Following today’s release of Tesco’s figures for the 52 weeks ending 24th February 2024; Eleanor Simpson-Gould, Senior Retail Analyst at GlobalData, a leading data and analytics company, offers her view: “Tesco has produced a decent set of results in a challenging year that has seen the grocer go face-to-face with the discounters and hold its own. The supermarket retailer reported UK like-for-like sales rose 7.7% for the year ending 24 February 2024, though with food inflation around 15% in 2023, this would indicate that Tesco did suffer a decline in volumes during this time as shoppers traded down. With inflationary pressure easing, Tesco’s UK performance slowed each quarter from 9.0% in Q1 to 5.8% in Q4, and Tesco is entering a new financial year where we expect to see a normalisation of sales growth. Tesco’s outlook for the new financial year is cautious despite falling inflation as the grocer recognises that consumers remain sensitive to price. With Tesco losing Lidl’s legal challenge to change its Clubcard branding, Tesco has the opportunity to draw deeper focus on its loyalty scheme. Passing on cost savings to customers will remain a key priority to keep the pressure on competitors and drive volume growth.
“While home & clothing only account for 7% of total UK sales, these sectors continue to hinder Tesco – sales decreased by 3.4% for the period. Given the weaker performance, Tesco’s efforts to exit from unprofitable markets such as large electricals and adult shoes and the acquisition and launch of Paperchase late last year are a good first step, but further work is needed to bring these ailing categories back to growth. To support its non-essential offer, Tesco should add third-party trials. A partnership with a homeware specialist would capitalise on consumers looking to revitalise their living spaces for the summer. Key items must include home fragrance and kitchen and dining products, as recent events such as Valentine’s Day and Mother’s Day have seen a growth in consumers opting to celebrate with a meal at home. With the UK toys & games market expected to grow by 2.8% this year, Tesco has done well to extend its partnership with The Entertainer to more stores to boost sales prospects and provide a critical uplift during Christmas trading.
“Tesco’s Whoosh rapid delivery service and online sales are going from strength to strength. Against weak comparatives of a 5.4% decline in FY2022/23, Tesco’s online sales increased by 10.4% for this financial year. GlobalData forecasts online food & grocery sales will outperform the offline channel this year, up 6.9% for 2024 versus the offline channel at an uplift of 3.6%. To ensure Tesco’s online prospects endure, prices must be at the forefront of all communications to appeal to shoppers who have switched to discounters.”
