The launch of Tesco’s Aldi Price Match, in early March 2020, was perfectly timed. On the eve of the pandemic, shoppers were reassured that Tesco offered great value, so they could justify avoiding Aldi’s small and crowded stores, and even shop online.
As the pandemic unwound, Tesco doubled down on this price-matching commitment, increasing the matches from about 300 to 500 in June 2020, as part of a broader switch to EDLP. By March this year, the number of matches stood at about 650. Fast forward to Tesco’s latest results, out this week, and the commitment to price parity with Aldi is stronger than ever.
In the trading update it boasted: “Aldi Price Match: strongest price commitment in market.” In fact, the update referenced Aldi Price Match three times. Aldi Price Match is part of a “powerful combination”, along with Low Everyday Prices and Clubcard Prices, which is “helping ease cost of living pressures” Tesco added.
There are two ways of looking at this strategy.
As shoppers watch every penny, the first view is, it reassures Tesco shoppers once again it is as cheap as its benchmark for best value. And subtle it is not: that same message is overtaking ‘Every Little Helps’ in its prominence in marketing – on TV, in newspapers, on social media, on its own website and of course in all its stores.
The other view is that, as pennies become the number one priority for more and more shoppers, it tells them over and over again Aldi is the benchmark for best value. And it can’t beat Aldi on price. It can only match it. On some products.
Some of the replies to Tesco’s social media posts also make interesting reading. “Why do you need to ‘price match’ Aldi?” said one. “Why not just have a policy of being cheaper in general? It works for them. Doesn’t advertising a price match just basically say ‘We’re more expensive’?”
With rival Sainsbury’s also launching its own version of ‘Aldi Price Match’, Tesco may have the strongest commitment to match Aldi prices out of any of the big, er, three – and perhaps the intention is to enhance the value perception of Tesco versus those.
But it is also clear to anyone that the strongest commitment to matching Aldi’s prices lies with Aldi, by virtue of it being itself.
Announcing Aldi’s results last week, CEO Giles Hurley spelt out the changing fortunes of the supermarkets, who were switching to Aldi “in their droves”, he said. And none more so than from Tesco, with £63.6m of spend swiching in Kantar’s latest 12 weeks to 4 September.
Tesco of course has the most sales to lose, given greater share. In relative terms Morrisons is in worse shape, the switching data suggests. But as the cost of living crisis steadily worsens, the gamble Tesco is taking intensifies.
As well as explaining some of its own lost spend, Tesco’s messaging might even account for some of the £8.1m that switched from Lidl to Aldi. Lidl, after all, does not benefit from the same level of brand reinforcement that Tesco provides. It relies on its own marketing budget, which, like Aldi’s, will be much smaller than that of the UK’s biggest supermarket.
Sainsbury’s smaller Aldi price matching campaign, voiced by the plummy actor Stephen Fry, provides further reinforcement.
“If I was in Tesco’s marketing department right now, the earliest I could move away from mentioning Aldi, I would,” one supplier source tells The Grocer, who describes Aldi as “my biggest competitor”.
Adds a leading media buyer: “To have the two biggest players directly calling Aldi out as a price benchmark in a cost of living crisis is going to be a marketing case study in years to come.”
With fresh Kantar data due next week, the wait for another chapter in this case study will not be long.
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