James Moore: Tesco needs to turn up the heat as marketplace gets a whole lot chillier

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The Independent Online

Outlook Just as it looked as if Tesco was turning the corner it's back into reverse gear again. Sales are declining and the brushfires that were burning across the empire seem to have flared up again.

The grocer's big hypermarkets are out of fashion and offering too much of the sort of product that consumers can more easily and cheaply purchase online from competitors such as Amazon that pay minimal business rates (no shops) and minimal corporation tax (supine politicians and tax authorities).

Tesco's food sales have been hit by the horse-meat crisis in the UK, it is faced with economic difficulties in central Europe and regulators have clipped its wings by restricting opening hours in South Korea.

It's struggling with these potholes while its competitors motor on (except poor Morrison's, which is awaiting the RAC).

Shareholders may have to accept that this sort of patchy performance is becoming the new norm for a business whose fortunes are hugely dependent upon the struggling consumer.

It can make things better than they are: too many stores are still unfriendly places to shop and if you're going to go to a supermarket, as opposed to an out and out discounter like Aldi, you're going to go somewhere you feel loved. If you're disabled, have children, if you simply want a little help, life tastes better at Sainsbury's in too many places where the two compete head to head. The numbers tell their own story.

This is a problem that can be solved as more stores are subjected to chief executive Philip Clarke's makeover programme. It's also dangerous to read too much into a single set of quarterly numbers. It's easy to forget how well Tesco did over Christmas.

And this is no crisis, more a reflection on how surprising it is to see this once unstoppable juggernaut stuttering. It's not even as if the company hasn't made visible progress in some areas. It's still way ahead of the curve online, even if making money from the non-food part of that channel is still tough.

But fundamentally, Mr Clarke is never likely to enjoy the sort of gushing acclaim that his predecessor Sir Terry Leahy – who stepped down at exactly the right time – took for granted. Tesco is a much bigger, more mature, and slower-growing business now, and the world it operates in is a different place. A chillier one. Mr Clarke could be judged a success if he can just locate a fuel source for a heater.