James Moore: Tesco turnaround may finally be taking shape

 

Click to follow
The Independent Online

Outlook It appears that Tesco is clawing its way back. The latest figures from researcher Kantar Worldpanel show a 0.3 per cent increase in sales during the three months to 12 February.

That might not look like much, but given that it is the first such increase since the beginning of last year, Tesco and its long suffering shareholders might justly feel they have something to celebrate. It should further be noted that the sales boost came at a time when the grocer’s three biggest rivals, Asda, Sainsbury and Morrisons, all recorded falls.

Tesco still under performed in the overall market – which grew 1.1 per cent as Aldi and Lidl continued to park tanks on the lawns of the established order.

But while their growth remains impressive, the pace of it is (finally) showing signs of moderating.

Even more encouraging for Tesco is that Kantar said the chain attracted the thick end of a quarter of a million extra shoppers. If they keep coming back in numbers it would suggest that Tesco’s store upgrade programme is starting to bear fruit.

So, it seems that at last there are reasons for optimism when it comes to the outlook for Britain’s biggest supermarket, which (it should not be forgotten) still has to deal with the fallout from overstating its profits by hundreds of millions of pounds.

This is just one set of figures, although the pace of Tesco’s sales decline had been slowing for several months previously.

But there may be more to come if new chief executive, “dynamite” Davis Lewis, has got a handle on the fact that Tesco’s problems went beyond its dowdy stores and the relatively uncompetitive pricing.

They are merely symptoms of a more deep-rooted sickness. Tesco, with its 30 per cent domestic market share and it’s global reach, often displayed an acute sense of entitlement. Its management sometimes appeared as concerned about the claret stored on board the corporate jet as they were about the claret on the shelves.

That sort of thinking is bad for any business, let alone a mass market retailer.

It says much that at one recent dinner, when discussing Aldi and Lidl, I was told that Tesco didn’t rate them as a threat in the early days of their expansion because their market share was too small to worry about, missing the fact that when a business grows at the rates that Aldi and Lidl have achieved it doesn’t remain small for long.

If Mr Lewis can blow that sort of complacency out of the water, Tesco’s investors ought to do rather well with him at the helm.

Comments