Philip Clarke and his executive team faced down the wolves of the Cityand the press pack one after the other on Tuesday – a dream day surely for the Tesco boss – as they revealed subtle but important changes to its UK turnaround plan.
After all the price war predictions in the run up to the event at London’s Stock Exchange, Clarke stopped well short of launching a fully-fledged attack on the discounters snapping at Tesco’s heels.
In fact he ended up lavishing praise on them instead.
Whereas in December Clarke had seemed to suggest the likes of Aldi and Lidl operated on untenable economic lines, here he was telling investors they had done a “great job” – adding upmarket rival Waitrose to the list.
He clearly had no intention of following them down the same route, however.
The £200m Tesco is throwing at “sharpening” – rather than slashing – the prices of everyday products such as cucumbers and carrots may seem like a lot but it is peanuts compared to the money that would be needed to take on the discounters. Not to mention its big-box rival Asda, which got in its retaliation first this week and is faced by many of the same strategic issues as Tesco.
The figure is also far less than Tesco injected into its ill-fated Big Price Drop in September 2011. Tesco and its UK team in particular will hope that the differences don’t stop there.
As well as being funded by what many regarded as a misguided raid on popular Clubcard rewards – rather than profit margins – the Big Price Drop was nothing if not confusing for customers. It seemed shoppers were crying out for everyday low prices, rather than temporary blitzes that too many of them do not trust any more.
Now Tesco is promising its prices are “down and staying down”. And if Clarke is serious about jumping off the promotions bandwagon – as well as quitting the space race – there will be a few suppliers jumping for joy, too.
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