Tesco just launched a 'game-changer' in the supermarket price war

Tesco is going to automatically give shoppers money off at the tills if they could have bought branded items cheaper elsewhere - a move one leading industry analyst is calling a potential "game-changer".

Tesco's "Price Promise" scheme currently prints off a money-off voucher at the tills if customers could have bought products cheaper at rival supermarkets. But the new version of the scheme, announced on Monday, will automatically deduct the savings from the bill when the customer pays.

Nick Bubb, an independent retail analyst, says in an email on Monday:

There are a lot of "smoke and mirrors" about most supermarket price cutting campaigns, but the new Tesco "Brand Guarantee" scheme could be a game-changer for the industry, as it does away with money-off coupons in favour of an instant discount at the till. It will be interesting to see how Sainsbury etc. respond.

HSBC has also backed the new scheme, calling it "a step forward" in a note sent to clients on Monday.

Analyst David Mccarthy and his team write:

This is the first meaningful (in our view) innovation by Tesco in some time. We expect its popularity to grow and to put pressure on the competition. With the right promotional support we would expect this initiative to be a market share winner.

Supermarkets have been locked in a price war for the last 18 months due to the rise of German discounters Aldi and Lidl, who have stolen market share from the so-called "Big Four" - Tesco, Asda, Sainsbury's, and Morrisons.

The "Big Four" have been fighting back by lowering their prices but Tesco's half-year results last week showed a 1.1% fall in sales. The supermarket is also reeling from a huge accounting scandal last year.

Tesco's new Brand Guarantee will only cover prices from the "Big Four" and not Aldi and Lidl.