinking loyalty cards and re-interpreting it for today’s promiscuous customers who have little or no loyalty to any one supermarket.

Morrison’s has changed “Match and More” to a points loyalty card which harps back to the weekly vouchers model, although that gave more value back to the customer. The Morrison’s model is going backwards and rather than the customer feeling better off shopping with them, they are more likely to feel unvalued unless the spend:points:voucher ratio is drastically improved.

Tesco meanwhile are giving instant discount at the till under its new Brand Guarantee which is set to rock its competitors as they scrabble to respond before Christmas. And Waitrose of course launched a Pick you own Promotions scheme earlier in the summer which is reported to be very successful.

Will Sainsburys be next?

If the main reason that a customer shops elsewhere is because of price then the new Tesco Brand Guarantee will help them with that decision. Branded items will be immediately price matched at the till against Asda, Morrisons and Sainsbury’s, the first grocer to do so. Doing away with the vouchers, in fact a 100% redemption rate, makes for a compelling message in the fog of pricing. As retail consultants we can see that Tesco’s competitiors will feel obliged to emulate in the near future giving Tesco the first mover advantage even if margin is eroded in the short term.

However when all the grocers are price matching each other on brands, the next place to go is own brand and we all know how complicated that can get. Different recipes, supplier provenance and quality are almost impossible to compare and is a slippery slope towards poor quality and/or weaker margins.

Meanwhile Aldi and Lidl carry on delivering good quality product at great prices. There is a message there – they don’t have price matching guarantees, or loyalty cards, but they do have loyal customers. The customer is always getting a good deal, so there is no reason to go elsewhere if price is the primary motivator. If range and brand availability is more important then Tesco wins.

This presents the grocers with an invitation to innovate the price matching/promotions/loyalty model, much in the way that Waitrose has. What will the point of difference be when brands are all at the same price everywhere you shop? It will pass to the other factors in the marketing mix, starting with the Brand itself.

So Sainsbury’s could be looking at its price matching model and trying to work out a new way to present it to the customer so they at least feel they are getting as good a deal as they would elsewhere. Or they could divert attention to its quality credentials and values.

We know what we would recommend doing.


We know it is sometimes hard to navigate the marketing mix objectively, so give us a call to see how we can help your stores.

 

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