Tesco sees first sales growth for over two years

Tesco Ireland posted its first sustained period of over-the-counter sales growth for more than two years, in the past quarter.

The positive news for the retailer coincides with the Irish grocery market showing its longest period of growth in two years and German discounter, Aldi making its first foray into e-commerce.

While Tesco has managed to maintain its market leading position in Ireland — except for a brief period when it was recently overtaken by SuperValu — its till sales have been in negative territory for some time.

However, latest quarterly supermarket share data from leading consumer insights agency Kantar Worldpanel shows Tesco sales were up by 0.3%, on a year-on-year basis, in the 12 weeks to September 14. This marks the first quarterly period since early 2013 that Tesco Ireland has posted a positive sales figure.

“Making the most of the back-to-school season, the grocer has seen its spend from families with children — a heartland for the retailer — increase by 4%. 

"A modest increase in shopper numbers overall has certainly played a part in Tesco’s recovery, and its customers are also buying more products per shop in the latest period, helping to boost the retailer’s performance,” said Georgieann Harrington, insight director at Kantar Worldpanel.

The latest Kantar figures show Tesco’s share of the Irish market stands at 24.8%, compared to 25.2% for the same period last year. SuperValu saw a 0.2% till sales rise in the latest quarter. 

It has 24.3% of the market, with Dunnes commanding 22.7%. The latter’s over-the-counter sales jumped by 5.2% in the last quarter.

Grocery sales increased 1.8%, year-on-year, in the period. The market has now expanded for 18 consecutive months, representing the longest period of sustained growth since October 2013.

The German discounters now command a combined 17.7% of the Irish market, up by almost 1% on a year- on-year basis. 

In the latest period, Aldi posted a 3.6% annualised sales jump and saw market share rise to 8.7%; while Lidl’s share of the market moved up to 9% on the back of a 9.5% rise in till sales.

“Getting shoppers through the doors continues to be the biggest driver of growth for Lidl, with 40,000 new customers visiting the retailer this year. 

"Lidl has utilised clever marketing campaigns, like ‘Stikeez’ to encourage customers to spend more per visit; with the average spend increasing by 5% to €22.84,” said Ms Harrington.

It also emerged, yesterday, that the British arm of Aldi plans to launch an online operation, marking the group’s first foray into e-commerce in Europe and opening a new front in its battle to raise its share of the tough UK market.

Aldi, which also posted a 4% dip in 2014 operating profit yesterday, showing discounters are not immune from an industry price war, said it will begin selling wine by the case online from early next year. 

That would be followed by non-food special offers, part of a long-term growth and investment strategy in Britain.

The German discounter’s profit fall came despite sales rising 31%, to a record £6.89bn, as the company opened new outlets. It has 598 stores in the UK and is targeting 1,000 by 2022.

Aldi is the UK’s seventh largest grocer, with a 5.6% market share says Kantar.

Additional reporting Reuters


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