Why Tesco should and will still bother with its price guarantee scheme

On the non-food side, John Lewis still swears by its ‘Never Knowingly Undersold’ guarantee. But as Sainsbury’s this week scrapped Brand Match (a mechanic already watered down in 2014 to include only brands from Asda) many experts say the price guarantee mechanic is now dead in grocery.

I disagree.

On paper it certainly looks like the writing is on the wall. First to market in 2010, Asda’s Price Guarantee scheme has been under review since last November, with CEO Andy Clarke declaring (without a hint of irony): “We are not going to be distracted by short-term gimmicks.” This move followed an earlier decision by Morrisons last October to can the ‘Match’ element of its Match & More card.

With Sainsbury’s pulling out, in all likelihood that will soon leave only Tesco’s Brand Guarantee. And it would be perfectly understandable if Tesco used the opportunity to drop it because - even after limiting the guarantee to branded lines from last October - it’s an expensive commitment, as this week’s £3.08 cashback in our Grocer 33 mystery shop attests. If no-one else is bothering, and in a world where the big four slavishly follow each other’s every move to snuff any possible advantage out, why should Tesco?

But here’s why it should and will: because it works. The flaw in Asda’s Price Guarantee was that it was (still is) a faff. You would have thought Morrisons might have learned from Asda’s mistakes, but with 28 steps, its Match & More scheme became a laughing stock as it was memorably mocked in a Lidl ad. Sainsbury’s Brand Guarantee worked a lot better in that the voucher was issued at the till. But you still had to wait till you did the next shop before your money was redeemed.

Tesco has itself had disasters on the price guarantee front: remember Double the Difference, the 2011 scheme whose flaws were expensively exposed using a neat arbitrage play developed by a software geek working from his bedroom?

But Brand Guarantee is different. The cash back is instant. Thus avoiding all those steps other schemes force the customer to take.

Sainsbury’s says Brand Match “doesn’t fit with the way people shop now”. This is true. They want instant gratification. And simplicity. Only Tesco’s Brand Guarantee gives them that. As Tesco chief product officer Jason Tarry says in his exclusive interview this week: “It is a key part of our overall value proposition, welcomed by and reassuring to our customers.”