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Even Tesco feels the pinch as customers defect to Asda
Sri Carmichael, Consumer Affairs Reporter02.12.08
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Britain's biggest retailer Tesco today admitted it was being hit by the recession as it revealed its worst sales figures in 16 years.
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.
Reader views (13)
Having read an article in a Sunday broadsheet about the poor quality and ingredients in UK based supermarket's "value" foods I'm surprised that more people aren't going to ALDI and LIDL, which faired much better in the test. Personally I only buy fresh ingredients from Waitrose, M&S or quality local shops and make my own food so can't really comment.
- Bob, Cheam
Was in the UK in August, and thought Tesco's was superb - amazing choice, amazing value which we could only dream of in NZ. Please open some stores out here Tesco!
- Dom Duncan, Auckland, NZ
I can't understand how a figure of 2% growth is an indication that people are deserting Tesco for other stores. Even a 0% growth would mean that they are maintaining their market share, whilst any growth should mean that they are, well, growing! Or am I missing something?
- Ronnie, Brantome France
We shop in ALDI, LIDL, Morrisons and local shops now.
And we have survived! AND got much more for our money.
- Jackie, surrey
You will think Tesco in England fantastic after seeing the shambles Tesco Ireland is. LDL here knocking spots off Tesco.
- William Miles, Ballina Ireland
Who could have guessed that in a recession, people might not appreciate tesco paying out millions,to millionaire celebredees, for advertising Tesco`s brand? After all these banal adverts are much more fun than lower prices are they not?..............
- Trevor, Southend UK
I think people, now they have to, are slowly waking-up to Tesco's mystic pricing policies and realising that they are being manipulated on a daily basis and the comparisons on their TV advert are for items that people don't really need.
- Sandy, London
I always think Tesco is expensive, ive deserted to Iceland, where you can get alot for your money.
- Kuldip, London, UK
Good! I hope this means that we'll see fewer tesco shopfronts popping up like mushrooms. A little less power in the market place will do them good.
- Maria, London
I wrote to Tesco, telling them I objected to having to ask for free4 bags. They told me it was what customers wanted. I told them I would be going elsewhere. I am, and their profits fall. I'm obviously not the only one. Even the staff don't like that system.
- Martin H Watson, Teddington
I thought Tesco was the pits! But now you tell me we can sink even lower to ...ASDA! Cutthroat pricing without any social responsibity to communities, about sums both of them up.
- Dhanraj, Basildon Essex
The best thing about Tesco's and Sainsbury's are the Economy/own brands, besides these items Tesco's and Sainsbury's are too expensive. The items that should be cheaper like Fruit and Veg are still pricey and in my personal opinion Tesco's and Sainsbury's cannot compete with Aldi, Morrison's and Asda in this current credit crunch climate.
My family, friends and I have all switched from Tesco's and Sainsbury's to Morrison's and Asda and my shopping bill has now reduced.
- Hiedi, London
I'm not surprised that people don't want to shop at Tesco anymore, because Tesco don't care about their customers, and their slogan 'every little helps' is simply a hollow and worthless piece of marketing junk.
Asda offers better value and cheaper prices, which Tesco don't care to beat.
Also, I used to buy their brand of crisps, which they used to charge at 59p for a 6 pack. Their 12 pack was only £1.10, but it was unobtainable at the fairly large Tesco store I shopped at. Then, they upped the price of their crisps to 79p, and now it's a rip off 95p or more (£1.03 at one online checker)! Even worse, they added MSG to it, and it tasted good enough without it, so they have now made their own product worse for their customers health, and they don't do anything when you complain.
- Ralph, GB
