Tesco CEO slams ‘unhelpful’ level of couponing

Tesco says an “unhelpful” level of coupon promotions is restricting its strategy to vary its marketing messaging beyond price.

tesco

CEO Philip Clarke, however, says that Tesco must keep up with rivals’ coupon promotions to avoid further slips in performance.

Coupons, he says, are not a long term solution to buoying Tesco’s performance but consumer confidence is still subdued which means it must continue to provide ways to help customers budget and get value for money.

Too much focus on coupons and low prices erodes margins and can mean that messages about quality and service are relegated.

Speaking to media this morning (11 June) to mark the first quarter results, Clarke said: “There has been an unhelpful step up in the market of this particular type of promotion. We’ve played our part in it as we planned to … but it isn’t a long term solution.

“That’s about getting a blend of price, promotions, quality and service, but it [more coupons] shows we are on the side of the customers in this very difficult time for them,” he says

Clarke also said that if Tesco did not compete with the same level of coupon activity, it risked rivals such as Asda, Morrisons and Sainsbury’s stealing a march on it. He admitted earlier this year that Tesco’s poor performance in the final quarter of last year was partly because it did not do enough couponing while rivals ramped up activity around Christmas.

“We said at the start of the year we didn’t do enough in quarter four and would do more. If you stand by and do nothing then you leave the door open for others – that was particularly obvious in our quarter four performance.”

Clarke would not be drawn on when Tesco’s £1bn investment into marketing, products and stores would start to improve the supermarket’s life for like sales performance but says that “momentum is gathering” as it begins trials of new initiatives.

Tesco reported a 1.5% fall in like-for-like sales in the three months to 26 May.

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