Tesco's bargain myth has been burst by its own shoppers - The Guardian

Tesco has had its bluff called by that very special breed, the savvy shopper. The chain has cut back on its price check offer complaining that a "cottage industry of savvy and determined people" had been making too much money from it. A bit rich, surely, when Tesco, like all the big supermarket chains, is forever claiming that it's in the business of putting cash into our pockets, not taking it out?

Under the scheme, which was part of Tesco's permanent mission to convince us that it is a cheaper place to shop than Asda, Tesco had offered to refund double the difference on products bought from its rival. But some customers were identifying products on promotion at Asda, buying them for more at Tesco, and using the double-the-difference coupons they collected to purchase more of the same. If your head is spinning with the personal finance wizardry of it all, the key thing to understand is that here, for once, was a supermarket price promotion that actually worked out to be a great deal for consumers. When Tesco realised that, it promptly changed it.

This episode underlines how supermarket price offers are rarely the bargains they're cracked up to be. The catch with deals such as buy one, get one free, three-for-two, two-for-one and other "multibuys", is that they coax you into buying more than ever intended or need. Apart from wreaking havoc with your budget, much of the food on promotion ends up in the bin. Earlier this month, the Local Government Association urged the big chains to ditch such deals on perishable lines because they are causing sky-high levels of food waste – a cool £13.7bn last year alone.

Leaving aside the landfill mountain supermarket "bargains" create, as diligent shoppers who keep their pocket calculator in hand when supermarket shopping will tell you, such offers are all smoke and mirrors. Quite commonly, supermarkets set prices absurdly high at the start of the season – summer berries, for instance, are ripe for this treatment – so that they can then "reduce" them later and present that as a discount. Hence those "50% more than last week" and similar claims that bombard us.

The industry term for this first-jack-it-up-then-bring-it-down technique is price establishment. If you were wondering how 125g of blueberries for £2.99 can ever be presented as "great value", look to the price establishment principle for justification.

Such supposed bargains help maintain the fiction that UK supermarkets are cheap places in which to shop, when in fact Britain's rate of food inflation is three times greater than the average 2.1% for the G7 group of nations. A report this spring from investment bank UBS concluded that food prices in the UK were "rising in excess of justifiable cost increases" significantly outstripping food retailers' cost inflation. UBS calculations suggest that the higher cost of ingredients would only justify a 3 to 3.5% rise in prices, but UK supermarkets have upped food prices by on average twice that.

British supermarket chains have worked hard to convince us that their food is cheap, using in-your-face promotions on seemingly unbeatably low-priced items to place an aura of good value around all that they sell. But buyer beware: if you're shopping for fresh food – fruit, vegetables, meat, fish – rather than bumper packs of crisps, then the local greengrocer, butcher, fishmonger and market stall will very likely be significantly cheaper.