Tesco recorded the fastest growing sales of the country’s four biggest supermarkets for the second consecutive month, according to Nielsen retail data released today.
During the 12 weeks ending 20 May 2017, Tesco increased sales by 2.2%, noticeably ahead of the 1.4% for Morrisons, 1.2% for Sainsbury’s and a -0.1% decline for Asda.
“Tesco’s re-focus on the customer and their changing needs, such as simplifying ranges and promotions, has meant they’ve not only attracted new shoppers but encouraged them to visit more often,” says Mike Watkins, Nielsen’s UK head of retailer and business insight. “These incremental improvements are helping reverse the declining spend per visit which was an ongoing challenge for Tesco last year. The growth is also now being supported by initiatives which revisit some wider consumer trends such as tackling food waste and supporting healthier eating and living.”
Tesco’s strong performance is further highlighted by the most recent four-week period; its sales grew at four times the +0.2% rate of that across all the supermarkets. This rather flat overall market growth was driven by underlying food price inflation, as the volume of goods sold fell-2.3%.“The return of inflation has helped supermarket grow sales but the challenge for the summer is to sustain this by encouraging shoppers to put more items into the weekly basket,” says Watkins. “Two tailwinds that should help are the six weeks up to the school holidays always being a good trade-up opportunity for retailers, with seasonal, fresh and ‘al fresco’ dining top of mind for shoppers. Alongside this, rising inflation means people will be more aware of balancing household budgets, which may encourage spending more on eating at home, rather than at restaurants.”
Watkins also notes an inherent advantage the supermarkets have over the discounters, with 26% of all grocery sales now happening in Convenience stores, “Although discounter growth continues through new store openings, the supermarkets still have a wider variety of formats, including online and local convenience stores, giving them a lot of scope to grow basket spend around different shopper missions.”
He adds: “Location still matters but lifestyle needs are becoming more important for consumers.”