Fresh blow as Tesco loses further ground to supermarket rivals

By Scott Reid
Published on Wednesday 1 February 2012 00:00

Tesco has seen its crown slip further after its share of the grocery market dipped below 30 per cent for the first time in nearly seven years.

Industry figures yesterday revealed that sales growth at Britain’s biggest retailer had slowed to just half that of the broader market as arch-rival Sainsbury’s and smaller players such as Waitrose gained share.

The news marks a fresh blow for Tesco chief executive Philip Clarke, coming just weeks after he stunned the City by issuing the group’s first profit warning in living memory.

According to research by Kantar WorldPanel, the supermarket giant’s share fell to 29.9 per cent in the 12 weeks to 12 January, as it slashed prices in a failed bid to attract more customers. A year ago, that share stood at 30.5 per cent.

The group admitted recently that it had messed up its pricing strategy over a disappointing festive period – triggering an unprecedented slump in its share price, wiping billions of pounds from its market value.

The UK’s big four supermarket chains – Tesco, Asda, Sainsbury’s and Morrisons – were embroiled in an aggressive price war in the run-up to Christmas, triggered by Tesco when it launched its £500 million “Big Price Drop” campaign in early October.

Yesterday’s data showed that grocery sales overall grew by 4.2 per cent year on year during the 12-week period, down on the 4.8 per cent reported previously. With grocery price inflation still hovering at about 6 per cent, the muted growth rate suggests that shoppers are cutting back on the number of items they are buying and switching to cheaper goods. Sales growth at Tesco slowed to 2.1 per cent from 3.3 per cent previously, Kantar noted.

Last month Clarke, who took over from Sir Terry Leahy at the Tesco helm last April, revealed that UK sales had fallen by 2.3 per cent, excluding fuel and VAT, in the six weeks to 7 January in one of the toughest Christmas run-ups for the high street in decades.

Tesco, which accounts for about £1 in every £8 spent in Britain’s stores, compounded the bad sales news by warning that trading profit in 2012-13 would be flat compared with previous City forecasts of a 10 per cent rise.

Clarke said the firm wrongly pulled back on one-off promotions, such as meal deals and buy one, get one free offers, at the same time as rivals had increased them.

Edward Garner, director at Kantar, said: “There is considerable pressure on Tesco, with its growth rate of 2.1 per cent only half the total market average. This has caused its share to fall by 0.6 percentage points.”

Kantar said Sainsbury’s had taken its strongest hold on the market since March 2003, commanding a 16.7 per cent slice. Waitrose nudged up by 0.1 of a percentage point to 4.3 per cent.

Asda, the UK’s second biggest grocer, put in a record performance, lifting its share from 16.9 per cent a year ago to 17.5 per cent, although this was boosted by the completion of its conversion of the Netto stores it acquired last year.

Meanwhile, low-cost chains saw their share of the market grow as well, with Aldi up from 3.1 per cent to 3.5 per cent and Lidl up from 2.4 per cent to 2.5 per cent.

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piedodger

Wednesday, February 1, 2012 at 11:40 PM

Que in reduced aisle getting longer, sign of the times.

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piedodger

Wednesday, February 1, 2012 at 11:29 PM

Looking good for a little share top up soon, but will still to my BMR now thats really going to booooom this week on :) And every little helps !!!

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