Tesco’s, the largest grocery retailer in the UK, has delivered its worst Christmas performance sales in decades. The poor performance spooked investors causing is share price to drop by 15% which wiped over £4bn off its stock market value! The supermarket’s high profile “Big Price Drop” campaign was widely met with indifference by consumers.
In addition analysts believe that the groups high volume of non-grocery sales such as electronics and clothing adversly effected sales as consumers tend to cut back on luxury items during economically tough times.
As a result Tesco’s chief executive Phillip Clarke reveled that the group now plans to cut back the rate of new store openings across the UK saying “we wouldn’t want a great many more of them” referring to out of town ‘hypermarkets’.
This could be good news for independents who traditionally come under a lot of pressure when multiples open up near by.
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The winners this Christmas have been those brands with the ability to fulfil the UK’s demand to treat itself on special occasions,”
Oriel Securities analyst Jonathan Pritchard.
Chander Hingorani
13/01/2012
Tesco have dominated the market for a long time. All other groups fall Tesco in price match. They have had over 30% of the share of the market so it is not bad for other groups to catch up. Healthy competition is good.
One of the problems has been over Tesco-isation of the market. Where I live I have four Tesco metros and TEsco express and other such groups within one mile.
This is a market correction which is welcome.