Tesco: “Inflation changes shopper behaviour”

British retailer Tesco has warned that shopper behaviour is changing as a result of the ongoing inflation. Turnover on the home market is falling, even if the chain is gaining market share. Online turnover is being hit remarkably hard.

“Incredibly challenging”

At group level, Tesco recorded a 2 % like-for-like sales growth in the first quarter of its broken financial year, but on its British home market like-for-like sales fell by 1.5 %. However, the food retailer was able to increase its market share by 37 basis points. The strongest decrease was for non-food, while the fall in online sales by 14.5 % is remarkable.

Sales have continued to decline in recent weeks, CEO Ken Murphy said: “The market environment remains incredibly challenging.” This is not going to change quickly, though: “We are seeing some early indications of changing customer behaviour as a result of the inflationary environment. Customers are facing unprecedented increases in the cost of living and it is therefore even more important that we work with our supplier partners to mitigate as much inflation as possible”, the CEO added.

Purchasing power

Tesco therefore remains strongly committed to purchasing power in its home market. The British market leader advertises ‘everyday low prices’ and compares prices with Aldi for a basic range, to avoid shoppers going elsewhere. This, however, inevitably weighs on margins.

Tesco’s quarterly results were eagerly awaited, as they could set the tone for the entire European food retail sector. After this set of results, the outlook does not seem very encouraging.