Tesco 'to tailor deals based on income'
Image: Tim Ireland - PA Wire
Tesco is to start customising its in-store products and promotions according to the income of local families, retail magazine The Grocer is reporting.
As part of the strategy, value-brand products will be promoted more heavily in poorer areas, while the supermarket's Finest range of goods will fill more shelves in richer neighbourhoods. Stores will also tailor their promotions and discounts according to what they believe will suit customers in each particular area/region.
The supermarket has stressed that there will be no variance in the price of non-discount goods across its branches.
However, given the vast amount of deals on offer in Tesco stores, it's clear that a shopper in a more affluent area might end up paying significantly more for their basket of goods than someone in a less well-off part of town.
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Is it a good idea for Tesco to tailor deals and products based on local shoppers' incomes?
- 22 %Yes - more supermarkets should do this
1,649 votes - No - it should offer the same deals in all stores
5,784 votes
Total Responses: 7,433
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Tesco squeezed at both ends
While the supermarket already tailors its products based on the shopping habits of its Clubcard members, this takes the strategy to a new level.
Perhaps one of the reasons behind the controversial move is the fact that its rivals have been eating into its share of the market.
Discount chains like Aldi and Lidl have been enjoying double digit sales growth in recent years, while stores like Waitrose and Sainsbury's have been applying pressure at the higher end of the market.
Make no mistake: the supermarket giant is feeling the pressure, having issued its first profit warning for 20 years at the start of January.
The Grocer reports that Tesco will initially trial the strategy in around 300 of its stores.
So what do you make of the move? Do you think it provides a better shopping experience, or would you expect stores to have a uniform offering regardless of where they are situated?
This sort of thing has been happening for years. One example of this is a well known high street bakery store selling packs of 4 instore baked sausage rolls with the prices differing in London, Kent and Leeds. The biggest difference was £1 in London which is 33% more than the price in Leeds.
I can only assume this difference is due to the vast rents being paid in London and the perceived affluence of their customers.
I suppose the 78% vote in favour of all stores offering these savings is only to be expected. A large number it seems will never be prepared to accept that the less well off have any perks presented to them, if the perception is that they are somehow thereby losing out. What an utterly selfish society we've become.
Then again I suspect like the Grantham Shopkeeper's daughter very few stop to consider wider social implications these days. - "no such thing as Society" is there? Just individuals looking out for number one and sod the rest of the population. I guess it's why we continually vote in Tory Governments in this country. Tescos, ironically a great supporter of Right-wing causes, has the temerity to try something socially and economically practical to the benefit others less fortunate and to itself of course (no harm in that) and many are still againt them doing it.
What a country....
patrick.
They charge it because many people are prepared to pay it. Consumers are really the boss here though. I predict that if everyone or at least a fairly large percentage who normally drive, because say of work commitments, were to take a concious decision not to use their cars on at least one day per week, and kept this up for 6 months the price of petrol would plummet.
The problem then of course, as is always the case the reverse impetus would kick in. Cheap petrol would encourage greater car use and the prices would quickly shoot up again.
The other major problem of course where petrol is concerned is that most of the cost of a litre is down to it being heavily taxed. Governments have had to do this because over the past thirty odd years because here has been a general political aversion to increasing direct taxation on individual incomes. So indirect or what are erroneously called "stealth" taxes have become more widely used to compesate.
I of course lay the blame mostly at the door of a certain Grantham shopkeeper's daughter, whose love of quoting St Francis of Assisi in her famous Downing Street doorstep victory speech in 1979 rings as hollow today as it did all those years ago. Oh! and of course, the other culpable lot are all the idiots who fell for it.
Maybe Tesco have come up with some new groundbreaking strategy. If the rates are less in less affluent areas, they can then tailor the prices to suit the overall running costs of individual shops. Keep running costs down, keep prices down.
Sounds too good to be true.
Tesco are too expensive. If my daughter says, let's go to Tesco. I would say, I'll just see what the bargains are. I won't shop there. Back to Asda for the main shopping.
Someone mentioned the housewife. It seems by the comments most people are well up on their housewifery, even the males. The masses have the supermarkets well marked.
Taking up the comment from Peter Stone.
Imagine you have an opportunity to open a car sale room selling Rolls Royce limousines. Would you even consider taking a sale room in the centre of a dilapidated estate where the majority of citizens are living on benefits. No! Of course not, you wouldn´t have any customers.
Tesco are trying to exist in a cut-throat business, many other contributors have named the competition. What they are trying to do is to display the type of goods they believe will sell to the citizens in their immediate neighbourhood. The statistics of the affluence of their surrounding area are not of their imagination but are provided from government sources.
From where I live I can catch a ´bus which goes past Lidl into the city centre. At Lidl I can buy a tin of the famous French delicacy Bloc de Foir Gras for 4€, wonderful value. If I stay on the ´bus for eight stops, in El Corte Inglese I can buy the same can for 10€. Different district, different customers. In the same branch of Lidl the quality of their vegetables is abysmal, I won´t buy them, whereas in Paphos Cyprus their quality is only surpassed by Debenhams at higher prices
What Tesco are seeking is a method of matching what they have to offer to what customers in their locality are likely to purchase and this is sound business practice.
Some years ago while visiting friends in London I met one of their neighbours who was the founder of Tesco. Having been on a training course which included the subject of Marketing I asked him what were the principles on which he based his operation.
His answer was his slogan, "Pile ´em high, sell ém cheap". Customers flocked to his doors in Shepherds Bush in such numbers that while he was buying his stock with three months credit from his suppliers, he was turning that stock over in three days and as a result he was able for the next few years to open a new store every week without borrowing a halfpenny from the banks.
Unfortunately, since his retirement the "bean counters" have taken over and put in place as Store Managers, bright young men who have shiny certificates but no experience and simply don´t understand their customers. It is obvious from the remarks in previous comments that housewives with a limited budget don´t indulge in "impulse buying" (the reason why things aren´t on the shelves where you expect them to be), they talk with their feet and that is the only language that retailers understand. If you don´t buy they go out of business.
So keep on talking with your feet and Tesco will either change their ways or go out of business. This is what free enterprise is all about and Government legislation can´t control it.
this is SO unfair! i live in a posh area because we moved to a catchment area for a school and we badly in debt and live in one of the smallest (not bad but cheapest) houses!?
STEREOTYPICAL AND RUDE. does absolutely nothing but leaves people feeling cheated and unequal. disgraceful, i think. it wont work anyway because people will just travel to the so-called poorer areas to shop leaving the higher pricing shops empty and unused. stupid idea.
Tesco is run by conmen who take us for fools. ~Prior to Christmas, prices went up on many of their products as they tried to cash in on the christmas spending spree. people voted with their feet and walked down to other supermarkets to shop. That is the real reason they lagged behind the rest at christmas.
They announced price reductions in january, but they do this every year as they simply drop back almost as far as they went up - or do they. This year I could not help but notice so many products where prices have risen. £1 lines are now priced at £1.27. £1 pizza that rose to £1.50 prior to Christmas is still £1.25. Mountains of Stilton that sold at £3 for a half wheel before xmas is offered as a "reduced" item at £4.50. And so it goes throughout the store.
I have now started using both Morrisons and Aldi. Both are much better than Tesco as far as value is concerned. Sorry Tesco, you lost my custom - actually, no, I am not sorry. You don't deserve my custom
Tesco are already doing this especially with their fuel prices. In Nottinghamshire where I live the cost of diesel is 136.9 per litre but where my Dad lives in Dorset it's 142.9 per litre!
I can't believe that each garage buys its fuel individually so selling it at inflated prices because they can get away with it is unethical. So much for every little helps!!
I think what I was trying to say is that a manufacturer will reduce the quantity and keep the same price, in order to hide a price rise. Don't you just notice that that slab of cake is getting thinner. And how Easter eggs have reduced in size. They can't let them go to the size of bird's eggs, they WILL have to increase size and price eventually. And all those tins of sweets at Christmas are all smaller tins than years ago. I know, I have the old tins with things stored in them.
I can see the point of not stocking too much of delicatessen, if nobody wants to buy. Goods on shelves not moving is not good business. Money tied up. Surely all supermarkets would do this. I probably would have a job finding that Russian delicacy, can't remember the name quickly, very few buyers in Hampshire I would think.
Suprised they dont do this already seems perfect buisness sense. Heavy student areas for example no point having premium products in store.
Tescos buisness wise great buisness, but i have started to notice as a consumer they become very sly knockin a little money off essentials but adding it on to other lees often bought products so you feel like your saving money though your not. Saisnbury though i think are genrally better value for money but unfortantly tesco are so good at their placement of stores you carnt avoid them.
Goods cost the retailer a certain price. They should add their profit margin to that price and sell whatever it is at the same price everywhere. Yes, they can be Natiional and obviously it will cost more in fuel and time to get goods from their regional depots to some stores. SO? They're the ones who wanted to be National and closed down all the local competition to them.
