Credit: David Wright

Tesco is continuing to outstrip the rest of the 'Big Four' supermarkets

But there are signs of trouble as it pulls Schweppes from the shelves.

by Jack Torrance
Last Updated: 28 Jul 2015

In years to come, could Tesco’s chief exec Dave Lewis be hailed as the man who saved the supermarket from its biggest crisis ever? Figures today from Kantar Worldpanel suggest the grocer is thrashing its main rivals in the battle to maintain solid levels of growth.

In the 12 weeks to March 1, Tesco’s sales were up 1.1% on last year, meaning it’s the only one of the ‘Big Four’ supermarket chains that grew in that period. Sales at Asda, the second-largest supermarket by revenue, dropped a painful 2.1%, while Sainsbury’s and Morrisons dipped 0.5% and 0.4% respectively.

Discounters Aldi and Lidl continued to grow apace, with respective sales up 19.3% and 13.6%, and Waitrose also continued its quiet good run, with sales up 4.9%. Despite having these smaller challengers nipping at its heels, Tesco managed to cling on to most of its market share, with a dip of just 0.1 percentage points to 28.7%.

But it’s not all looking rosy for the giant grocer, which is currently under investigation by the Serious Fraud Office  - and the less scary but equally controversial Groceries Code Adjudicator.

Today it emerged Tesco had pulled 25 lines of Schweppes drinks from its shelves over a dispute with their supplier, according to The Grocer. The supermarket has been rapidly cutting prices in a bid to keep shoppers coming through the doors – a situation which appears to have rubbed Coca-Cola Enterprises, which distributes Schweppes in the UK, up the wrong way.

Lewis has pledged to 'reset' the supermarket's relationship with suppliers, which has been the subject of so much controversy, but it seems things aren't going so well in that respect. 'Due to a supply issue, we have had to temporarily adjust some of our soft drinks ranges,' a Tesco spokesperson said. 'We continue to work in close collaboration with our suppliers, to provide our customers with the best products, the greatest value and fantastic availability.'

Away from the supermarket aisles, it seems online grocery sales are still bubbling away. Ocado announced today that its gross group sales were up 19.2% to £271.1m in the 12 weeks to February 22.

‘Our business continued to grow, against a backdrop of a retail market that remains challenging and competitive,’ said its CEO and co-founder Tim Steiner. ‘Notwithstanding the uncertainty that remains in the marketplace, we expect to continue growing slightly ahead of the online grocery market.’

While Ocado has the advantage of not having to maintain an estate of stores like its rivals do, it's not immune to the broader conditions of the market. According to Kantar, shoopers have saved £400m in the past three months thanks to the supermarket price war and wider deflation - which is reflected in a 2.4% fall in Ocado's average order size. It will need to convince customers it's offering something substantially different to the rest if it wants to avoid being dragged into a profit-hitting discounting frenzy.

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