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Recovery signs at Tesco as falling sales improve

Published 05/04/2016

The study predicts Tesco to return to growth within the next few months
The study predicts Tesco to return to growth within the next few months

Supermarket giant Tesco is showing signs of recovery after improving its falling sales for the fourth month in a row, a report said.

Britain's biggest supermarket saw sales slide by just 0.2% in the 12 weeks to March 27, according to the study, which predicts the grocer to return to growth within the next few months.

But the Kantar Worldpanel report said Tesco's decision to close stores had put its market share under pressure, falling 0.3% to 28.1%.

The brightening picture for the retail giant came as an early Easter bolstered supermarket sales across the whole industry to their strongest levels for a year, climbing 1.1% compared with the same period in 2015.

It said the rise in demand was driven by a sales boost of £152 million over the Easter period, with 63% of households buying chocolate eggs in March.

Shoppers were also handed a lift from the falling cost of groceries, with like-for-like prices dropping 1.5% in comparison with the same 12 weeks in 2015.

German discounters Aldi and Lidl led the pack with double-digit sales growth over the period, rising 14.4% and 17.7% respectively, the report said.

It also showed that they continued their trend of snatching market share away from the Big Four, with Aldi capturing a record 6% of the market, while Lidl hit 4.4%.

It said the Co-op saw sales rise at their fastest rate since it snapped up Somerfields in 2011, climbing 3.9%, as it was boosted by a growing demand for fresh food and its decision to remain open on Easter Sunday while other supermarkets closed.

Sainsbury's was the best performer out of the Big Four grocers, recording 1.2% sales growth despite its decision in February to end multi-buy and buy-one-get-one-free promotions.

Waitrose also saw sales pick up, rising 1.7% over the period, but Asda recorded a drop of 3.9% and Morrisons saw sales fall 2.4%, according to the report.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said consumers were happy to treat themselves after saving money on basic products.

He added: "Premium own-label sales grew by 6.6% in the past 12 weeks, well ahead of the overall grocery market.

"Aldi and Lidl are leading the way, growing their premium lines more than twice as quickly as the rest of their ranges, but we've seen this across the retail spectrum - from Morrisons and the Co-operative to the likes of Waitrose, whose forthcoming launch of Waitrose 1 is the latest attempt by a traditional grocer to reclaim sales from the discounters."

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