According to industry data from market researcher Kantar, Tesco, the largest supermarket group in Britain, outperformed its major competitors during the crucial Christmas period. While Tesco saw a slight decline of 0.9% in grocery sales for the 12 weeks leading up to December 26, 2021, compared to the same period in 2020 when COVID-19 restrictions resulted in increased food sales, it recorded a growth of 10.1% when comparing sales over a two-year period. Furthermore, Tesco’s UK grocery market share increased by 0.6 percentage points to 27.9%.

In contrast, rivals Sainsbury’s, Asda, and Morrisons experienced sales declines of 4.4%, 3.9%, and 6.5%, respectively, compared to the previous year’s Christmas period.

Tesco’s strong performance can be attributed to several factors. Firstly, the supermarket’s extensive physical store and online operations allowed it to cater to different consumer preferences and shopping habits. Additionally, Tesco’s “Clubcard Prices” loyalty scheme proved to be successful in attracting and retaining customers. Lastly, its ability to navigate supply chain disruptions ensured a steady flow of goods, even during challenging times.

The positive results during the Christmas season align with Tesco’s previous actions. In October 2021, the company raised its earnings forecast for the full year, indicating confidence in its performance. Analysts speculate that Tesco may further revise its outlook when providing trading updates on January 13. Investors have shown their confidence in the supermarket, as Tesco’s shares have increased by 24% over the past year.

Kantar reported that total UK grocery sales for the 12-week period amounted to £31.7 billion ($42.9 billion), representing a 3% decrease compared to 2020 but an 8% increase compared to 2019. Fraser McKevitt, Kantar’s head of retail and consumer insight, highlighted that although there were no formal COVID-19 restrictions in place across the UK during this period, many people still chose to celebrate at home due to the Omicron variant.

One notable trend during the Christmas season was the increase in premium own-label sales. Shoppers spent £627 million on supermarkets’ high-end own-brand products, marking a 6.8% increase compared to 2020.

However, grocery price inflation in the UK reached 3.5% in December, according to Kantar. This is the highest level since spring 2020 and has resulted in nearly £15 being added to shoppers’ average monthly grocery bills. Price hikes were observed in categories such as fresh beef, savoury snacks, and skincare, while prices for fresh bacon, bath and shower products, and spirits experienced declines.

These findings align with the Bank of England’s revised inflation forecast, which predicts that consumer price inflation will reach a 30-year high of around 6% in April 2022. Rising grocery prices reflect the broader trend of increasing inflation in the economy.

Tesco’s strong performance during the Christmas period reinforces its market dominance and ability to adapt to changing conditions. As the economy continues to recover from the pandemic, the grocery industry remains a crucial indicator of consumer spending behavior.

Useful Links:
Tesco Official Website
Kantar Official Website