Low prices put Tesco on seven-year record
TESCO had its best UK quarterly sales growth for seven years as it kept prices down despite rising inflation.
Britain’s biggest supermarket enjoyed its sixth straight quarter of growth as takings in UK stores open for at least a year rose 2.3 per cent, driven by marketleading demand for its fresh food.
Customer transactions rose 10 million, or 1.3 per cent, from the previous year with grocery prices rising 1.4 per cent compared with the most recent measure of 2.9 per cent by industry researcher Kantar Worldpanel.
Tesco, under chief executive Dave Lewis, has built its recovery on improved customer service and supplier relations, lower prices than competitors and new and streamlined product ranges.
Lewis said: “This is a good start to the year. In tough market conditions, we have stayed true to our commitment to helping customers, working closely with our supplier partners to keep prices low.
“Customers have responded by doing more of their shopping with us and as a result we continue to grow volumes, particularly in fresh food.”
Tesco’s international same-store sales were down 3 per cent after it pulled out of unprofitable bulk selling of products such as tobacco and alcohol in Thailand, while Tesco Bank grew sales by 4.8 per cent. Shares in Tesco initially moved higher but closed down 8¾p to 171p, along with other supermarkets, after Amazon’s big push into the grocery market with the £10.7billion acquisition of Whole Foods.
John Ibbotson, of consultancy Retail Vision, said: “Tesco’s food, and fresh food in particular, is firing on all cylinders and that’s a huge shot across the bows for its competitors.
“It has used its immense buying power to keep prices lower for its customers. But the toxic combination of rising inflation and low wage growth remains a major threat.”
Retail Remedy’s Phil Dorrell added: “Tesco are on a roll in getting their customer mojo back; stores are easier, more engaging and comparatively better value than a year ago. Customer-centric decisions have helped grow sales in six quarters on the bounce.”