Tesco today stepped up the battle for hearts and minds in the supermarket price war with a new advertising blitz to convince customers it is more competitive against its discount rivals since its change in strategy.

CEO Philip Clarke said this morning Tesco’s policy of slashing prices on key everyday items represented a “fundamental change” in the business, describing them as “deep price cuts”, as opposed to the previous language that referred to them as “sharpening”.

Clarke said the lines Tesco had cut in price – including products such as milk and everyday vegetables and meat – had seen average volume sales increases of 28%, despite the retailer’s figures out today showing a 3.7% fall in UK like-for-like sales in the first quarter, its third successive fall.

“We’re stepping up our print and TV advertising to make sure customers know these are genuine price cuts and they are not gimmicks anymore,” said Clarke, who added that Tesco was “much more competitive than we’ve been for years”.

“We’re stepping up our print and TV advertising to make sure customers know these are genuine price cuts and they are not gimmicks anymore”

Philip Clarke

The latest TV ad, above, was put together by agency TAG and breaks on terrestrial channels this evening.

Clarke said Tesco would continue its policy of scrapping  “short-term promotions” and claimed its Fuel Save campaign, which rewards Clubcard owners with reduced fuel prices, had led to a 22% increase in Clubcard transactions since launch, with more new sign-ups to the loyalty scheme in the past six weeks than the previous 30.

However, Clarke also promised that Tesco’s bid to win loyalty on reduced prices of food and fuel would not distract from its improved quality.

He said the company was “enormously proud” after scooping almost a third of the top awards at The Grocer’s 2014 Own-Label Food & Drink Awards ceremony last month.

“Price is one important part of the mix; it’s very important for some customers,” he said.

Clarke also expressed regret at not halting the rollout of Tesco’s larger stores sooner. “I probably should have stopped the expansion more quickly and made the reallocation of space more of a priority.”

Tesco confirmed today it was on course to refresh more than 600 stores but it is facing a big headache in how to re-invent its Extra hypermarkets, with at least five to be shrunk and extra space rented out to other retailers and leisure facilities such as gyms.

Reports this week suggested Tesco may be losing more than one million shoppers in the UK a week.

Meanwhile data from Kantar Worldpanel published yesterday showed that in the 12 weeks to 25 May Tesco’s sales fell 3.1% year-on-year.

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