TheMarketingblog

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Is Tesco going to drop its ClubCard scheme in favour of everyday low pricing?

First of all – some background. This article shows what Tesco is up against. For so long the champions of everyday low pricing (EDLP), this Christmas the big four supermarkets have been shown a clean of pair of heels as the discounters of Aldi and Lidl have stolen significant market share, writes Tim Downs, director at Aberfield Communications in Leeds.

Clubcard built the Tesco of today, but it could be time to ditch it 

TheMarketingblog comment : At best the experts are predicting that Asda will have held their own and at worst, as with Tesco and Morrisons, will have seen a significant drop – 2.6 per cent and 5.6 per cent in year-on-year sales for the six week Christmas period.

Consumers have realised that the big four are no longer the cheapest place to buy their weekly shop. They have already realised that the ‘discounters’ have come a long way in improving their image as well as their range

Are we going to see some pretty major changes in brand strategy.Tesco’s  ClubCard scheme is costing them £500m per year. There are now discussions taking place behind the scenes at Tesco concentrating on – is the very successful Card scheme still the right course for the supermarket. The main question being asked is if they pumped the £500m per year savings into price reductions to undercut Aldi and Lidl would it make a significant difference to their market share? Or do they compromise? Keep the scheme, forsake the lower prices approach but offer more services such as Blinkbox , Tesco Law and the hudl tablet.

One thing is sure.

They have to react very soon to this severe  market share erosion.  In cuuting prices they would be sending a powerful message to consumers about the intentions of a future Tesco