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Tesco attempts to win back customers

The supermarket’s £5 off offer seeks to reverse the failed Price Drop campaign, which saw rival supermarkets triumph over the Christmas period

Tesco is heavily promoting an offer to lure shoppers back to its stores after admitting its last campaign to win customers had fallen flat.

The supermarket giant has taken out full-page adverts in newspapers to promote its latest deal – the promise of £5 off your next shop if you spend £40 in a store or online.

With the tag line “It’s just our way of saying ‘Thanks’”, the £5 voucher will be given to shoppers who spend £40 up to and including 22 January, and will be valid to use on another £40 shop between 23 and 29 January.

However, it cannot be spent on “infant milk, formulae (sic), tobacco products, fuel, prescription medicine, stamps, lottery, cafe, E-Top up, opticians, Travel Money Insurance and gift card purchases.”

The offer comes in the wake of Tesco’s much advertised £500m price-cutting campaign the Big Price Drop, which triggered a supermarket price war.

Tesco slashed the price of milk, bread, fruit, vegetables and other staples, with a focus on its own-brand products. Rivals subsequently launched their own discount schemes: Asda guaranteed to be 10% cheaper than its rivals and Sainsbury’s launched its own Brand Match initiative.

But Tesco told investors in mid-January that Price Drop had failed to bring in enough customers, while critics accused it of increasing the prices of some products before the offer began to make the savings look bigger.

Cliona Lynch, a retail analyst at Verdict, said it was no surprise Tesco had turned to coupons “because other retailers drowned out the message of Tesco’s Price Drop with their discounting and coupons”.

She added: “I don’t think rivals will follow suit. They are doing more innovative things themselves.

“Morrisons is giving away free shopping to five people nationwide every day in January, while Sainsbury’s has extended its Brand Match offer. I think Tesco will look to move away from price deals and focus on the quality and range of its products in future.”

A spokeswoman for Asda said the retailer had run a similar offer in October, and had no plans to relaunch it in response to Tesco’s campaign.

The £5 offer may well come in handy for shoppers. While the headline figure of inflation fell to 4.2% in December 2011, and shop price inflation fell to 1.7% (down from 2% in November, its lowest level for 16 months), the British Retail Consortium said food prices rose 4.2% – higher than November’s 4% increase – despite the high level of supermarket discounts.

The weekly basket of goods monitored by The Grocer, which includes fruit, vegetables, fresh meat and other staples alongside frozen pizza, pesto, snacks and treats, shows Tesco beating Asda, Morrisons, Sainsbury’s and Waitrose in early January. The Tesco basket of 33 items comes to £50.14, compared to £50.36 at Asda, £53.64 at Sainsbury’s, £54.20 at Morrisons and £56.80 at Waitrose.

However, the latest basket of goods fell in price by just 7p at Tesco compared to a fall of 38p at Asda and 44p at Waitrose. Morrisons ran the highest number of promotions among the items in The Grocer’s basket, with 11 products on special offer compared to 10 at Tesco and Asda, nine at Sainsbury’s and seven at Waitrose.

Morrisons is giving away free shopping to approximately 15,000 customers every week throughout January, with five people in each store winning back the cash value of their shopping via a daily draw of unique entry codes printed on every till receipt. Winners have until 29 February 2012 to claim their prize.

With Sainsbury’s Brand Match, the supermarket instantly calculates the cost of a shopper’s basket of branded grocery goods at the till and compares it with the cost of the same branded basket at Asda and Tesco.

If the goods would have been cheaper at either store, including promotional deals, shoppers will immediately receive a coupon equal to the value of the difference. Shoppers can redeem this the next time they shop. The promotion, which was due to cease at the end of 2011, is now part of the group’s “regular pricing offer”. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds