By Diane Cooke
Marks & Spencer and Waitrose are facing tough times. Both retailers have shelved plans for new shop openings amid slowing food sales.
Senior retail sources have commented that M&S’s food division misses the beady eye of Steve Rowe who is now running the entire business while Rob Collins at Waitrose is still struggling to match up to the successes of long-serving Mark Price’s tenure.
As a result, both retailers will have to sharpen up their food offering. Marks & Spencer has said that it has been too “niche” and is going to start appealing to families rather than just couples who want to dine in for £10.
Waitrose has said that it wants to become “more Waitrose”, in other words, more upmarket.
So what is Tesco doing differently to other supermarkets? In Spring last year, despite controlling almost 28% of the UK grocery market, the supermarket had been losing customers to Aldi and Lidl for most of this decade. But by Christmas it was starting to turnaround its fortunes in the UK delivering better than expected annual profits after higher sales of food, clothes and toys.
Tesco had improved customer service and ranges, helping to boost sales of party food by 24%, premium wine by 20% and Free From specialist allergy-free foods by 18%.
Britain’s biggest food retailer said it had achieved the sales growth despite deciding not to repeat the previous year's loyalty card promotion, which it said had hit performance by 0.8%. Sales of the group’s F&F clothing range rose 4.3%.
Richard Lim, the chief executive of consultancy Retail Economics, said Tesco’s turnaround continued to gather momentum. “Its laser-like focus on the core UK food business through deeper price investment and further asset disposals has halted the loss of market share against the smaller but faster growing discounters,” he said.
A year later and Tesco is boasting a 28 per cent rise in profits. It made a profit of £1.64bn in the year to February 24 as total group sales rose 2.8% to £57.5bn. Sales at established UK and Irish stores rose 2.4% in the final quarter, slightly ahead of the 2.2% analysts had expected.
Dave Lewis, the chief executive, said: “This has been another year of strong progress, with the ninth consecutive quarter of growth. More people are choosing to shop at Tesco and our brand is stronger, as customers recognise improvements in both quality and value."
The update is the first since the completion of Tesco’s £3.7bn takeover of the grocery wholesaler Booker last month. Booker’s former chief executive Charles Wilson has taken over as head of Tesco’s UK business from Matt Davies.
Despite “difficult circumstances”, which include a tough UK market and an inquiry by the Serious Fraud Office into accounting problems dating to 2014, before Chief Executive Dave Lewis took charge, the Tesco boss said the company was “slightly ahead of where we thought we might be at this stage”.