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Online grocery growth slows at Tesco but overall sales rise

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Tesco said online sales growth had slowed in the first quarter of its financial year, compared to the same time last year, while overall like-for-like sales grew.

Group sales at the supermarket, a Leading retailer in IRUK Top500 research, grew by 0.9% on a like-for-like basis, stripping out the effect of store openings and closures, in the 13 weeks to May 28. Total sales were up by 1.1%, reflecting a small number of new store openings. In the UK and Republic of Ireland market, like-for-like sales grew by 0.3%, with the quantity of goods sold up by 2.2% and transactions up by 1.7%. International like-for-like sales grew by 3% in the quarter.

But, Tesco in today’s statement, “The rate of sales growth in online grocery has continued to moderate, as expected, reflecting the changes we made last year to improve the sustainability of the offer.”

Those changes included a move to raise from £25 to £40 the amount shoppers needed to spend in order to qualify for free click and collect and cheap delivery.

In pursuit of sustainability Tesco has also set about moving its websites onto one platform. That means the closure of its standalone F+F website, with that range now sold on the main Tesco Direct website. Today the company said the integration of those websites would be completed this month “as part of our effort to streamline the customer experience across our mix of formats and channels”.

Focus on the customer experience

Across the business, Tesco said it had focused on improving the customer experience, with changes including “lower, more stable prices” that mean “the cost of a weekly shop at Tesco is now 6% lower than it was in September 2014”. Multi-buy promotions and the use of discount coupons have reduced, and the company has focused on improving the shopping experience. As a result, it says, customer satisfaction measures have improved by 2% since the start of the year.

Chief executive Dave Lewis said: “In both the UK and internationally, we are putting customers at the centre of everything we do and re-configuring our business to serve them a little better every day. Our new fresh food brands are performing very well, with over two-thirds of our customers having bought products from the new range.

We are encouraged by the progress we are making. By growing volumes, transforming the way we work together with our suppliers, and further optimising our store operating model we are rebuilding profitability in a sustainable way. I am confident that the improvements we are making for customers are working and will create long-term value for our shareholders.”

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