Supermarket giant Tesco is making a comeback, while UK Walmart subsidiary Asda nosedives. For the 12-week period ending on March 1st 2015, Tesco sales were 1.1% up, after plunging in 2014, according to market research firm Kantar Worldpanel.
Investors are hopeful that this latest quarterly turnaround marks the end of an 18-month stretch of tumbling sales.
Stronger sales have helped Britain’s largest retailer arrest its declining market share, which fell by just 0.2 of a percentage point compared to last year.
Dave Lewis’ strategy appears to be paying off. (Image: Tesco)
The Dave Lewis effect
Tesco’s fortunes have improved significantly since Dave Lewis took over in September 2014. His strategy of cutting prices across hundreds of lines as well as shutting down 43 loss-making stores appears to be paying off.
Asda, however, which competes with many of the same consumers as Tesco, has had a terrible time in the same 12-week period. Its market share plunged by -2.1% to 17%. Asda’s performance was the worst in 20 years.
Over the same period, Morrisons and Sainsbury’s both saw market share grow, even though their sales declined by 0.4% and 0.5% respectively.
German discounters Aldi and Lidl continue to make strong inroads into the British grocery market, posting sales growth of 19.3% and 13.6% respectively. However, Aldi’s 12-week period growth was the slowest since June 2011.
In the latest period, premium grocer Waitrose saw sales rise by 4.9%. The Bracknell-based retailer has more products on promotion than ever before as it tries to gain market share, which rose 0.2% of a percentage point to 5.2%.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said:
“A combination of lower general inflation and the grocery price war has saved shoppers £400 million in the past 12 weeks, with deflation driven to a record low of -1.6%.”
“All of the major supermarkets are cutting prices to win shoppers, especially within everyday staples such as eggs, vegetables and milk. Retailers are focusing their efforts on simple price cuts rather than complicated ‘multibuy’ deals.”
Kantar Worldpanel informs that during the latest 12-week period, grocery deflation has reached a new low of -1.6% as fierce price competition between the country’s supermarkets continues to impact the market.
This means that consumers today are paying less for a representative basket of groceries than they did last year.
Earlier this week, Tesco removed Schweppes beverages from the shelves of its supermarkets, after falling out with Coca-Cola Enterprises.