Even Tesco feels the pinch as customers defect to Asda

Tesco said its sales growth had more than halved to two per cent in the past three months as customers traded down to its cheaper ranges.

But retail analysts say the new figures indicate the poor performance is down to shoppers defecting to supermarket rivals Asda and Morrisons at record rates.

"Switching" data today revealed shoppers have recently shifted some £22million of their spending directly from Tesco to Asda.

Tesco lost another £10million to Aldi, the cut-price retailer, and almost as much again to Morrisons in the 12-week period up to 2 November, according to data from industry analysts TNS Worldpanel.

The figures show Tesco's leading grocery rivals are doing far more damage to it than previously thought and discount stores such as Aldi and Lidl are having less impact than expected.

Tesco insisted its recently launched Discounter brand was to blame for knocking two to three per cent off UK sales figures.

Retail experts say today's figures suggest Tesco may be fighting the wrong battle - pre-empting an assault on its market position by cheaper chains rather than focusing on protecting its customer based from the likes of Asda and Morrisons.

Tesco UK like-for-like sales growth for the third quarter of this year, excluding petrol, is the worst since the early 1990s recession.

But the company's overall sales worldwide grew by 11.7 per cent in the same period.

Chief executive Sir Terry Leahy said: "We are pleased with our progress but we are also realistic - the current economic climate, and the strain this is putting on consumers everywhere, is something that all businesses are feeling, including ours."

Andrew Higginson, Tesco's finance director, said price drops had dragged down the quarterly growth but would put the supermarket in a stronger position as Britain slumps into recession.

Tesco shares rose more than five per cent in early trade today.