Sainsbury's price matching offer - how much further can price transparency go

Sainsbury's price matching offer – how much further can price transparency go?

With the recent news that Sainsbury’s is to install price matching technology at its checkouts – with customers being refunded the difference if products are cheaper at competitor’s stores – it perhaps comes as no surprise that experts are predicting another price war. However, the most notable element of this particular story is that Sainsbury’s is now competing with ‘budget’ supermarket chains, which it has generally avoided in the past. Whether it’s a long-term move or a quick fix remains to be seen, but its latest promotion has certainly raised some eyebrows and throws up all sorts of questions about it and other supermarkets’ promotions policies.

Many are sceptical of the move, citing that the minimum spend of £20 and the maximum payout of £20 is somewhat restrictive – not to mention the fact that the offer doesn’t apply to every single item. Granted, it does apply to 12,000, which must constitute a large majority of Sainsbury’s product range, but if it was truly confident, would it not apply its new price guarantee store-wide? One assumes there are shades here of the old high / low strategy that Safeway pursued until its acquisition by Morrisons.

Online commentators reacting to the news have been cynical likewise. One individual believes it to be nothing more than a scam that will result in prices at all supermarkets ending up the same, whilst another suggests that the move is only possible because Sainsbury’s is charging excessively inflated prices in the first place. Ouch!
Whether these claims are true or not, the question remains: will this promotion drive customers into its stores? Customers can be surprisingly loyal to the retailers they shop with (that, or stuck in their ways), whilst loyalty schemes provide an added incentive to encourage this. There’s also the logistical issue of location. There’s no point travelling further afield to a Sainsbury’s if it’s ultimately going to cost more in transportation fees than in potential savings – not to mention the inconvenience.
There’s also an underlying trust issue that Sainsbury’s assumes its customers will place in it. After all, it’s their own in-house technology that will be making the judgement calls on which prices match and which don’t – and with 12,000 items included in the offer, you’d be hard pressed to find someone who knows when they may or may not have been short-changed. Indeed, with the emergence of the smarter consumer in the digital era, it might be more likely that an independent website – such as MySupermarket.co.uk, which has compared prices between the brands for many months – would prove more trustworthy than the claims of a specific brand which would obviously have a self-promotional bias.

Competitors have already shot back, with an ASDA spokesperson sarcastically noting that its price guarantee is “not just a trial across a few stores”, but with Sainsbury’s effectively moving onto its territory, its feathers might be a tad ruffled. Indeed, just hours after the news broke, ASDA is reportedly set to install booths into its stores which allow customers to access the internet and check its online price guarantee (the same service that it offers on its website). With the weekly supermarket visit hardly an enjoyable process as it is, it’s hard to envision people willingly spending even more time than they have to quibbling with a screen in a booth as to whether they should pay 42p or 44p for a tin of beans. What your brand is and what is stands for, ultimately will count, and the general consensus is that an obsessive focus on low price can kill the brand long term may play out. Now, don’t go thinking Tesco is guilty here – don’t forget choice, multiple formats, loyalty cards, financial services, multi-channel offer and good service at the till at least; that all adds up to an identifiable brand that no one competitor can match.

By combining an already-saturated marketplace with an unstable financial climate, it comes as no surprise that retailers are throwing all kinds of promotions at the wall. It remains to be seen whether or not this scheme will stand the test of time.

Written by Simon Rowley