'Big Price Drop' looks like a flop as Tesco sales fall again

Tesco's "Big Price Drop", a strongly marketed campaign to lure shoppers into stores, was branded a flop today after the supermarket giant recorded another set of falling sales.

The £500 million scheme was designed to ensure Tesco regained the initiative in a tough market where Asda, Sainsbury's and Morrisons have all fought to eat into the biggest players' business.

Today Tesco revealed that sales in the third quarter - the 13 weeks to 26 November 26 - fell 0.9% in the UK. Although overall group sales rose 7.2%, Tesco relies on the UK for three quarters of its profits.

This is the fourth-consecutive quarter that sales in this country have fallen, putting pressure on new chief executive Philip Clarke.

He says that consumers are buffeted by high unemployment and rising living costs, adding: "We have made good progress in our third quarter against ... challenging conditions for consumers in many of our markets.

Group sales excluding fuel rose 5.4%.

Rahul Sharma of Neev Capital said: "Despite the massive PR exercise and media coverage of Price Drop, the failure to generate a bigger price response is disappointing and it is tempting to call it a big flop."

Philip Dorgan at Panmure Gordon said: "The UK numbers are not yet good enough. Sales cannot even be said to be moving in the right direction yet."

Phil Dorrell of consultancy Retail Remedy said: "Such lukewarm performance... is further evidence that Tesco's much-publicised "Big Price Drop" campaign has failed to deliver increased sales. Despite an eye-watering £500 million in discounts, the gamble appears not to have paid off."

Tesco's shares fell 4.8p to 392.1p.