Tesco has told suppliers it will not allow the likes of Aldi to gain the sort of price advantage they had during the 2008/9 recession.
CEO Dave Lewis will deliver Tesco’s first quarter’s results on Friday, and will massively ramp up the price-matching campaign Tesco launched against Aldi in March.
In March the campaign was based on hundreds of own label products. Now Tesco has told branded suppliers they will be expected to match Aldi’s prices in the new strategy.
Tesco will stop normal promotional activity, with all promotions driven through its Clubcard loyalty card, making them exclusive to Tesco’s 19 million Clubcard holders. Tesco has already been trialling Clubcard Prices as it seeks to ramp up Clubcard as an advantage against the discounters, and this will be expanded.
“I think this is going to have a huge impact on suppliers,” said a supplier. “Tesco got it wrong in the last recession and Aldi got the jump on them on price and they are absolutely obsessed with not allowing themselves to be outgunned by the discounters again.”
A Tesco spokeswoman said: “We are always working hard to give customers great value. In March, we launched Aldi Price Match, a commitment to match hundreds of Tesco products to Aldi prices.”
Aldi Price Match has been maintained amid the challenges of Covid-19, and already includes a range of branded products along with own-label.
While Aldi carries only a limited range of brands, suppliers expect Tesco’s new strategy to be extended to those serving other discounters such as Lidl, B&M and Home Bargains.
“A recession is inevitable and it’s going to be a very severe one and supervalue or everyday value is going to be the biggest trend,” said a source.