Tesco hit as Britons flock to pubs and restaurants

SHOPPING and eating at home have taken a back seat as Britons flock to newly reopened pubs and restaurants.

Tesco, the nation’s largest supermarket chain with 3,400 stores, said its sales in the UK rose by just 0.5pc in the three months to May 29 as lockdown restrictions eased.

That was a sharp slowdown from the 8.8pc growth in the previous quarter.

Separately, the office for national Statistics (ONS) reported that retail sales fell 1.4pc between April and May with food stores taking the biggest hit – down 5.7pc.

But rather than signalling a slump in spending, experts said the reopening of pubs, cafes, bars and restaurants from April 12 ushered in a shift in behaviour.

This was particularly the case in May when the hospitality sector started to serve food and drink indoors.

Paul Dales, chief UK economist at Capital economics, said: ‘Some of us spent less time in Primark and more time in the pub.’

Tesco did not disclose figures for its own food sales but analyst Clive Black at Shore Capital said: ‘Food will be down around 4pc to 5pc. Dry goods and tinned food will be down 10pc-plus, while food-to-go such as sandwiches and salads will be in recovery.’

Tesco chief executive Ken Murphy (pictured) said families are moving away from the big weekly shop and placing 200,000 fewer orders per week now than at the height of lockdown, in a sign that life is starting to return to normal.

The return of socialising helped Tesco post ‘particularly strong’ sales from general merchandise and clothing, which grew 10.3pc and 52.1pc year-on-year respectively. It continues to benefit from strong sales of alcohol, and demand for barbecue food and fresh fruit rose sharply at the start of the heatwave and the euro 2020 tournament.

Tesco’s Booker wholesale business bounced back with a 68pc rise in sales year-onyear, thanks to increased demand from pubs and canteens.

Group sales, including central europe, rose 1pc to £13.3bn in the 13 weeks to May 29, compared to last year. Shares fell 4.1pc, or 9.4p, to 221.75p.

Murphy, 54, said: ‘Customers were getting out and about more frequently. It’s definitely going to be challenging keeping sales in positive territory.’

The ONS’s director of economic statistics Darren Morgan said: ‘Food stores sales suffered as feedback suggested the reopening of hospitality meant consumers took advantage of eating out instead.’

Retail sales fell sharply at the start of the pandemic as the country went into lockdown and households reined in spending.

But they bounced back strongly. Across April and May, average sales were 7.7pc up on March.