Is Tesco’s BOGOF Later scheme a scam?
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Buy-one-get-one-free deals appear to be in a Catch 22 situation, and the issue is back on the agenda this week, thanks to Tesco’s latest announcement.
Sir Terry Leahy, Tesco chief executive, revealed plans to allow customers to take advantage of BOGOF deals by picking up the second product at a later date, if they don’t need it right away.
The initiative comes as another layer in Leahy’s sustainability plans to help Tesco and its customers reduce waste and carbon emissions.
Tesco plans to issue customers a coupon at the till if they have not redeemed both items, and the opportunity to claim it at another time.
It addresses much-voiced concerns that these kinds of promotions encourage customers to buy too much and lead to wastage, and for many is the common sense solution to the problems surrounding BOGOF deals.
While it’s true everyone likes getting something for nothing and few are likely to leave behind the second product if it’s free, buy-one-get-one-free deals are problematic for a number of reasons.
One or two person households may not be able to consume the products before they perish, which can lead to waste, and while deals on non-perishables such as laundry detergent are all well and good to help you stock up, it can be logistically difficult to carry it home from the shop and store it at home.
It’s easy to lay the blame for food wastage at the feet of the large multiples and their tempting offers, but at some point, consumers must take responsibility for their own purchases and food wastage.
On the surface Leahy’s delayed approach to BOGOF deals is a beneficial idea that will be welcomed by customers, but in reality, I wonder how many people will simply never get round to claiming their second item.
Vouchers get lost, people forget, in which case, these consumers will actually lose out on price promotions, while Tesco gets the kudos of offering lots of great deals many customers don’t benefit from.
It must also pose a potential problem for Tesco in terms of stock. When a product is on promotion, stores are able to quantify how much of that product will need to be in store throughout the promotional period.
With delayed redemption, Tesco could run into all sorts of trouble keeping enough of the promotional products in stock at the right time, and warehousing high stock levels if the majority of consumers only claim one item at a time.
So, while Tesco appears to be offering a solution to contentious buy-one-get-one-free deals, by offering to delay the multi-buy, is it scamming customers out of promotional deals many will never redeem?
A better deal for consumers would see Tesco halving the price, instead of offering something additional for free, but then that would eat into Tesco’s profits.
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Readers' comments (8)
Anonymous | Wed, 21 Oct 2009 10:45 am
It's brands trade marketing budgets that suffer not Tesco profits. Simple answer is to restrict BOGOF deals to products with long shelf life.
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Chris Macpherson | Wed, 21 Oct 2009 12:34 pm
You say that 'consumers must take responsibility for their own purchases and food wastage'. Shouldn't they therefore also take responsibility for ensuring that vouchers DON'T get lost and that they take advantage of the offer at a later date? As a 2-person household we welcome the scheme. (Though I have to admit, half price in the first place is even better!)
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Anonymous | Wed, 21 Oct 2009 1:21 pm
Tesco is clearly the beneficiary here. Consumers rarely redeem coupons even for free products, so they will lose out. Meanwhile Tesco will buy the 'free' product at promotional prices from its suppliers when it issues the coupon. At the same time, it enhances its corporate image in terms of environmental issues. It's a win, win . . . and win again for Tesco!
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Anonymous | Thu, 22 Oct 2009 2:55 am
Having worked for Tesco, this is not the case. Free product coupons get on average around 40-50% redemption - so they work for over 2 out of 5 people. Go into store after the Statement lands and you'll see how many people are taking advantage of their discounts...
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Pete Harris | Fri, 23 Oct 2009 3:35 pm
I thinkl this is agreat idea from Tesco. I have been in store and the BOGOF has been offered to elderley customers that call in for a couple of items and because these customers can not carry these extra items (one was Orange Juice), it will give them the oppurtunity to use the coupon at a later date..
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Anonymous | Wed, 28 Oct 2009 10:46 am
BOGOFs are killing small/medium FMCG business'. The retailer makes the supplier fund these promos - fine if you are a big multinational with deep pockets; not if you are a small/medium business with a fine profit margin. Who will be forced to end up funding the extra extended promotions - need you ask?! More FMCG business will go to the wall if this is implemented
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Anonymous | Wed, 28 Oct 2009 10:48 am
I think it is a very good marketing tactic! yes a high % of tesco shoppers do actually redeem - however when you consider this 40 - 50% v the usual take up on a BOGOF promotion is approx 85 - 90%, Tesco will benefit somewhere along the way. However, I would assume that most manufacturers would ask for retro payments on such deals and not off invoice! Consumers need to take responsibility for food wastage as well as supermarkets and manufacturers it needs to become everyones responsibility - and purchasing habits do need to change even more than they have due to recession. the issue here lies with the logistical nightmare of ensuring that the stores have sufficient stock on the promo line - but I would assume that this has been researched with Dunnhumby and shopper profiling looked at to guage when coupons will be redeemed - All in all, from a brand perspective, then the longer the promotion in front of mind of the consumer the better ... but lets just watch, wait and see how successful it is.
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Anonymous | Thu, 29 Oct 2009 1:37 am
One thing I've never been clear on--if I want my free item that same day, can I have it. Or must I use the voucher on a return trip.
One factor I haven't seen mentioned is that it'll give consumers incentvie to return to a Tesco. That must make the retailer smile.
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