Tesco Steps Up Discounting With 1,000 Christmas Price Cuts

Tesco Plc, (TSCO) the U.K.’s biggest retailer, said it will cut the prices of 1,000 products for the Christmas season as it steps up a campaign to gain shoppers struggling to contend with dwindling household incomes.

The discounts on items such as meat, vegetables and bread will start tomorrow, U.K. chief Richard Brasher said today at a media event at a store in Wembley, northwest London. They will be in addition to the retailer’s “Big Price Drop” on 3,000 items, which has led to an improvement in sales volume since the campaign was introduced eight weeks ago, he said.

“Dropping prices is the right thing to do,” Brasher said. “We have reduced inflation for our business, we’ve reduced inflation for our customers. We’ve probably reduced inflation for our country.”

Supermarkets are relying more heavily on discounting as rising food and fuel prices leave customers with less to spend. J Sainsbury Plc started a price-matching campaign last month in response to Tesco, while William Morrison Supermarkets Plc (MRW) is offering 100 million pounds of price cuts, promotions and rewards through its Christmas collector card program. Wal-Mart Stores Inc.’s Asda unit has a promise to be 10 percent cheaper than rivals or it will refund the difference.

About 90 percent of Tesco customers have benefited from the price-drop campaign, Brasher said. Since its introduction on Sept. 26, there have been more than 100 million transactions containing “Big Price Drop” lines, he said.

Gadget Part-Exchange

Tesco is offering customers discounts in return for used electronic products excluding so-called white goods such as refrigerators and washing machines, said Ian Ditcham, category director for electrical goods.

“Customers can come in with their old mobile phone, maybe a game console or a television” that they can “offset against the purchase of a new product,” Ditcham said. About 5,000 customers have traded in gadgets since the program, which is available in 230 Tesco Extra stores, began last month, he said.

Tesco’s share of the U.K. grocery market fell to 30.5 percent in the three months through Oct. 30, according to latest data from researcher Kantar Worldpanel.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editor responsible for this story: Paul Jarvis at pjarvis@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.