Tesco faces scrutiny over pricing transparency on clubcard offers

Tesco, the UK’s largest retailer, has found itself in hot water as consumer group Which? has reported the company to the competition regulator. The reason? Tesco’s failure to provide detailed pricing information on its loyalty card offers. In a time when UK food inflation is soaring to record highs, Britons are becoming more vigilant, shopping around and comparing prices at different supermarket chains.

Which? argues that Tesco’s policy of not including unit pricing, which denotes the price per 100 grams or 100 millilitres, for instance, on its Clubcard loyalty scheme offers could be misleading for consumers and potentially violate consumer protection regulations. Unit pricing plays a vital role in helping shoppers compare prices between different products and make informed decisions about their purchases, especially during the current cost of living crisis, as grocery inflation reaches unprecedented levels.

Tesco, holding more than a quarter of the UK’s grocery market share, defends its position, stating that it complies with all the rules and even highlights that Trading Standards, a government service responsible for safeguarding consumers from unfair trading practices, recently endorsed their approach. A Tesco spokesperson expressed disappointment with the claims against the Clubcard Prices scheme, deeming them “ill-founded.”

“We always take care to ensure we are compliant, which is why we asked Trading Standards to review our approach on Clubcard Prices. They formally endorsed our labelling, confirming it meets the current legal requirements and guidelines,” the spokesperson remarked.

Nonetheless, the company is open to improving the way it displays prices to customers and is actively exploring options to make it even clearer.

The Competition and Markets Authority (CMA) in Britain initiated a review of supermarkets’ unit pricing earlier this year, with a focus on ensuring fair practices. Last month, the CMA announced plans to intensify its examination of grocery prices. However, as of now, the authority has not found evidence pointing to specific concerns. An update on its progress is expected in late July.

Recent official data reveals that food and drink inflation stood at 19.1% in April, narrowly missing a 46-year high. The good news is that grocery inflation showed a slight easing to 17.2% in May, according to industry data.

Tesco’s shares took a slight hit, down 0.4% in morning trading. Nonetheless, the company has enjoyed overall gains of 16.4% so far in 2023. Investors will be eagerly awaiting Tesco’s update on first-quarter trading, scheduled for June 16, to gain a clearer understanding of the company’s performance in the current challenging market landscape.