Tesco steps up marketing to get across price message

Video: Tesco’s new TV ad to promote its price cuts

In the first quarter, Tesco’s UK sales at stores open for more than a year declined by 3.8 per cent year on year, excluding fuel, the supermarket’s worst performance in more than a decade. The figure marks Tesco’s third consecutive quarter of worsening sales, after it posted a sales decline of 3 per cent in the fourth quarter.

Chief executive Phillip Clarke blamed the decline in part on Tesco’s decision to move away from promotions, which he believes only work in the short term and encourage shoppers to move around to find the best deal.

Tesco has cut its usual couponing rates by two-thirds and is instead investing in lower and more stable prices and its Clubcard Fuel Save marketing initiative.

Clarke claims those moves are paying off, with volume sales on lines where it has focused its recent price cuts up 28 per cent and Clubcard sign-ups rising 22 per cent since it launched Fuel Save. The supermarket claims it has signed up more new Clubcard customers in the past six weeks than in the prior 30.

Tesco now plans to ramp up TV and print advertising to ensure that more customers know these are long-term price cuts, with a new TV ad launching today (see video above). It is also investing in further driving loyalty with the launch of its digital wallet and digital Clubcard, which will allow people to receive personalised promotions to their smartphones, in the autumn.

Clarke says: “It all comes back to the customers. We have such great insights and Clubcard is right at the heart of that. We have to give people choice in how they engage with us – some will always use debit cards others want to shop with their phones, some buy DVDs other stream via Blinkbox.

“We are excited about the way that some customers are using digital and we have got to be there for them.”

Speaking about the recent changes to its marketing structure, which have seen Tesco’s director of developing business Jill Easterbrook take on responsibility for global marketing while Matt Atkinson moves over to become chief creative officer, Clarke says the decision is part of efforts to “strengthen efforts”.

“Our communications have improved and will continue to do so. We felt we needed a job that just looked at customers, how we communicate, listen and respond to them and Jill has an unswerving insight on customers.

“We are not going for a traditional structure. This is something unique to us.”