The recent row between Tesco and Sainsbury has been characterised
by many as just another skirmish in an ongoing war between the two companies.
It may turn out to be rather more fundamental than that.
The background is this. Tesco are guaranteeing that their own
label prices will never be more expensive than their competitors, but Sainsbury
protested to the Advertising Standards Authority saying that price is not
everything and in doing comparisons Tesco needs to take into account other
issues like animal welfare and responsible sourcing. Tesco responded that the way food is produced
is not a primary reason for purchase, and what matters to their customers is
that they are getting the best deal possible.
The Authority found in favour of Tesco, ruling that Tesco
had compared prices on the basis of products meeting the same need, and that
food such as meat eggs or fish are interchangeable.
Sainsbury are incensed by the ruling, and by Tesco’s attitude. They are convinced that consumers care about where their food comes
from, and that being on a budget should not mean sacrificing ethical
considerations.
They have retaliated with an advertising campaign pointing out
the ethical standards it applies to food sourcing, but which Tesco do not. An
advert for bananas has the headline “Same price, different values” and points
out that all Sainsbury’s bananas are Fairtrade but Tesco’s are not. A second
advert with the same headline pictures two rolls both containing ham from each
supermarket’s lowest price range, but pointing out that Sainsbury’s ham comes
from British pork, whilst Tesco’s does not. Other advertisements show that the low price “Basics” tea
from Sainsbury is Fairtrade, Basic eggs are from cage free hens, and Basics fish
fingers come from Pollack a fish which is in plentiful supply.
What lies behind Sainsbury’s strong reaction is a
realisation that building a distinctive brand which persuades shoppers to opt
for a particular supermarket is more vital than ever in today’s low growth,
budget conscious retailing climate.
Price as a differentiator is not the weapon it was, now that all the
major supermarkets are committed to selling branded goods at the same price as
competitors. And own label goods are increasingly price matched too. So the
persuasive brand has to offer “price plus”. Sainsbury have chosen ethical
sourcing as their point of difference. Other options could be superior quality
or exemplary service.
Tesco by contrast seem not to have identified their point of
difference. Worse, they continue to come across as arrogant. Their reaction to
the ASA issue is dismissive of what consumers value, seeming to say that when
on a budget nothing else matters apart from price. Which is not the case as the
horsemeat scandal, in which Tesco was embroiled, amply demonstrates. Tesco have
upset farmers too. As the NFU pointed out on behalf of British pig farmers,
“comparing EU ham with ham produced in Britain is wrong, and misleading to
consumers”.
In this altercation between the two companies, Sainsbury is
the one projecting a strong brand image, which will stand them in good stead in
the long run.
