Tesco chief executive Ken Murphy described Booker’s 12% year on year growth as ‘the star of the show’ in the grocery giant’s newly released preliminary results.
While much of the success was in Booker’s catering business,Booker retail still delivered 3.2% growth despite a 5.6% drop in tobacco sales and won 451 new Booker retail partners during the year. Murphy attributed the new sites to the ‘success story’ of Premier, Londis and Budgens, having ‘the best availability and the best pricing’ and the rollout of 500 Jack’s own-label lines to Booker stores.
Despite Murphy predicting inflation-driven price rises would receed, Booker retailers had expressed alarm what they claimed is a growing gap between Tesco retail and Booker wholesale prices. For instance, Three white onions sells for £1 at Tesco but comes with a £1.39 wholesale price at Booker. questioned by RN on the gap, Murphy attributed it to reflecting lower volumes of some items such as onions through Booker and a ‘much more complicated supply chain.’ He added: “On the flipside, frequently we are seeing Booker are as if not more competitive than Tesco on a number of products because the economics favour the Booker supply chain model.”
Murphy also claimed the introduction and increasing of delivery fees paid by Booker retailers had delivered a ‘positive impact’ for both shop owners and Booker. Responding to The Grocer he explained: “What we’ve seen actually is an improvement in how retail customers think about delivery, doing a lot of consolidation of deliveries improving the flow of goods from Booker into retailers and reducing the number of road miles we have to do so reducing the carbon footprint by reducing the number and cycle of deliveries.”
Despite the closure on one Booker branch in the previous year, Tesco’s results forecast no further Booker branch closures in the year ahead.
Tesco said it saw ‘growing opportunities across convenience’, opening 50 Tesco Express and 18 One Stop stores. Tesco saw an overall UK like for like sales increase in convenience of 6.4%, with city centre stores bouncing back from the pandemic. For instance, London sites achieved sales 9.4% higher than the year before. Murphy predicted inflation to fall significantly over the coming months, and credited its revamped Tesco Club Card scheme. Despite the Tesco brand appearing in independent stores for the first time through Jack’s products, the chief executive ruled out expanding Tesco Club Card to Booker retailers, stating it had ‘no plans for Clubcard in independents.’
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