When Matt Davies opened Retail Week Live last month, the boss of Tesco UK claimed the grocer was “on the cusp of something special”.
Next week will provide clues on how right he is as Tesco unveils its full-year figures.
The past few years have been torrid for the UK’s largest retailer. Its reign of seemingly never-ending sales and profit growth is over, and the grocer has been in fightback mode ever since as it struggles against price deflation and the growth of Aldi and Lidl.
Yet under the new leadership of Davies and his boss Dave Lewis, it looks like Tesco is beginning to get its mojo back.
The first real evidence of this was felt over Christmas, when Tesco surprised the city with a better than expected UK like-for-like increase of 1.3%, putting it ahead of its big four rivals thanks to a focus on price, quality and availability.
Obviously the damage done to margins in the second half as Tesco chased sales won’t be known until next week, but the grocer is on an improving sales trend, corroborated by today’s Kantar figures, which showed a further improvement in revenue decline to just -0.2% in the 12 weeks to March 27.
Tesco is not resting on its laurels and is chasing further sales gains through its new ‘Farms’ value own-brand lines, which pits it squarely against the discounters, and its value big four rivals Asda and Morrisons too.
“Tesco is not resting on its laurels and is chasing further sales gains through its new ‘Farms’ value own-brand lines”
This focus on grocery retail, rather than distracting non-food lines or even its Giraffe restaurant chain, which Tesco is said to be considering offloading, is the right thing to do in the face of such strong headwinds in the market.
Yet Tesco is not the only grocer to be enjoying a return to form.
With a similar focus on the basics, and itself under new leadership, Morrisons has also delivered top-line improvement. And Sainsbury’s, which has led the way in terms of market share growth in the past year, is about to close a transformative acquisition of Argos which aims to bring it new firepower in terms of multichannel, distribution and non-food product prowess.
Davies might well be right to say that Tesco is on the cusp of something special. His problem is that the same could be said for his rivals.