Tesco sales spurt puts pressure on SuperValu

Tesco saw its strongest sales growth at its Irish operations in five years in the past three months despite grocery prices continuing to fall.

Latest figures — for the 12 weeks to September 10 — from consumer insights agency Kantar Worldpanel show Irish grocery price deflation eased to 0.4% but that falling prices failed to stunt market share growth for the big players.

Tesco has a a 22% share of the Irish grocery market; just 0.1 percentage point lower than leading player SuperValu.

While a perennial struggler — in terms of till sales — in recent times, Tesco outperformed the market for the second straight quarter, according to the latest survey.

Its over-the-counter sales grew by 4.3%, year-on-year, in the latest 12-week period. That was its strongest sales spurt since the first quarter of 2012.

In contrast, Dunnes Stores grew its grocery sales by 2.3% and SuperValu only saw growth of 0.9%.

Overall, combined Irish grocery sales grew by 2.3%, year-on-year, in the last quarter.

“As Irish families head back to school, we’ve seen strong performance from a number of lunch box staples.

Sales of cooked meats and bread increased by 3.7% and 3.6% respectively, while crisps posted a particularly strong sales increase — up 12.1%,” said Kantar Worldpanel director David Berry.

Regarding Tesco, Mr Berry said that while it has lowered its prices, consumer spend in its stores has improved.

“The average shopper spent €15 more with Tesco than during the same period last year. As it celebrates its fifth consecutive period of growth, Tesco’s fortunes certainly seem to have shifted,” he said.

Dunnes, which controls 21.6% of the market, saw a 5% increase in customer spend in the last quarter, but its number of shoppers fell by the same percentage.

“The challenge now will be attracting those lost shoppers back to the supermarket — a vital step if Dunnes is to improve its market share ranking,” said Mr Berry.

The market shares of the German discounters, Aldi and Lidl, remained stable, on a year-on-year basis, at 11.6% and 11.8% respectively.

However, both saw decent at-the-till sales growth for the quarter — Aldi up 3.3% and Lidl ahead by 2.4% for the period.

Separately, Aldi yesterday reported a 17% drop in operating profit, for 2016, for its UK and Ireland division. Profit for the year amounted to £211.3m (€240.4m).

The fall reflected the German grocer’s strategy of maintaining a price gap over larger rivals as well as investment in infrastructure.

Its UK and Ireland revenues increased by 13.5% to a record £8.74bn, however, and the company said it will be pressing on with its expansion in the UK despite the third straight year of falling profits there.

“The owners of our business see such a huge potential for future growth in the UK market,” Matthew Barnes, chief executive of Aldi UK said. Discount supermarkets still account for a much smaller share of the UK market.

“Our investment in the UK is ramped-up if anything,” Mr Barnes said, noting £450m was invested in stores and distribution centres in 2016 and £459m was planned for this year as a whole.

Mr Barnes added future capital expenditure plans were “entirely unaffected” by Britain’s decision to leave the EU.

Additional reporting Reuters


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