Following today’s release of Tesco H1 figures for 2020/21,
Thomas Brereton, Senior Retail Analyst at GlobalData, a leading data and analytics company, comments:
‘‘Tesco’s eagerly anticipated H1 results reveal an impressive performance amid an incredibly tough backdrop, navigating the choppy waters of COVID-19 to deliver strong growth in its core UK & ROI market. Although total sales suffered as non-food sectors fell victim to altered consumer behaviour habits (notably UK clothing sales down 17.2% and fuel down 42.0%), a market-leading performance from food (+9.2%) shows Tesco’s ongoing strategy of retreating from international markets to focus on UK & ROI food is harmonious with downtrodden customers prioritising food spend over non-essential purchases.
The results also welcome Ken Murphy as new CEO, a tried and tested leader with lengthy experience in UK retail from his time at Walgreen Boots Alliance. While he takes up the mantle against a much more tranquil internal backdrop than Dave Lewis did in 2014, he will need to cope with numerous external challenges (including COVID-19, recession and Brexit) that will require quick adoption of new policies to meet rapidly shifting consumer choices.
The existing strategy of a dual assault on value and online fulfilment is a good one for Tesco. It has overhauled stores to shield itself from surrendering further market share to the discounters, with its Aldi Price Match and rejuvenated ClubCard loyalty scheme front and centre in the minds of value-driven consumers. In the face of a fragile UK economy and distressingly low consumer confidence, this tactic is and will continue to bear fruit for Tesco. And its rapidly evolving online presence (having more than doubled slot capacity to 1.5m per week and launching its first Urban Fulfilment Centre) is in step with the quarter of Brits that have tried food shopping online since the pandemic began. For many such shoppers, this change will be a permanent one, and Tesco is pulling as many strings as possible to keep new online shoppers on its site.”