Tesco’s online sales remain “significantly ahead” of pre-Covid levels in the weeks leading up to Christmas, showing like-for-like growth compared to 2019 of more than 60% giving the retailer the highest share of grocery for 22 consecutive periods.
As for many other retailers, the Christmas period has proved strong for Tesco, with large stores seeing 4.6% two-year growth and online a whopping 64.4%.
As a result of these stronger than expected sales to date, Tesco says that it now expects retail operating profit to come in slightly above the top-end of our previous £2.5bn to £2.6bn guidance range. It also expects Tesco Bank operating profit to be between £160m and £200m, due to the effect of more favourable economic forecasts on our provision for expected credit losses.
Ken Murphy, Chief Executive, says: “We are delighted that we were able to help our customers have a great Christmas. Despite growing cost pressures and supply chain challenges in the industry, we continued to invest to protect availability, doubled down on our commitment to deliver great value and offered our strongest ever festive range. This put us in a strong position to meet customers’ needs as, once again, COVID-19 led to a greater focus on celebrating at home. As a result, we outperformed the market, growing market share and strengthening our value position.”
Murphy adds: “The entire Tesco team is at its best when it is delivering for customers and we are really pleased that so many customers who were new to Tesco during the pandemic have remained with us – either continuing to shop online or becoming regular in-store customers. This reflects the hard work and commitment of our fantastic colleagues and I want to thank every single one of them for the incredible contribution they make every day.”
Nick Everitt, Director of Advisory, EMEA, Edge by Ascential, comments: “Data from Edge Retail Insight, Edge by Ascential’s industry-leading data forecasting and retail research portal, shows that in 2020, Tesco’s ecommerce sales grew 51% and grew another 19% in 2021 on the back of strong comparatives.”
Everitt continues: “This follows a noticeable increase in strategic digital investment under CEO Ken Murphy. The pressure will be on though for Tesco to maintain momentum, especially given the challenges associated with rising economic and living costs, as well as ongoing supply chain issues.”
Everitt says: “Tesco’s Clubcard loyalty scheme has proven successful with customers and it is clearly keen to leverage this success through its newly launched Clubcard Pay+, a new debit card giving its 20 million Clubcard members shoppers the opportunity to allocate and budget grocery spend at the retailer.”
In Everitt’s view, Tesco will have to continue to set itself apart from its supermarket rivals. This includes continuing to invest in building out its frictionless experience via an expansion of its checkout-free stores, as well as strengthening its overall omnichannel offering.
Everitt concludes: “With growing appetite for on-demand groceries, Tesco last year partnered with the ultra-rapid delivery specialist Gorillas in a trial programme, promising a 10-minute delivery service to customers in quest of a convenient and rapid delivery to their doors. The deal will help Tesco to gain valuable learnings in this booming market, with further partnerships and expansion likely as Tesco seeks to maintain its market-leading position.”
