Following today’s release of Tesco’s figures for the 13 weeks ending 27th May 2023; Eleanor Simpson-Gould, senior retail analyst at GlobalData, a leading data and analytics company, offers her view: “Building on a robust FY2022/23 that saw Tesco’s UK sales grow 3.3%, the grocer’s performance in Q1 FY2023/24 has accelerated to achieve a 9.0% uplift in like-for-like (l-f-l) sales in the period. Retention of market share as a core pillar of Tesco’s FY2023/24 objectives has so far been fruitful, aided by its value-driven focus via the expansion of its competitive pricing across everyday essentials. Tesco’s Q1 performance echoes recent results from ASDA and Marks & Spencer earlier this year. Marks & Spencer l-f-l food sales for the 13 weeks ending 1 April 2023 grew 9.2%, while ASDA reported food sales were up 8.5% for the 12 weeks ending 31 March 2023, with performances driven by the impact of inflation on the UK food & grocery market. However, Tesco’s cautious approach to the year ahead forewarns a return to more modest growth for the coming months following expectations that food inflation reached a record-breaking peak in April 2023 and will subsequently continue to fall back throughout the rest of the year. Tesco’s promise to ensure value will be crucial to strengthen confidence among customers amid ongoing investigations from the Competition and Markets Authority on supermarket profiteering.
“Following devaluation of Clubcard voucher points overnight and concerns over clarity on pricing, Clubcard has so far weathered the flurry of loyalty scheme initiatives from Morrisons, Co-op and Sainsburys seeking to capitalise on Tesco’s winning formula. Tesco’s Clubcard pricing across 8,000 items preserves a competitive advantage among the ongoing threat from discounters. There has been a decline in the number of consumers stating that they are switching away from Tesco, down from 29.5% in April 2023 to 27.4% May 2023, according to GlobalData’s consumer surveys of 2,000 respondents. To entice customer loyalty further Tesco must ensure Clubcard pricing and incentives are proactive throughout the summer on items such as BBQ and picnic food and outdoor homewares.
“Expansion of Tesco’s convenience store formats with the addition of 196 new stores by February 2024 is underway. With UK online sales up 8.2% during the period, further development of Tesco’s ultra-fast delivery service, Whoosh, will be a critical investment to support growth prospects this financial year. Tesco’s store portfolio diversification and positive online sales growth build a solid base to remain at the forefront of consumer choice in the food & grocery sector.”
