Cheapening the competition: Tesco introduces super-discount brands

New discounted brands are appearing in the aisles of major supermarkets as the consumer appetite for cheap goods continues amid recessive economic conditions. In a bid to fight back against the ever-increasing market share of value supermarkets such as Aldi and Lidl, British supermarket chain Tesco has introduced a 350 product-wide range of cheap branded items marked ‘Discount brands at Tesco’.

Although long-term benefits of discounting are in contention – with evidence that brand equity is lost with the lowering of product prices – cheap ranges are currently a crucial section of FMCG as customers cut back on their weekly spend.

This new range is a temporary solution to gain ground against discount retailers, but may have an adverse effect on branding in the long term – giving consumers the idea that Tesco, too, is a discounter. Introducing lower-priced goods may be a savvy move in the short term, but Tesco may well face new challenges in promoting its premium ranges once the economy returns to normal, if the brand is firmly cast in consumers’ minds as a discounter.