Tesco is moving away from its unique marketplace differentiator – its brand guarantee that claims to sell brands cheaper than rivals Asda, Morrisons or Sainsbury's.
Back in 2015, the retailer launched the new brand guarantee and no longer required consumers to dig out receipts from other supermarkets to compare brand prices. Instead the price difference was policed by Tesco and deducted automatically, making savings of up to £20. However, to qualify, shoppers had to buy at least 10 items in-store or digitally.
At the time, Matt Davies, Tesco UK and Ireland chief executive, said it was part of the company’s efforts to “make the shopping trip that little bit easier for customers with simple, affordable prices you can trust”.
Alessandra Bellini, Tesco chief customer officer, today (25 June) 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.”
The scheme will end 16 July 2018.
Martin Lane, managing editor of money.co.uk, said: "The news Tesco is ditching their brand guarantee might have loyal Tesco customers up in arms. The promise of lower prices across the board might sound appealing but there's no longer a guarantee you couldn't get cheaper elsewhere.
"Tesco has got its work cut out to compete against the likes of Aldi and Lidl and if they don’t offer true value they could be at risk of losing loyal shoppers. It will be interesting to see if this move will help Tesco customers because the current system can be confusing and scrapping the scheme might help people to make an easier comparison. Let's hope the revision of prices will be competitive because this change is likely to prove unpopular."
Recently, the retailer has been looking to reduce the number of brand names on its shelves, taking a leaf out of Aldi and Lidl’s book. The reduction of brands on its shelves contextualises a move away from the brand guarantee as the retailer delivers its own produce instead.
It has been lining up its own discount brand for this very reason. It is unclear how consumers will react; news that Brexit would increase the price of household goods like Marmite whipped up a lot of negativity.
Tesco lines have not been without their share of controversy. Its fake farm brands, designed to give its own meat-lines a sense of continuity and gravitas in the market, were criticised by the National Farmers' Union in 2016.