Tesco and Sainsbury’s reporting of quarterly results within days of each other adds to the image of two heavyweights going head to head in the arena.
On first glance Justin King, chief executive of Sainsbury’s, has manoeuvred his business to deliver another bloody nose to his larger rival. Total sales for the first quarter were up 3.6% and like-for-likes rose by 1.4%.
Although Tesco boss Philip Clarke described the performance from his blue and red corner as “robust”, many commentators were less flattering about its figures, which included a 1.5% decline in UK like-for-like sales.
Critics didn’t need to dig too far into the numbers to find evidence to fuel their discontent: they marked the fourth consecutive quarter of falling UK sales.
King, by contrast, said on Wednesday that Sainsbury’s was continuing to outperform the market and remained confident, despite the pressure grocers are placing on themselves with new levels of promotions and couponing.
But these early exchanges are misleading. Tesco’s first-quarter figures did not include trading across the Jubilee, which it described as its best week ever outside of a Christmas period, with more than £1bn of sales. Furthermore, it’s a mere seven weeks since Clarke unveiled plans to unleash a £1bn investment programme in the UK to return the grocer to former glories.
A total of 4,300 additional Tesco staff have been recruited and 100 stores have been refreshed since the start of the year, along with updates to own-label and Tesco Direct ranges. Clarke’s argument that the company is “gaining momentum” has considerable weight.
Wisely, the Tesco boss still refuses to be pinned to any deadline for a return to like-for-like growth. But while Sainsbury’s may have won these early exchanges, it’s unlikely to have it all its own way in later rounds.
Banking on M&S
In the current climate, who’d admit to being a banker? M&S boss Marc Bolland it seems. Despite – in fact because of – the current public animosity towards the banking sector, the move by M&S to launch a chain of banks is a relatively low-risk and innovative strategy.
Even the retailer’s harshest critics would admit it has a unique relationship with its customers. Its ability to trade on its service credentials, allied to the attractiveness of its relatively affluent customer-base, will make this a fascinating add-on to the M&S proposition.