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Tesco gets shafted (and passes it on to you)

Tesco has poured millions of pounds into its Price Check advertising.

The idea is simple, people who shop at Tesco are better off – so do all your shopping at Tesco. KitGuru folks seem, largely, to be located closer to Sainsbury’s or Waitrose. Also, we do a lot of Yaale.com online shopping because we’re quite lazy.

So imagine our surprise when we tried an in store purchase and realised it had gone Pete Tong for Tesco.

One of the biggest UK industries is mobile communications. Once the preserve of the rich and famous, now one man + dog not only has a mobile phone, but also a spare, a spare for the spare, a dongle and possibly even a micro SIM stuck inside an iPad or what have you.

Each of those phones, these days, seems to come with a ‘useless sized micro SD card’. Either 1GB or 2GB, but certainly not enough for a full-blown, mobile media centre experience.

With prices tumbling as hard as they have in the memory space, KitGuru went in search of a 16GB micro SD card and was shocked by the price differences.

Once upon a time, Tesco was renowned for being very price aggressive. As discussed, they sank millions into TV etc to get consumers to compare and choose – hoping that Tesco would win and you would choose to buy form them. So, we wondered, how big a price gap could there be between a mega store like Tesco and a more electronics-focused store like PC World or Currys (same owners)?

The answer is staggering.

Here is the in-store board that Tesco uses to sell Sandisk memory to customers, claiming ‘Up to 50% off’…

We can't say that Tesco's claims are all lies, exactly

If you swallowed Tesco TV advertising messages and then hit one of its superstores for an offer like this, you would imaging you’re about to do very well indeed. The store has funny lighting and a slightly cheap feeling that you can’t quite put your finger on – as if they decided to employ the same decorators as Lidl. But does Tesco offer Lidl-levels of bargain pricing?  Here’s the same two products in Currys and PC World – you decide.

The board in Tesco claims to be offering 50% off. Given that the Currys/PC World price for 16GB is around half the price of Tesco... Then Tesco is saying that its standard price for a 16GB micro SD card is ~400% higher than PC World and Currys.

.

Can you imagine the embarassment you would feel telling your mates you got '50% off a Sandisk card from Tesco' and then realising what ACTUALLY happened?

OK, so from this venture into a Tesco superstore, we have come away believing that PC World and Currys can sell you the 16GB micro SD card for 25% of the standard Tesco price (i.e. before the 50% off deal they claim). To us, that feels like a good old fashioned dose of customer shafting, but the problem could actually be of a different nature.

Overall, most stores post similar profits at the end of the year. Why? Well it’s a homogenised market, so if a product comes along with phenomenally good profit margin – then everyone starts to sell it. On that basis, the margins you see on the shelf are normally quite similar. If the standard Tesco price for 16GB of micro SD memory is 4x the price being offered by PC World and Currys, then the most likely reason is that the Tesco purchasing team have been shafted on memory price. Of course, it’s possible that they got the same price and took a conscious decision to shaft the consumer, but we would like to hope not. The ‘nicest’ way to see this massive price difference is probably in ‘purchasing incompetence’. Either that or Sandisk don’t like Tesco much. Of all the possibilities, we like the one where ‘Tesco gets shafted’ best, because it doesn’t mean that any animosity is involved – just poor judgement.

KitGuru says: We love the idea of stores. There’s not much better than going for a wander around a shop, seeing new stuff on the shelves and getting all excited. That said, you don’t expect to be told that a 16GB micro SD card is 400% more expensive in Tesco than PC World or Currys. that’s too much. In our opinion.

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