Tesco Focuses on Private Brands

Last week Tesco announced the biggest price cutting programme in 25 years, with £500m invested in lowering prices.

Most of the cuts will effect Tesco Private Brand products. The move came as Tesco insiders admitted that an increasing number of shoppers were switching from Tesco-branded food and household products to lower-margin big-name branded goods, a switch which in theory hits its profits.

Research conducted by Assosia, which monitors all the promotions at supermarkets, shows that the level of discounts being offered on branded goods has increased significantly in the last year. Twelve months ago the average discount on the 8,000 or so branded products on promotion at Asda, Morrisons, Sainsbury’s, Tesco and Waitrose was 32.5pc. This has now increased to 34.3pc.

At Tesco the increase is more stark, with the average level of discount moving from 34pc to 36.5pc.

Separate research, conducted for the Sunday Telegraph by the IGD, the supermarket research company, has found that shoppers have increasingly turned to brands in recent months, especially nostalgic ones. A year ago 30pc of shoppers said that it was important that the food they bought came from a specialist manufacturer; this figure has now jumped to 35pc. When asked if it was important that the brand was one they had grown up with, 32pc said it was very important up from 27pc a year ago.

Tesco has called in all of its store managers this Sunday to put up all of the new signs, announcing the price cuts, which come into force on Monday. Its emphasis on its own-label products, from is Finest range to its Value one, is in contrast to J Sainsbury and Waitrose – both of which have stressed how they compete against Tesco on brands.

Source: International Supermarket News

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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.