Bye-bye BOGOF? Tesco finally winds down promotions in favour of simpler pricing strategy

 
Lynsey Barber
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Tesco is the last to move away from promotions (Source: Getty)

Tesco is winding down its focus on promotions such as the famous BOGOF - buy one get one free offers - instead offering customers clearer prices in the long term.

It's the latest supermarket to follow in the footsteps of discounters Aldi and Lidl with low prices overall rather than deals which have been criticised as confusing for customers.

Asda took "radical action" in January with additional price cuts of more than half a billion pounds planned for 2016 ahead of a "challenging year", said boss Andy Clarke. Meanwhile, Morrisons announced similar price cuts in the ongoing supermarket price wars shortly after.

The move has started at Tesco with certain categories including beers, wines and spirits and will be expanded further in due course. The supermarket will focus on an "everyday low prices" strategy, but won't end promotional offers altogether.

Tesco is the last major supermarket to move away from promotions, however, leaving it following the pack on price rather than leading the way, one anlayst warned.

Cantor Fitzgerald's Mike Dennis said the strategy should improve sales value at the supermarket as fewer promotions will increase average sale prices on products, but it risked fewer transactions and a reduction in footfall as it would no longer attract shoppers motivated by deals, calling it a trade-off.

He also warned that Tesco is left with little room for manoeuvre because it is less competitive on price than other supermarkets which have already invested millions in price cuts. Tesco would have to invest much more in price reductions to compete, he said.

The reduced reliance on promotions could also simplify the supermarket's relationships with suppliers which came under serious scrutiny from the grocery watchdog last week.

An investigation into how it works with suppliers triggered by Tesco's profit misstatement in late 2014 concluded there were serious issues with supplier relationships, for which it apologised.

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