The news: Tesco is phasing out its Value private label line and replacing it with a new brand called Everyday Value.
The implication: This isn’t just a name change, but a move to make the packaging and quality of its bottom-tier range far more attractive to value-seeking shoppers. The products will contain no MSGs, GMOs, and many will be UK-sourced. This will help to improve both price and quality perception, but I imagine there will be an element of self-cannibalization as shoppers trade down from the standard Tesco range.
Better late than never, although Tesco is certainly behind both global and domestic peers in this regard. During the recession, Walmart revamped Great Value in a similar vein. Carrefour Essentials also replaced the hideous No. 1 range. What did Tesco do? They launched, errr, Discount Brands. Rather than playing to their strengths and improving Value, they complicated the offering by adding a whole new fourth tier.
Meanwhile, at home, we’ve seen some fantastic innovation in the bottom-tier category, particularly from Morrisons who has shown us that cheap can still be cheerful.
Now, after their first profit warning in 20 years, they are having to go back to basics. They are not alone here. Walmart, having slashed thousands of SKUs and moving away from EDLP, suffered from two years of declining comps. They’re now back on track because they have gone back to their core – offering low prices on a wide assortment of brands. Tesco has underinvested in its stores, they’ve become too discount focused (ironically without genuinely being the cheapest) and they’ve lacked innovation in the food category with the exception of a few premium pet brands and some posh ice cream. The launch of Everyday Value isn’t rocket science, but it’s certainly a step in the right direction.
For more on private label trends, clients can read our report here.