UK: Speculation mounts over Tesco Price Promise extension

By Katy Askew | 4 March 2013

More speculation on Tesco Price Promise

Speculation is growing in the UK that Tesco's Price Promise promotion could be extended, with the possibility the price comparison mechanism could be moved to the till.

Tesco's Price Promise enables consumers to enter details from their receipt onto the retailer's website, which will then compare the shop to prices at Asda, Sainsbury's and Morrisons. If the shop would have been cheaper elsewhere, customers receive a voucher to make up the difference.

In Northern Ireland, Tesco has been trialling this process at the checkout. At the company's stores in Northern Ireland, consumers receive a voucher at point of purchase rather than having to go online.

"We can see why Tesco has looked at check-out based measures to reassure and encourage its customers to be more loyal," Shore Capital analysts wrote in a note to investors. However, they add the Tesco initiative represents a "balanced" move that is unlikely to mark the beginning of a price war in the UK.

"The initiative helps to extol and underscore its value credentials without a material step down in gross margins. It is consistent, to our minds at least, with an industry (supply chain & retailer) that is seeking to assist customers and deliver value when coping with unprecedented volume contraction due to sustained negative differential inflation and rising costs of goods and operations. Price matching is a measured way to deliver value; we continue to believe that no player wants to commence a 'price war'."

A spokesperson for Tesco was coy on whether the retailer plans to roll the initiative out to checkouts in the UK, but emphasised the firm is focused on driving value for UK consumers.

"We're continually looking for new ways to help our customers keep the cost of their shopping down," the spokesperson said.

Sectors: Multichannel, Retail

Companies: Tesco, Asda, Sainsbury’s, Morrisons

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