Magazine article Marketing

Tesco's Checkout Change

Magazine article Marketing

Tesco's Checkout Change

Article excerpt

Tesco is introducing electronic scanning of coupons at the checkout. Costs will be slashed, loyalty schemes will arrive sooner

Tesco is to introduce electronic coupon scanning at the checkout, claiming it is "one of the most significant initiatives in UK food retailing in recent times".

From March 1993, all firms undertaking Tesco specific coupons will have to carry barcodes. And in the long term, Tesco wants all coupons redeemed in its stores to be barcoded.

Tesco says the introduction of scanning will end the problem of misredemption, speed up customer transactions and cut administration costs -- handling sorting and counting of coupons is still mostly manual.

Dramatic cost reductions and the ability to gain access to detailed information on redemptions will give the number two grocer hopes to gain an edge on its rivals. And increased cost effectiveness is likely to add a further boost to an already burgeoning marketing technique.

"Tesco have identified the huge opportunity that coupons offer us, our suppliers and our consumers, and have developed a WIN-WIN-WIN solution to the problems", says a Tesco document currently being circulated to all suppliers.

Misredemptions are the coupon industry's main target. Barcodes have been appearing on coupons for the past few years, but so far no retailer has decided to scan them at point-of-sale. They have been used by handling houses, predominantly Nielsen, to speed up the processing further down the line.

Tesco's barcoding initiative (first reported in Marketing in its March 12 issue) follows directly on from its decision in 1988 to introduce the Tesco specific coupon, with its own "constant" design format. "This was the first stage of Tesco's attempt to reduce the misredemption of supplier funded coupons," says the document.

"The Tesco specific coupon has proved to be incredibly successful over the past four years," it adds, "and now accounts for over 50% of all the coupons we accept at the checkouts."

The number of coupons distributed in the UK has more than trebled in the past nine years--last year alone it rose a record 60% to 8.1 billion, and the number of coupons redeemed has also grown substantially in the same period (see box).

The rise of the coupon has not been without its problems, however. Retailers have increasingly baulked at cost of handling coupons, while manufacturers became incensed by retailer decisions to accept coupons designed for rival stores. …

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