As Tesco kicked off the fourth wave of its Price Drop campaign, an investigation by The Grocer has revealed that it has put up prices on three products for every two that it lowered in the past six weeks.
On 1 March, 3,258 products across 18,800 food and soft drink lines were more expensive than six weeks ago while 1,962 were cheaper [BrandView.co.uk]. The remaining 13,580 prices were unchanged.
And across the 1,709 products that were flagged up as price cut promotions this week, 24% actually left customers no better off than they would have been six weeks ago: 345 were the same price and 58 were more expensive.
Prices at Tesco have also risen faster than at rival supermarkets in recent weeks. The Grocer Price Index, which tracks hundreds of comparable lines across the big four, shows that in the month before the campaign, Tesco’s prices rose by 2% while Asda cut prices by 0.3% and Morrisons and Sainsbury’s raised them by 0.1% and 0.7% [4w/e 28 February].
The findings suggest a move by Tesco to “high-low pricing” in which a supermarket funds low prices on KVIs by raising the price of less popular lines. One supplier said Tesco may have also raised prices in the run up to the end of its financial year in an effort to maximise profits.
The source said he had expected a price drop campaign this week - the first in Tesco’s financial year - as it looks to claw back market share after Kantar Worldpanel reported it had reached a seven-year low of 29.7% [12w/e 19 February].
There is also evidence that Tesco raised prices on lines included in the Price Drop campaign in the weeks before it launched.
In a national press ad this week, Tesco advertised its own-label cream of tomato soup as “Was 59p Now 45p”. But six weeks ago it was just 1p more, at 46p. Tesco raised the price to 59p on 5 February, before lowering it to 45p this week.
“Tesco is pulling the wool over customers’ eyes by putting prices up only to ‘reveal’ a fake price drop later,” one rival said. “This sort of desperate action won’t fool customers for long.”
A Tesco spokeswoman told The Grocer: “Commodity prices and other cost increases have affected prices in every supermarket. Through the Big Price Drop, Tesco has helped to offset the impact of this for our customers at the till.” More prices up than down before the drop