Tesco, the UK’s largest supermarket, has reported a surge in consumer demand following an increase in sales of premium products and reductions in food prices. The supermarket stated that shoppers were purchasing more items compared to the previous year, with total group sales growing by 4% to £31.5 billion over a 26-week period ending on August 24. This growth encompassed both food sales and the home and clothing businesses.
The rise in the volume of purchases, especially in fresh food categories, contributed to a 4.9% increase in food sales within the UK. Tesco attributed this increase to its ability to lower prices on around 2,850 everyday grocery products by an average of 9%, as inflation showed signs of easing. The supermarket noted a higher number of purchases made using its Clubcard loyalty scheme, with over 23 million households enrolled in the program across the UK.
Moreover, Tesco revealed a nearly 15% increase in sales volume for its premium Tesco Finest range, attracting over 20 million customers. Noteworthy products like sourdough bread have been particularly popular among consumers. Ken Murphy, Tesco’s chief executive, commented on the positive consumer sentiment, indicating a stability in customers’ willingness to spend more on indulgent purchases.
Sales of Tesco Finest Dine In products saw an 18% growth during the period, possibly reflecting a trend of people opting to dine at home rather than eating out. Murphy also mentioned an optimistic outlook for the upcoming festive season, anticipating a desire amongst consumers to have a special and joyful Christmas this year.
In terms of financial performance, Tesco reported an adjusted operating profit of £1.6 billion for the first half of the year, a 16% increase from the previous year. With volume growth exceeding expectations, the company now projects an operating profit of £2.9 billion for the year 2024, up from the initially expected at least £2.8 billion. Tesco attributed about £260 million in cost savings during the first half of the year to initiatives such as streamlining store operations and reducing stock wastage.
Furthermore, Tesco disclosed that it currently holds a 27.8% share of the broader grocery market, marking its highest level since the beginning of 2022, solidifying its position as the leading supermarket chain in the country. This strong performance reflects shifting consumer preferences and the supermarket’s strategic initiatives to cater to evolving demands in the retail landscape.