Tesco outperforms rivals and grows share over the festive period, says GlobalData

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Following today’s release of Tesco’s figures for Q3 and Christmas, FY2021/22; Kunaal Shah, retail analyst at GlobalData, a leading data and analytics company, offers his view: “Up against tough comparatives in Q3 and Christmas FY2020/21, Tesco has delivered an impressive set of trading results, outperforming competitors Sainsbury’s and Aldi and once again raising its profit guidance. Its two-year performance saw total UK like-for-like sales rise 7.5% for the 19-week period, driven by an 8.8% rise over Christmas, outperforming the market (grocery expenditure in the UK fell 0.6% in Q4 2021) which has led to share gains.

“While sales in stores were positive, Tesco’s online sales dropped 12.2% against Q3 and Christmas FY2020/21. However, with the circumstances in 2020 having been unique, a decline was expected, and its two-year growth of 58.7% online indicates the retailer’s channel is still performing strongly. The expansion of its Tesco Whoosh rapid delivery service to 100 stores, new trial partnership with rapid delivery specialist Gorillas, and the opening of its third urban fulfilment centre in Bradford next week will further strengthen Tesco’s online proposition and provide the channel with new growth opportunities during 2022.

“Consumers are facing further increases in cost of living this year, however Tesco is well placed to provide its shoppers with competitive pricing through its Aldi price match strategy and its Clubcard-only discounts. 95% of its promotional sales are now on Clubcard prices and 8.5m customers access Clubcard via the app, contributing to a more loyal customer base which will continue to grow as consumers demand the best value for money during a period of squeezed disposable incomes.” 

Richard Lim, CEO, Retail Economics, said: “The retailer’s single-minded focus on competitive pricing and driving loyalty through its Clubcard-only discounts has won over customers this Christmas. The use of Clubcard has been a masterstroke from the retailer, enhancing the perception of value and playing on the hugely powerful customer instinct of FOMO – the fear of missing out.

“Online continued to deliver strong gains as a wave of new e-commerce converts stuck to a new way of getting their groceries over Christmas. Sales growth was mightily impressive in the wholesale part of the business with Booker seeing double-digit growth as catering and convenience boosted sales.

“Looking forward, the imminent squeeze on incomes will force many households into recessionary behaviours, trading down to own-brand and shopping around as they look to make budgets stretch that little bit further. Tesco is well placed to win new customers with their laser-like focus on value as they double-down on their Clubcard success.”