Heavy price discounting is to blame for today’s poor results from Tesco, claims Tim Orrell, managing director of Golley Retail, the shopper marketing consultancy.
Total Tesco sales for the six weeks to 7 January 2012 in the UK rose by 3.8% and ex fuel, ex VAT like-for-like sales fell by 2.3%, against a quarter three rate of -0.9%.
Orrell said: “The disappointing sales results published by Tesco today could be written off as a symptom of the current financial mess, but were in fact almost certainly due to the larger retailers relying solely on huge discounts and slashed prices.
“It seems some of the big four have forgotten their role in our lives. In a wave of discounting the good old fashioned messages about use, benefits and advantages have all been washed away, leaving true bargains harder to judge with price alone as the main selling message.
“A retailer’s role is to solve our problems,” he said, “whether that’s what to have for tea or how to get the stain out of my best shirt and then offer the right product at a price we can’t resist.
“All this discounting isn’t ideal because as a result retailers, brands and the whole supply chain are feeling the squeeze and this is inhibiting business growth for the whole sector. For brands there is also the risk of this strategy de-valuing their products and causing damage that will have a negative impact even beyond the current economic climate.
“Throughout 2011 shoppers have been beaten senseless with an omnipresent value message that offers massive savings without the context to judge these unbelievable prices,” said Orrell.
“Some retailers however are getting it right. Marks and Spencer’s ‘Dine in for two for £10’ adds a solution to the discount message, showing the shopper what tonight’s dinner looks like with no need to ponder and at the same time, wraps this welcome solution up in a discount – discount with purpose and direction.
“Retailers need to remember that just like in the days of the corner shop, they need to solve the problems faced by their customers and combine these solutions with real discounts to drive their sales and protect the sector,” he said.
Source: Golley Retail
