Tesco “losing a million shoppers a week”

Tesco, the UK’s biggest retailer and long a name to strike fear into the heart of every shopkeeper in the land, today unveiled its worst quarterly results for 40 years.

The multiple grocer said like-for-like sales fell more than 3.7% in the first quarter of 2014 – far worse than the 2.9% drop in the previous three months.

Chief executive Philip Clarke, whose job looks in danger, unveiled the deepening sales decline today and said they “are the worst” he had seen in his four decades at the supermarket.

It is also the third quarter in a row that sales have plummeted and the bad news has sent shares downwards this morning.

HSBC market analyst David McCarthy said: “Tesco looks like it is experiencing more than one million fewer customer visits per week on a like-for-like basis. We assume average expenditure of £25 per lost visit”.

Despite spending £200m on cutting the price of basic items, analysts say Tesco is still perceived as “too expensive” compared to the likes of Aldi and Lidl, and its service levels and in-store experience lag behind more upmarket rivals such as Waitrose.

Tesco’s woes have stunned the industry with one expert saying such a poor performance would have been “almost unfathomable in times past”.

Clive Back, an analyst at stockbrokers Shore Capital, told the Daily Mail he had “never been so gloomy about Tesco’s prospects in 20 years”.

He said: “We believe Tesco is increasingly perceived by customers as simply too expensive versus the discounters, Asda and potentially Morrisons. That is a dangerous and frankly untenable place for a mass-market leader to be.”

According to media reports this morning Tesco is still by far the biggest UK supermarket with 28.6% market share, but this is down from 29.7% a year ago.

The Big Four supermarkets – Tesco, Asda, Sainsbury’s and Morrisons – have all suffered at the hands of the discounters as well as premium rivals Waitrose and Whole Foods.

The popularity of Aldi and Lidl has increased significantly since the start of the recession with the stigma felt by some at being seen in one of their stores wearing off they are now detinations for middle-class shoppers.

Industry experts say that shopping habits have changed, with the weekly shop giving way to more frequent smaller trips to smaller, local as families hunt out the best deals and reduce waste.

In last month’s Wholesale News, the new FWD chairman, Landmark MD Martin Williams, wrote that “UK food and drink wholesalers are in good shape, with consumers turning away from the hypnotic lure of out-of-town retailers.”

Get Our E-Newsletter - Wholesale News stories in your in-box, delivered weekly.
Will be used in accordance with our Privacy Policy
Share.

About The Author