The UK’s largest supermarket by sales and share says sales from UK stores open for a year or more were flat in the 13 weeks to 24 August. Like for sales in its first quarter had declined 1per cent.
A 1 per cent increase in UK food sales for the latest quarter, driven by the warm weather Britons enjoyed over the summer, helped offset poorer sales from general merchandise goods such as consumer electronics, however.
In a statement, Tesco claims customers have “responding positively” to its marketing campaigns, in particular the Wieden+Kennedy created “love every mouthful” activity launched in July that encouraged customers to trial and “celebrate” everyday food.
[“Love Every Mouthful] Will be an enduring marketing campaign highlighting the quality and provenance of our fresh food offer, encouraging our customers to try new and seasonal products.
“The campaign has been particularly well-received and has generated significant social media interest, helping us to have a new and engaging conversation with our customers. Initial customer research is very promising with customers recognising the emphasis we are placing on range, quality and freshness.”
The supermarket also claimed customers’ perception of the value it offers has improved since the launch of price matching scheme Price Promise in March. Quoting internal “customer viewpoint scores”, Tesco says since launch the number of customers rating its price matching as excellent or good has increased by 34 per cent. The same internal tracking found a 5 per cent increase in customer service and staff helpfulness scores.
Clothing sales increased 8.6 per cent in the period, lifted by the recently launched campaign for its F&F range. Online grocery sales were up 13 per cent.
Pre-tax profit for the group dipped 7.4 per cent to £1.5bn, dragged down by a 67 per cent drop in income from its European divisions.
In a conference call this morning (2 October) CEO Philip Clarke revealed it sold 35,000 Hudl tablets in its first two days on sale, “more than we thought”, Clarke added.
Neil Saunders, managing director of retail analyst Conlumino, says the UK results show Tesco is moving in the right direction.
”This [Tesco’s UK performance] represents a stabilisation rather than a turnaround, but it is progress of a sort and does reflect the various initiatives that have gone into redeveloping the customer proposition.”
The food campaign proved controversial after rival Sainsbury’s slammed it as an attempt to “recast [Tesco’s] ethical image”.
Separately, Sainsbury’s has today (2 October) posted a 2 per cent increase in like for like sales.
Read recent research on how customers rank the “effort” needed to shop at supermarkets here.