By Matteo Castia 
 

Tesco PLC said Thursday that it has committed to start offering its products at Aldi Germany prices, in a price matching campaign that involves "hundreds of Tesco and branded products."

The U.K. largest grocer by market share added that its Aldi Price Match initiative will be available both in its stores and online. The action will be valid for all those prices Tesco finds in five or more Aldi stores.

"An aggressive move that shows a confident approach," analysts at Jefferies define it, coming "at a time when Aldi sales momentum has come progressively under pressure."

The U.S. bank analysts also note that this step represents a rather permanent shift in Tesco's marketing message, taking its long-standing use of Aldi as a value benchmark to the next level.

Tesco's price crusade comes on top of several other programs such as the Weekly Little Helps and Fresh 5 promotions, or the Clubcard Plus loyalty scheme, in an effort to stop surrendering market share to its cheaper competitors.

Indeed, German discounters Aldi and Lidl Great Britain Ltd. have been subtracting an increasing share of the U.K. grocery market from the "big four" industry players Tesco, J Sainsbury PLC, Asda Group Ltd., and Wm. Morrison Supermarkets PLC in the last years, with significant stores network expansion and growth rate overhauling the larger traditional retailers' performance.

However, the Aldi Price Match campaign improves Tesco's position in the market, as "Aldi's ability to respond looks relatively limited," Jefferies concludes.

Tesco shares at 1000 GMT were down 2.5 pence, or 1%, at 238.3 pence.

 

Write to Matteo Castia at matteo.castia@dowjones.com

 

(END) Dow Jones Newswires

March 05, 2020 05:21 ET (10:21 GMT)

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