Tesco has warned the market not to judge its Big Price Drop too early as it is a “medium term strategy”.
Finance director Laurie McIlwee said: “The Big Price Drop is not a promotion or a quick fix, it’s a medium term strategy and its performance should be judged after months, not weeks.”
Tesco revealed its like-for-like sales in the UK, excluding petrol and VAT, fell 0.9% in the third quarter today.
McIlwee said: “There will not be an instant reaction to Big Price Drop. We are one of a very short list of retailers who are growing in volume.”
The UK’s largest grocer’s policy is to be equal to the cheapest in the market on 3,000 core lines and 10% cheaper on 600-700 further products.
Tesco has targeted staple items with the initiative to prevent shopper promiscuity.
McIlwee said: “All retailers have customers who shop in another store because they are cherry picking promotions.
“We need to make sure our essentials are going to be cheaper at Tesco and that’s a behavioural change. It’s a medium term strategy we have done successfully in many other markets around the world.”
Tesco claimed it is driving deflation in the market and The Office for National Statistics has said the recent strong competition on price at all of the major grocers has driven the food Consumer Prices Index inflation measure down by 1%.
Tesco’s performance on non-food was better in the third quarter than the second and it is performing well on electricals although no figures were given by McIlwee.
He said: “Surprisingly given the market, we have seen a strong performance in electricals as one of the major retailers of the iPad and Kindle.”
Around 80% of Tesco’s online customers are now using its click and collect service.