New dawn in convenience pricing as Budgens takes on Tesco
Musgrave has ushered in a new dawn for convenience pricing in the UK with a pledge that its Budgens stores will price match Tesco on 800 products.
The programme represents the first move by a symbol group to match Tesco’s prices since Select & Save began advertising Tesco-beating promotions in 2006 but is by far the most comprehensive to date, and is expected to make Budgens cheaper than Tesco Express and other convenience chains in many cases.
“With value in the eye of the storm, it’s no longer possible for independents to be pricing as they did before, especially with so many Tesco Express and Sainsbury’s Locals opening. We want to be in the competitive set,” said Chris Martin, Musgrave Group CEO.
“We can’t afford the old ways of working.”
Musgrave said it would fund the lower prices itself in order to maintain its retailers’ cash margins. With sales static for the last three years, it was “a critical intervention”, said Martin. “We’ve accepted this needed to be done, or retailers would question their investment.”
The price match will be advertised in local press and through door-drop leaflets. In-store promotional signage will also be ramped up, with shelf-edge labels and wobblers next to the 800 products, as well as further signage to indicate where prices had been lowered.
Five stores have been quietly trialling the initiative since August. Vince Maloney, owner of Budgens Ascot, said the average basket size had increased during the trial as customers picked up more Tesco price match items on impulse. Maloney said customer feedback had been very positive, with many remarking on how his independent store is now cheaper than the Tesco Express across the road.
“We’ve had the Tesco regional managers and directors coming into the store to see the initiative for themselves,” he said. “What we were doing before price matching some core lines like milk was poking the tiger in the cage. Now we’ve given the tiger a good slap.”
The price match system is the first of a number of measures by Musgrave aimed at making the Budgens brand more competitive in a challenging marketplace. Its catch of the day initiative, which brings fish from sea to shelf in 36 hours, will be expanded after trials resulted in a 45% increase in sales. Its meat range is being developed while a bakery trial is planned this month.
Musgrave is also overhauling its own-label range to bring it in line with Ireland. Tenders are out for Supervalu from Budgens to become its mid-tier own-label range as the wholesaler moves to centrally source own-label suppliers for British and Irish stores.
Taking on Tesco
2006 Symbol operator Select & Save starts a campaign promising consumers ‘You’re better off here than Tesco’.
March 2008 Ocado unveils plans to match Tesco on 3,500 branded products
September 2010 As Asda’s price guarantee heats up the big four war, Waitrose pledges to match Tesco on 1,000 branded lines. Mark Price says the promise will result in a £26m hit to margins