Take supermarket price match schemes with 'pinch of salt', says Which?

Investigation into Asda, Sainsbury's and Tesco finds differences in schemes means claims to be the cheapest are worth little to customers

Popularvoucher-style price match schemes run by the majorsupermarkets vary enormously, making it hard for shoppers to tell which supermarket is the cheapest, according to new research.

The consumer group Which? analysed shopping trips to Asda, Sainsbury's and Tesco – which all operate rival price match schemes – but warned that their claims about likely savings "should be taken with a pinch of salt".

The warning came as the advertising watchdog banned what it said was a misleading advert for the Sainsbury's campaign – known as Brand Match – for suggesting that consumers do not need to shop around to benefit fully from deals at rivals Tesco and Asda.

Price comparison tools have become a key battleground in the fiercely competitive UK grocery retail sector. But the supermarkets have been waging further war against each other by challenging their rivals' claims and even referring them to the Advertising Standards Authority (ASA).

The investigation by Which? found that the schemes run by Asda, Sainsbury's and Tesco differ greatly, making them of little real worth to shoppers. Secret shoppers visited the supermarkets to find that, in the majority of cases, each claimed to be cheaper than its rivals.

Which? analysed the till receipts from 59 shopping trips – 19 at Asda, 20 at Tesco and 20 at Sainsbury's – each time checking the price of the basket with the supermarket's own online price match. Asda was the cheapest, according to its own "Price Guarantee" on the most occasions (17 out of the 19), Sainsbury's judged itself cheaper than Asda and Tesco for 10 of the visits and joint cheapest for another two, according to its "Brand Match", and Tesco was cheaper than Asda and Sainsbury's for 10 of the 20 visits – according to its "Price Promise".

But supermarkets set their own rules for what is and isn't compared under price-matching schemes, and sometimes stock products in different sizes, so it can be hard to tell which is the cheapest.

Overall, the 59 shopping trips analysed by Which? resulted in an average discount voucher for shoppers of just £1.45.

Richard Lloyd, Which? executive director, said: "Supermarket price-matching schemes can save you money but we believe they should be taken with a pinch of salt because they are difficult to compare. At a time when consumers are facing a squeeze on their household incomes, we want all the supermarkets to do whatever they can to help consumers find the best deal."

The Sainsbury's television advert showed various people shopping, with the screen split three ways to indicate the supermarkets Sainsbury's, Tesco and Asda, before a voiceover said: "Deals. Everywhere aren't they? But wouldn't it be nice if we didn't have to go everywhere to get them?" The advert said Sainsbury's would compare baskets of £20 or more with prices at Asda and Tesco and offer a coupon for the difference, taking deals into account. But two viewers pointed out that Brand Match compared the total cost of the branded shop, and any savings on cheaper Sainsbury's products were offset against any items that were cheaper at Tesco or Asda. The deal meant the value of the coupon was reduced, and customers could have saved more by buying the items at their cheapest price from across the three supermarkets.

Sainsbury's said it believed the advert made it clear that the comparison was of the total price of the branded shop, and believed it contained all the necessary information "for viewers to understand the offer and assess it objectively".

But the ASA said: "We understood that the amount of any voucher for the price difference would be reduced if any of the purchased branded items on offer at Sainsbury's were more expensive at Tesco or Asda, and that in order to achieve the cheapest overall price in these circumstances it would be necessary to shop in different supermarkets. We considered that the ad … misleadingly implied consumers did not need to shop around to obtain the full savings from deals, when in fact that was not the case. We therefore concluded the ad was misleading."

Article Source : http://www.guardian.co.uk

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Tesco pays out to rid itself of US chain Fresh & Easy

US billionaire Ron Burkle's Yucaipa investment vehicle agrees to take on 150 stores and 4,000 staff

Tesco has finally negotiated an exit from its failed expansion into the US by lending US billionaire Ron Burkle £80m to take away its loss-making Fresh & Easy chain.

After more than nine months searching for a buyer, Burkle's Yucaipa investment vehicle has agreed to take on 150 Fresh & Easy stores as well as 4,000 staff and a vast distribution centre and production facility east of Los Angeles.

The deal will cost Tesco £150m in total, including the loan, payoffs for about 400 permanent staff and the closure of about 50 stores not included in the deal – taking the total cost of the humiliating episode to nearly £2bn. The future for a further 600 staff is unclear, with some expats likely to return to Tesco in the UK while others are part-time staff and will be let go.

Philip Clarke, the UK supermarket's chief executive, said: "The decision we are announcing today represents the best outcome for Tesco shareholders and Fresh & Easy's stakeholders. It offers us an orderly and efficient exit from the US market, while protecting the jobs of more than 4,000 colleagues."

Tesco said that the deal would mean there was no ongoing financial exposure in the US. However, under the agreement, which is expected to be finalised by the end of the year, Tesco will hold warrants that entitle it to a 32.5% stake in the holding company that will run Fresh & Easy, should certain performance criteria be met. They could be exchanged for a cash sum in the future.

Ron Burkle, managing partner of Yucaipa, who founded the Ralphs and Food4Less supermarket chains in the US, indicated that he planned to continue to run Fresh & Easy as a standalone chain.

He said: "Fresh & Easy is a tremendous foundation. Tesco should be applauded for giving their customers an affordable, healthy, convenient shopping experience. Its dedicated employees and great base of customers give us a solid starting point to complete Tesco's vision with some changes that we think will make it even more relevant to today's consumer."

He said Yucaipa planned to build the chain into a "next-generation convenience retail experience". However, there has been speculation that Burkle wants to use the Fresh & Easy stores to relaunch his Wild Oats brand, which he sold to rival Whole Foods Market in 2007.

The deal is good news for Tesco after weeks of speculation that it would be unable to find a buyer for its US business. The trip over the Atlantic, begun in 2007 with ambitious plans for thousands of stores, has proved very costly for Tesco with trading losses and investment reaching some £1.8bn.

The failure has not only meant problems for Tesco but tarnished the reputation of former chief executive Sir Terry Leahy, who was previously held up as a shining example of British retail success.

It also reflected badly on Tim Mason, the Tesco marketing supremo who was relocated to the US to run Fresh & Easy and build it into a chain the same size as Tesco UK. He was made redundant earlier this year with more than £2m.

It was not clear on Tuesday night if Tesco would have to make further write downs after completing the deal.

Selling off the US business is good news for Clarke, who has been attempting to get rid of poorly performing overseas assets in order to concentrate on Tesco's problems at home.

In April, the supermarket reported its first fall in annual profits for 20 years as its chains both abroad and at home suffered during a global downturn.

The ongoing losses in the US were blamed for a squeeze on expenditure in the UK which meant that stores began to look tired and customer service suffered. Tesco has also suffered from a series of PR disasters including revelations that some of its burgers contained horse meat.

Tesco recently revealed it was in negotiations to put its Chinese business into a new joint venture with the state-owned Chain Resources Enterprise. The deal, which would cost Tesco an estimated £1.5bn, would merge its 131 stores into CRE's Vanguard chain, which has nearly 3,000 outlets.

Article Source : http://www.guardian.co.uk

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