Tesco's sales rose for the first time in a year, according to researcher Kantar Worldpanel, a sign that the UK supermarket leader is fighting back against the incursion of German discounters Aldi and Lidl.
Revenue at the grocer rose 0.3 per cent in the 12 weeks ended 1 February, compared with the same period last year, Kantar said in a monthly report on the UK grocery industry. An additional 236,000 people shopped at Tesco during the period, the researcher said.
"Britain’s largest retailer is bouncing back from a tough year,” Fraser McKevitt, Kantar Worldpanel’s head of retail and consumer insight, said in a statement.
The Kantar report provides a fillip for Tesco CEO Dave Lewis, who is shutting dozens of unprofitable stores and plans to close the company’s head office as part of efforts to revive the business. To win back customers, Lewis has lowered prices on hundreds of branded goods and increased the number of staff in stores at peak times.
Meanwhile, Morrisons' sales decline narrowed to 0.4 per cent, the strongest performance since December 2013.
Tesco’s overall market share fell by 0.2 percentage points to 29 per cent, compared with a year earlier, Kantar said.
The pace at which Aldi and Lidl are winning business is slowing, the Kantar figures showed. Aldi sales rose 21 per cent in the latest 12-week period, compared with a 36-per-cent peak in April 2014. Lidl’s revenue increased 14 per cent, compared with its strongest growth of 24 per cent in May last year.
The intense level of competition has caused further deflation across the industry, Kantar said, with prices falling by a record 1.2 per cent on a like-for-like basis.
“Shoppers are taking advantage of both lower fuel prices and the continuing price war among the supermarkets to slightly increase their grocery spending,” McKevitt said. Overall spending on groceries rose 1.1 per cent in the 12-week period.
News by Bloomberg, edited by ESM
