Tesco posts best sales performance since March 2014

Tesco’s success comes amid a backdrop of slow sales growth and deflation in the supermarket industry.

Tesco recorded its best numbers in almost two-and-a-half years in the 12 weeks ending 11 September, according to Kantar Worldpanel. Although sales have not yet returned to growth, a year-on-year decline of 0.2% is its best since March 2014.

The supermarket giant, which has itself reported two straight quarters of like-for-like sales growth, now accounts for 28.1% of the UK grocery market, a fall of 0.1 percentage points.

Perhaps most encouraging is the role Tesco’s larger stores, which were once seen as a loss-driver due to the rise of convenience and online retailing, are now playing in its turnaround. Fraser McKevitt, head of retailer and consumer insight at Kantar Worldpanel, says its Extra and larger stores delivered a “positive contribution to performance”.

Elsewhere in the big four, Asda continues its rapid decline, with sales down 5.4% for the period and its market share falling 1 percentage point to 15.7%.

At Sainsbury’s sales fell by 1.4%. However, McKevitt highlights that this fall is largely due to the grocer cutting its overall prices as it phases out promotional activity, such as the buy-one-get-one-free deal, and moves to a simpler pricing strategy.

Despite posting like-for-like sales growth in its half-year results last week, Morrisons saw sales fall 2.3% as market share also dropped 0.3 percentage points to 10.4%.

However, Kantar Worldpanel attributed this to a reduced store portfolio. More encouraging for Morrisons is the rise of its Ocado-led online operation, with shopper numbers up 45% year-on-year.

Lidl reached a market share high of 4.6% for the period having grown sales by 9.5%, while Aldi increased sales by 11.6%, making it the fastest growing UK grocer.

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Earlier this month, Aldi’s marketing director Adam Zavalis told Marketing Week it wasn’t scared of losing customers to the big four and that the discounter was encouraging more customers to do their weekly shops than ever before.

And the Kantar Worldpanel numbers appear to back him up.

McKevitt adds: “Aldi and Lidl continue to grow – not only are both continuing to expand their store estates but existing customers are visiting more frequently and upping their basket size.

“The discounters are helping drive the industry-wide growth in premium own-label lines, with marketing campaigns moving away from showcasing only price to a focus on quality – collectively, premium own label grew by 29.5% in the discounters this period.

“Shoppers now spend an average of £19.24 when visiting the discount retailers and at a time of falling prices this increase of 4% is not to be sniffed at.”

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