Tesco’s new own label lines will give the discounters food for thought

Tesco shareholders have been waiting a long time for evidence that the retailer is truly back on the front foot, and today’s launch of no less than seven new own-label brands across its fresh and meat line-up is perhaps the most concrete yet.

You might struggle to find some of the farms that have allegedly spawned the 76 new products on your satnav. But the arrival of names like Redmore Farms (veg), Willow Farms (chicken) and Nightingale Farms (salad), has given the discounters something to chew on at last.

It is also by far the most customer-facing move yet in CEO Dave Lewis’ plan to create a simpler shopping experience – one that will help him drive up volumes on the back of a more straightforward range.

Today’s launch builds on the success of the most basic-but-effective marketing tool employed by Tesco over the past two Christmases: The Festive Five. That promotion chimed perfectly with customer demand for convenience and low prices.

Yet the encouraging thing about the new entry-level brands is that they show Tesco has not just realised the importance of price, but of quality, and perceptions of freshness and provenance too.

It may be fewer than four years since the struggling supermarket giant spent a fortune relaunching its (once ground-breaking) £1bn Value range as Everyday Value, but it feels – and, as far as some of the products are concerned, looks – like something from a bygone era.

Customers have been flocking to discounters not just in search of lower prices, but safe in the expectation that they won’t have to compromise much on quality either. Tesco may have matched its traditional rivals on the prices of brands (with Brand Guarantee) but all too often its most affordable own label basics were no better than Aldi’s or Lidl’s – and sometimes worse.

As Tesco’s product testing – and no doubt customer feedback – has shown, the rebrand to Everyday Value may have got rid of the blue and white stripes, but not the stigma attached to many of the products.

Few customers will be sad to see the back of products like Everyday Value sausages, carrots and grapes. These items all too often appeared to struggle to survive the trip to the car park, let alone make it through the week.

If Tesco’s Farms brands pass the quality test, it would be no surprise to see this initiative rolled out much more widely in other areas of the shop.

In doing so, Tesco would in effect be stripping out the layers of its tried-and-trusted good, better and best proposition. But I think customers will settle for just two of those – good and best – especially if they perceive they are getting value for money.

What they will soon see through is products that are none of the three – just cheap.