Tesco expected to look to premium positioning

Tesco’s strategy for the recession was focused on low prices and its Clubcard loyalty scheme, but commentators believe it will now look to a premium marketing positioning.

Tesco CEO Terry Leahy says the supermarket is in a stronger position than before the recession. The supermarket has just posted record profits of £3.4bn for the past year – up 10.1% – with UK sales rising 4.2% to £42.3bn.

Leahy says: “Tesco’s strategy to earn loyalty through prices has kept shoppers at Tesco. We do well when people aren’t feeling wealthy as we offer good value.”

Matt Piner, retail analyst at Verdict Research, says that Tesco’s loyalty push was in response to the declining threat of the discounters. He believes that the Discount Brands range which Tesco introduced will be sidelined in favour of premium and organic ranges, which will become more prominent in marketing at the cost of discounting and prices.

Alan Treadgold, head of retail strategy at advertising agency Leo Burnett, says: “It’s too early to see dramatic changes because there is still a lot of uncertainty. Tesco is still focusing on value, but later this year there will be more emphasis on quality and the Finest range.”

However, Ed Garner, director of research at Kantar Worldpanel, says Tesco has already embarked on a new strategy. “At the end of last year, Tesco backed off its discount brands and advertised Finest quite strongly. But Tesco will want to keep a view on all things.”

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