Tesco steps up low-price promotions

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Tesco Lotus will spend heavily on a low-price campaign in the second half of this year to stimulate consumer demand.

Gwyn Sundhagul, chief marketing officer of Ex-Chai Distribution Systems, the operator of Tesco Lotus discount stores, said the budget would be used on its two campaigns - Roll Back, a low-price campaign, and Super Save, a deeper price-cutting promotion.

In the first half, the company devoted a big budget to the Roll Back campaign and received a better response than it had expected during the downturn.

Under the new Roll Back campaign, Tesco Lotus will provide discounts averaging 7.6% on more than 800 essential products. At the same time, it will offer Super Save promotions on more than 1,000 product items with price discounts above those in the Roll Back campaign.

Mr Gwyn said some of the funds invested in the price strategy campaign came from the company's programme to reduce waste and increase management efficiency to reduce operational costs and expenditures.

"All the money gained from the cost-saving schemes has been reinvested in the low-price and discount promotions. Some costs will be absorbed by our product vendors who participate in the campaigns," he said.

The best way for Tesco Lotus to help stimulate the country's economy during tough times is to reduce prices for the one million customers who shop at its stores every day, he said.

The retailer has made the "Tesco Lotus Raises the Flag: Fighting the Economy for Customer Savings" TV commercial, in an attempt to show how the company's executives and employees are fighting the price battle for consumers.

In the commercial, Mr Gwyn leads a group of Tesco Lotus employees who say the company's prices and promotions will help customers during tough economic times.

Mr Gwyn said that customers were spending less time shopping as a result of the H1N1 outbreak.