On Tuesday Sainsbury’s revealed a shock first quarter 8.2% profits cut to £503m. Tesco responded with a trolley wobble of its own, its shares dipping 3.5% almost immediately. The three major supermarkets, Tesco, Sainsbury’s and Morrisons slashed fuel prices on Wednesday – 2p off diesel and 1p off petrol – in a bid to retain market share.
Then this morning, Friday, M&S announced the appointment of new chairman Archie Norman (ex chief exec of Asda). A fast-moving, tough week. Who, then, comes out best? Paul Thomas, senior consultant at Retail Remedy, says it must be Tesco.
“Tesco has [boss] Dave Lewis. He’s getting rid of businesses he doesn’t need and getting back to being a grocer. Lewis is working at strategies to offset the discounters, Aldi & Lidl. Tesco has the largest non-food offering of all the supermarkets. Clothing and general merchandise is a big margin generator for Tesco.”
Tesco isn’t problem-free. Thomas says Tesco has the largest stores and its customers are shopping less at them. “But equally it [Tesco] has the largest amount of express and convenience stores.” A sector that has grown fast as the Big Four take the sales fight to Lidl and Aldi, wherever they lie.
In comparison to Sainsbury’s Morrisons had a good week. Yesterday it revealed 3.4% like-for-like sales growth for the first quarter thanks to a swathe of price cutting and a strong Easter. Morrisons chief exec David Potts wants to put their premium ‘The Best’ range – it contains more than 450 lines – close to the centre of their growth strategy.
“They’ve [Morrisons] got some good strategies closely aligned with Tesco,” says Thomas. “They’re getting back to being a core grocer, more people on the shop floor. They’re working hard on their Best brand, trying to tap into the Waitrose-type customer.”