Price comparison schemes were once a stalwart of supermarkets’ marketing strategies. Wanting to take price out of the equation in consumers’ decision on where to shop, Asda, Tesco, Sainsbury’s and Morrisons all used to offer customers money back on their next shop if comparable items could be found cheaper elsewhere.
Asda started the strategy back in 2010, hoping to hone in on its positioning as the cheapest of the ‘big four’ by promising that if shopping with it wasn’t 10% cheaper than elsewhere, customers would get the money back. Tesco, Sainsbury’s and Morrisons soon followed suit, not wanting to be left behind on key value messaging.
And it became a bitter battleground, with various spats between Tesco and Sainsbury’s in particular over what “comparable items” should include and when customers would be eligible that saw both brands fall foul of the Advertising Standards Authority’s ad rules on a number of occasions.
The rise of the discounters
But the growth of Aldi and Lidl in the UK grocery market laid waste to claims by any of the big four to be the cheapest. The discounters won shoppers by charging considerably less, while pushing a quality message that made people feel like savvy shoppers.
Their simple message that shoppers would be guaranteed the lowest prices just by shopping at Lidl or Aldi, rather than having to jump through hoops by inputting receipt details online and downloading vouchers, won them customers. Nowhere was this clearer than in a clever piece of print advertising by Lidl that listed all the actions Morrisons customers would have to take just to get things at the same price as at one of its stores.
The move to so-called ‘everyday low prices’ has been building momentum since then. The big four retailers have invested millions in bringing their pricing more in line with the discounters, while at the same time cutting down on promotional tools such as buy-one-get-one-free or promising shoppers x amount of money off their next shop if they spend a certain amount.
Consumers had spoken, and it was straightforward low pricing they wanted, not marketing gimmicks.
The pace of change in retail has been unrelenting and today, the Asda Price Guarantee, while still the ironclad promise it always was, has become less relevant to customers.
Andy Murray, Asda
This is at the core of both Tesco and Asda’s recent decisions to scrap their price match schemes. At the beginning of the summer, Tesco said that with just one in eight transactions receiving a refund through its scheme, money would be better invested in cutting the price of everyday products.
Asda’s chief customer officer Andy Murray said much the same in a blog post last week. He claimed that just 1% of customers still used its price guarantee scheme, and research clearly showed that, much like at Tesco, customers wanted it to invest “everything we can” in everyday low prices.
Murray says: “The pace of change in retail has been unrelenting and today, the APG [Asda Price Guarantee], while still the ironclad promise it always was, has become less and less relevant to customers, with less than 1% using it. Today, customers are savvier than ever on the price of their shopping.”
Communicating everyday low prices
There’s little doubt that interest in price comparison schemes from customers has been waning as they look for simpler ways to get the best value. But what these price guarantees offered customers was reassurance that if their shopping was cheaper elsewhere they wouldn’t be out of pocket.
There were even some shoppers, called ‘womblers’, who made thousands from using other people’s discarded receipts to get money off future shops.
While they did become less widely used over time, the schemes were a key way to communicate around pricing and value for money. Savings from everyday lower prices are less tangible and harder to see on a weekly food shop.
Supermarkets must ensure they don’t lose consumers’ trust by failing to hammer home they fact they are offering the lowest prices and the best value. The economy may no longer be in recession, but habits formed then are still evident in how customers shop today, while price rises caused by the drop in the value of the pound have caused the issue of food prices to rise up the agenda once more.
Supermarkets must watch that the decision to get rid of price match schemes doesn’t impact their brand equity in pricing. Otherwise savvy shoppers (and that’s most people now) will head elsewhere.