Tesco has taken arguably its most radical step yet to turnaround the fortunes of its UK business by ditching its Tesco Value brand.

Tesco has taken arguably its most radical step yet to turnaround the fortunes of its UK business by ditching its Tesco Value brand

The grocer has rebranded its own label range which is one of just four private labels worth more than £1bn alongside its Finest line, Waitrose Essentials and Asda’s Chosen By You. It will now be called Everyday Value.

Tesco Value launched in 1993 and was key in Tesco’s rapid growth under former boss Sir Terry Leahy.

The unmistakeable blue and white striped brand clearly set out Tesco’s proposition to offer grocery and non-food products at low prices.

Evolution Securities analyst Dave McCarthy says: “Tesco Value offered a co-ordinated opening price point across a range of products which meant it could fight the discounters and Kwik Save.”

Tesco Value range has become a hugely popular cut-price option. However, a YouGov Brand Index poll in December revealed that the perception of the value in terms of quality, reputation, satisfaction and, crucially, value had all slipped in the last year.

Conlumino analyst Neil Saunders said the decision to ditch the “one-dimensional” brand was “long overdue”. He said: “At its creation it was an innovative and bold merchandising move that allowed Tesco to promote its value credentials and grow share at the price sensitive end of the market without sacrificing the middle ground. However, the market has since evolved and Value was looking increasingly tired and was becoming outmoded, especially when compared to competitor offers.”

Coupled with chief executive Philip Clarke’s admission in January that store standards have slipped and staffing levels need to be improved, it was clear something needed to be changed.

Tesco marketing director David Wood said “an affordable quality range is more relevant than ever, but customer needs have changed” in launching the new Everyday Value selection.

The grocer reviewed more than 550 lines to create the range. The lines are intended to represent improved quality compared to Tesco Value, including more fruit in its squash drink and apple sauce and reduced artificial flavours. The range also has a strong emphasis on healthy eating and British sourcing as well as more user friendly packaging.

The packaging itself has a kitsch design, modernising the brand from Tesco Value’s stripes.

Tesco has been accused of attempting to be all things to all men on a number of occasions and it must ensure the range is not too expansive. The core of Tesco’s customers are still likely to put good value at the top of its criteria.  

But Saunders thinks the proposition may hit the spot. “There is a large segment of the shopper population who want keenly priced everyday products without having to sacrifice too much on quality; in other words they want great value for money, which is much more than about just price,” he says.

With the Big Price Drop imitative widely criticised the move signals an attempt to get the UK back on track. Own-brand is a key battle ground.

Tesco Value and Finest helped the grocer stretch its proposition to fight Sainsbury’s in the 1990s, but according to Kantar Worldpanel, own-label budget ranges have grown 9.3% over the last year, and Tesco is understood to have lagged behind this as rival own brands including Asda’s Chosen By You gain traction. 

The grocer will be keen to address this using Everyday Value and by increasing the number of venture brands.

But McCarthy warns the new brand is just one of a number of initiatives Tesco needs to enact to get its UK like-for-likes back on track. “Its discount Market Value range has failed terribly. Tesco has an awful lot of problems it has created in the last few years, it’s not a short term fix,” he says. “Even if they take all the right decisions right now there’s a way to go.”