Retail

Resurgent Tesco Curbs Discounter Growth As Revival Speeds Up

By Steve Wynne-Jones
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Market leader Tesco Plc continued to lead a counterattack by Britain’s supermarkets last month as German discounters Aldi and Lidl recorded the slowest sales growth since 2011.

Tesco’s sales rose 2.2 percent in the 12 weeks ended Nov. 6, researcher Kantar Worldpanel said Tuesday. The growth was the fastest in three years and sent the shares up as much as 3.9 percent in London. Aldi’s sales gained 10 percent, while Lidl’s rose 6.1 percent, Kantar said, a slowdown on previous months.

The findings provide a further sign that the rise of the discounters may have peaked. With their low prices and no-frills approach, Aldi and Lidl have increased their share of U.K. grocery spending to almost 11 percent. Supermarkets have responded with a sustained period of price cuts that has closed the gap. Tesco in particular has seen customers return as Chief Executive Officer Dave Lewis has also improved service and product availability, though Wal-Mart Stores Inc.’s Asda continues to struggle.

“Overall the industry remains tough, making Tesco’s acceleration all the more impressive,” Dave McCarthy, an analyst at HSBC, said in a note.

Kantar’s findings were backed up by rival researcher Nielsen, which said the combined growth of Aldi and Lidl is at its lowest level since the end of 2011. Tesco’s 2.3 percent sales gain in the 12 weeks ended Nov. 5 was the strongest in more than three years, Nielsen said.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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