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Tesco's "Big Price Drop", a strongly marketed campaign to lure shoppers into stores, was branded a flop today after the supermarket giant recorded another set of falling sales.
The £500 million scheme was designed to ensure Tesco regained the initiative in a tough market where Asda, Sainsbury's and Morrisons have all fought to eat into the biggest players' business.
Today Tesco revealed that sales in the third quarter - the 13 weeks to 26 November 26 - fell 0.9% in the UK. Although overall group sales rose 7.2%, Tesco relies on the UK for three quarters of its profits.
This is the fourth-consecutive quarter that sales in this country have fallen, putting pressure on new chief executive Philip Clarke.
He says that consumers are buffeted by high unemployment and rising living costs, adding: "We have made good progress in our third quarter against ... challenging conditions for consumers in many of our markets.
Group sales excluding fuel rose 5.4%.
Rahul Sharma of Neev Capital said: "Despite the massive PR exercise and media coverage of Price Drop, the failure to generate a bigger price response is disappointing and it is tempting to call it a big flop."
Philip Dorgan at Panmure Gordon said: "The UK numbers are not yet good enough. Sales cannot even be said to be moving in the right direction yet."
Phil Dorrell of consultancy Retail Remedy said: "Such lukewarm performance... is further evidence that Tesco's much-publicised "Big Price Drop" campaign has failed to deliver increased sales. Despite an eye-watering £500 million in discounts, the gamble appears not to have paid off."
Tesco's shares fell 4.8p to 392.1p.
Reader views (16)
There are too many stores in the London Borough of Newham. Tesco wantto move into the site of the West Ham football stadium, which frankly is a disgrace. I rather the site be used for something interesting rather then a boring supermarket, and we seem to have one in every street corner....
I rather shop at Queens Market, but the Olympic Mayor of Newham, can't see the potential that this could be turned into the best market in London!!
- P.L, Newham (London), 08/12/2011 21:16
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Couldn't be anything remotely to do with the abysmal level of help, courtesy and service amongst many (though not all) Tesco staff on the shop fllor, including managers could it perchance? That's if you can find anyone...
- David H (tgw123 on Twitter), London, 08/12/2011 18:58
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Tesco's can 'Fool some consumers, all of the time, or all consumers some of the time, but never all of the consumers, all of the time.'
Recent BBC TV consumer programmes are clearly being listened to in these tighter times. Thank goodness!
- Concerned Observer, Harrow, 08/12/2011 18:22
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Tesco in the UK needs to gets its act together. I have shopped in ASDA and find the products cheaper. I should mention Tesco city centre stores charge much more than out of centre, on key items.
With technology we know and can see, Tesco Directors need to take note. I am a shareholder and still believe in them. But smell the coffee and respond, please.
- Andrew, London, 08/12/2011 16:43
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Tesco operate a slight of hand, card sharp type of pricing, as good as any local spiv.
They drop the price on a few items but raise the price on others...They must think we sailed up the Thames in a banana boat these stores.
- joe jones, Leicester UK, 08/12/2011 14:51
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Michael
You have a long trip for your weekly shop !!
That said real problem for Tesco is non food sales .
Expect will be a rush at last minute when you can only get digital TV in 2012 .
- remus, london, 08/12/2011 14:33
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In the Tesco I visited (at Watford) this week during a visit to family, I gave up waiting, and abandoned my selections after wait. On my way back, i discovered Morrisons. WOW! What an enlightenment. Firstly, their prices of fresh fruit and veg were about 30% cheaper (what's all this 5% margin rubbish!)than Tesco's and the staff seemed much happier too! I was through the checkout in less than 5 minutes with virtually all tills manned. I watched a programme with BBC's Sophie Raworth on TV this week, and, notwithstanding Tesco's spin, I think that they (Tesco) had jacked up their prices in the autumn ahead of thsi campaign. Shoppers are no longer foled by this tirted nonsense. "Other supermarkets are available"!
- Michael Spencer, Rome, Italy, 08/12/2011 13:49
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In the Tesco I visited (at Watford) this week during a visit to family, I gave up waiting, and abandoned my selections after wait. On my way back, i discovered Morrisons. WOW! What an enlightenment. Firstly, their prices of fresh fruit and veg were about 30% cheaper (what's all this 5% margin rubbish!)than Tesco's and the staff seemed much hapier too! I was through the checkout in less than 5 minutes with virtually all tills manned. I watched a programme with BBC's Sophie Raworth on TV this week, and, notwithstanding Tesco's spin, I think that they (Tesco) had jacked up their prices in the autumn ahead of thsi campaign. Shoppers are no longer foled by this tirted nonsense. "Other supermarkets are available"!
- Michael Spencer, Rome, Italy, 08/12/2011 13:49
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After 8 years as a loyal and mostly admiring Tesco customer I left Tesco's permanently after two recent experiences. Two weekly shops, late on Monday evenings's at Tesco Surrey Quays. 25 mins to checkout on first ocasion. Told customer services if it happens again, I won't be back. 3 weeks later. 35mins to checkout at same store. 3 tills open, shoppers queuing the entire length of the store. Tesco's have completely lost their way in my opinion......I got the impression from mgt I spoke to that a cost focus was behind the decision not to hire more staff. Well they can save on costs but they will loose their customers with the ability to spend. For me it is goodbye Tesco....Hallo Sanisburys???
- Eoin, Surrey Quays, 08/12/2011 13:14
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After 8 years as a loyal and mostly admiring Tesco customer I left Tesco's permanently after two recent experiences. Two weekly shops, late on Monday evenings's at Tesco Surrey Quays. 25 mins to checkout on first ocasion. Told customer services if it happens again, I won't be back. 3 weeks later. 35mins to checkout at same store. 3 tills open, shoppers queuing the entire length of the store. Tesco's have completely lost their way in my opinion......I got the impression from mgt I spoke to that a cost focus was behind the decision not to hire more staff. Well they can save on costs but they will loose their customers with the ability to spend. For me it is goodbye Tesco....Hallo Sanisburys???
- Eoin, Surrey Quays, 08/12/2011 13:07
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They have'nt slashed many prices if the Billions profit they make during a recessions anything to go by.
- stuart, chesterfield,derbyshire, 08/12/2011 10:48
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Supermarkets work on thin margins of around 5% (meaning if they cut all prices by 5% they'd make no profit at all). The competition is fierce. So there really isn't any scope for price slashing beyond the promotional offers.
"Slick PR"? Not PR, marketing. You can do quite well out of the offers if you shop with no fixed idea about what you want to buy for next week. Just don't over-buy perishables! You're free to shop at Lidl if you prefer. Or like me, mostly at Sainsbury's, which costs a little more but is nicer and I can afford it.
If most shoppers are feeling the pinch they'll seek out cheaper goods and like-for-like sales will fall. Hardly surprising, is it?
- Nigel, London, 08/12/2011 10:38
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i have a tescos just up the road from where i live but have stopped shopping there poor quality and bland tasting food is why.
- paul., busted, britain lie bour did it!, 08/12/2011 10:31
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Very little evidence of any price 'slashing' at my local Tesco. It is all just slick PR and we no longer believe the false advertising claims. The best way to save money is to buy fruit and vegetable at local street markets.
- Neil Simmonds, London, 08/12/2011 10:10
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As far as Tesco is concerned - 'every Lidl hurts'
- Collyp, London, 08/12/2011 09:37
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If it is just sale volume that Tesco is after, then the SIMPLE answer is just KEEP slashing the prices - it will reach a point that buyers can not even find parking spaces in their superstores!
However,if it is increase in profits then - I would also like to know HOW!
- Hello Kitty, NW London, 08/12/2011 08:33
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