Tesco is to plough £500m into a huge new offensive that will see 3,000 products slashed in price.
The Big Price Drop launches on Monday, as predicted yesterday by The Grocer, kicking off what many expect to be a full-scale price war in the run-up to Christmas.
Tesco said it would be slashing the price of milk, bread, fruit, vegetables and a raft of other staples, in what it billed as a response to the impact of the economic crisis on families’ incomes. Many of the reductions will focus on its own-brand products – some of which, Tesco said, would now cost less than half the price of brands.
The push comes as the UK’s largest supermarket giant fights to regain share lost to discount rivals.
As The Grocer reported yesteday, Tesco is also shifting strategy away from promotions in favour of sweeping price reductions. From the end of October, the ‘double points’ promotion on its Clubcard loyalty scheme will also close.
“We are going to simplify promotions, reducing the number of multi-buys – particularly in fresh foods, where customers have said [the deals] can drive waste,” said UK chief executive Richard Brasher.
“To make the biggest change we can for customers, we’re going to make a change to Clubcard, ending the double points promotion and returning to one Clubcard point per pound spent.”
The price cuts will send shockwaves through the food retail market, with the share prices of rivals having slumped in the past 24 hours as speculation mounted over Tesco's plans.
“Across the country families are telling us the same thing: their budgets are under real pressure,” said Brasher. “They want more help today to afford everyday essentials. We have listened carefully and, for families facing hard times, the Big Price Drop will cut prices on the products they need to buy the most.
“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.”
Tesco price war threat sends rivals’ shares tumbling (22 September 2011)
Tesco gears up for massive new pricing offensive (21 September 2011)