Michelle Butler, Bord Bia London

Having increased its market share for the first time in nearly two years from 30.6% a year ago to 30.7% for the twelve week ending period to November 09, Tesco, it could be said, is defying the critics. Furthermore Tesco’s growth rate of 4.7% year-on-year outperformed the market average of 4.4% which again has not been achieved since 2007.

However, this week Tesco posted its third quarter trading results which on a like-for-like sales basis were at the lower end of expectations.  Analysts had predicted Tesco UK’s like-for-like sales to grow at a rate of 3% while Tesco’s actual growth rate was marginally lower at 2.8%.

Tesco cited falling inflation as a key contributor to their latest results stating ‘the performance was driven by strong volume growth, with inflation having fallen considerably across the sector and petrol also seeing a substantial decrease in cost’.  Other contributing factors worth noting have been Tesco’s exposure to non-food and the introduction of the discount range which resulted in value erosion.

Tesco’s attempt at winning back customers via the double Clubcard points scheme has been well received by consumers.  This week Tesco have upped the stakes by announcing they will cut prices across 200 of their Finest lines each week in the run-up to Christmas.  Tesco are clearly looking to retain some of the premium spend which traditionally deflects to more upmarket retailers like Waitrose and M&S at this time of the year.