Tesco will offer "clear and reliable savings"

Tesco will offer "clear and reliable savings"

Tesco is to cut GBP500m from the price of thousands of items in the UK in a revamp of its promotional strategy.

The UK retailer announced what it has dubbed a "Big Price Drop" in a move that could prompt a price war among the country's largest grocers.

Richard Brasher, chief executive of Tesco's UK operations, said consumers' budgets were "under real pressure". He said: "We have listened carefully and for families facing hard times and looking for genuine savings, The Big Price Drop will cut prices on the products they need to buy the most."

The price cuts come into force on Monday and form part of an overhaul of Tesco's promotional strategy. The retailer plans to "simplify" its promotions, a move that will see it reduce the number of multi-buys. Tesco will end its double Clubcard promotion in four weeks time. Shoppers will receive one point for every GBP1 spent, rather than two.

Brasher said: "We're giving customers a more straightforward shop - reducing the number of promotions and putting the emphasis on clear and reliable savings that everyone can benefit from."

He added: "Clubcard is an important thank-you for customers. They enjoy being rewarded for their loyalty with Clubcard points they can spend later. But they're saying very clearly in these difficult times, that they also want more immediate savings at the checkout."

Tesco's initiatives will throw down the guantlet to its rivals, including Asda, which earlier this year launched its a pledge to be 10% cheaper than its main rivals.

However, Tesco's moves come as it feels pressure from its rivals in the UK. Tesco's market share was 30.4% in the 12 weeks to 4 September, down from 30.8% a year ago, according to the latest published data by Kantar Worldpanel.

The same data showed that Asda was also losing share, although Sainsbury's and Morrisons, the UK's third- and fourth-largest food retailers, had gained ground on Tesco and Asda.

Meanwhile, all four retailers are facing competition from discount retailers Aldi and Lidl, which have seen their share of the UK grocery market increase in recent months.

Shares in Tesco closed down 2.13%. Sainsbury's shares were down 4.01%, while Morrisons stock finished the day 2.48% lower.