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Freshly clicked: is Tesco launching a ‘no win’ price war?

News that Tesco is offering same day Click & Collect comes as no surprise. What we once thought was amazing now barely gets a reaction. In fact, I for one thought that Tesco already offered this service.

More interesting is the motivation behind Tesco’s foray into an area where it is pretty tough to make profit. The company does not declare its income or profit from its individual channels, so we can assume that the truth is not going to be impressive. Click & Collect is already hard for most retailers because it interrupts normal store activities, so same day is only going to make things harder.

However, consider that profit is not Tesco’s primary motivation. It wants to win the propaganda war with Amazon and the other grocers on who can deliver fresh food quickest into the customer’s hands, either in-store or at home. It’s a bit like the old price wars – no one wins, but Tesco generally survives in better shape because it can afford to take the hits.

This time, the stakes are even higher, but there is potentially more for Tesco to win. Price wars, we generally accept, do no one but the customer any good. However, offering services that complement we way we live today can transform a retailer’s fortunes in a market where there is often little to distinguish between supermarkets except physical location. Tesco has the opportunity to reinvent itself with millions of customers who currently use it for certain types of shopping trips, while reserving its competitors for all the other types.

We are back to the old concept of share of wallet, so Tesco is to be applauded for squaring a big circle in retail. It will be interesting to see how other supermarkets respond. When The Entertainer launched 30-minute click-and-collect, Toys R Us undercut it with a 29 collect in-store service. How far are Sainsbury’s et al willing to raise the bar?


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