Supermarket rivals close gap on Tesco

29 May 2009

LONDON: The lead of the UK's largest retailer, Tesco, over its supermarket rivals has continued to narrow, according to the latest release of three-monthly data from Nielsen, the research firm.

In the 12 weeks to 17 May - when Sainsbury's, Morrisons and Asda all clocked sales increases of more than 7% – Tesco was left lagging with growth of just 4.8%. This was coupled with a 0.1 percentage point slide in market share, to 28%.

Nielsen also reported that 32% of sales in the most recent four-week period were for goods on special offer, a record high, reflecting consumers' increasing propensity to shop around for value.

"Take this benefit away from shoppers and we would probably be looking at headline growths at the multiples some one percentage points lower than the buoyant 5% we have seen since Easter," said Mike Watkins, Nielsen's senior manager of retailer services.

The slowing progress of the retail giant coincided with news that chief executive Sir Terry Leahy's pay packet would be down 7% on last year, to £5.1 million ($8.1m; €5.9m). It reflects the sluggish home market and Tesco's battle to turn a profit at its Fresh & Easy US venture.

But Tesco may be cheered by an additional report from the market research firm TNS, pointing to a plateau in the growth of heavy-discounting chains like Lidl and Aldi.

The near-20% sales uplift generated by recession-struck consumers last year looks to have moderated down to an average increase of just under 10% now.

Data sourced from The Times; additonal reporting by WARC staff