Tesco looking good ahead of Christmas

Tesco looking good ahead of Christmas

Tesco had the fastest growing sales of the UK’s four biggest supermarkets for the eighth consecutive month. During the 12 weeks ending 4 November 2017, Tesco increased sales by 2.7% year-on-year, noticeably ahead of the 2.1% for Sainsbury’s, 1.8% for Morrisons, and 1.7% for Asda.

Tesco has maintained good momentum ahead of the all-important Christmas trading season. They continued to attract new shoppers over the summer, who visited more often, giving a further boost to growth in the last month. At the same time, like all the supermarkets, they’ve had to tread a fine line around holding back at passing on cost price increases to compete with the discounters. Two-thirds of households now visit Tesco at least once a month and all eyes will be on whether the number one retailer can pull off another strong final quarter.

Across the whole market, for the four weeks ending 4 November, UK grocery sales increased 3.1% year-on-year. Excluding the discounters, sales rose 1.7%¹ while volumes fell -0.5%.

This represents a slight slowdown in growth – not helped by a milder October than last year – which could be down to households becoming increasingly willing to change how they shop if it helps their monthly household budget, and may be delaying spend until after Black Friday or until all Christmas promotions kick in later in November.

Despite the sales opportunity offered by the school half-term and Halloween, general merchandise sales at supermarkets, for example, were down significantly (-5.5%) on last year.

However, the outlook for improving sales growth in the run-up to Christmas is a positive one but much will depend on how successful the current advertising campaigns will be in encouraging people to spend more at the supermarkets as shoppers are now experiencing ‘peak inflation’ and a squeeze on discretionary spend is already being felt by many non-food retailers.

We can see that shoppers are in an economising not compromising mind-set so, for example, they may feel like dining in at home a bit more in the coming weeks, helping supermarkets to snatch spend from restaurants.

With Aldi and Lidl also looking to gain market share in premium food and drink, price competition across food retailers will remain intense as they compete for the Christmas purse.

All figures are from Nielsen Homescan Total Till unless otherwise stated.
¹Source: Nielsen Scantrack