Fake farms help Tesco grow sales

Tesco’s controversial in-house farm brands have helped the retailer grow sales by 1.3% in the 12 weeks to 9 October 2016, according to the latest grocery share figures from Kantar Worldpanel. 

The multiple retailer has grown ahead of the overall market, which saw a 0.8% sales growth in the period. It was also Tesco’s first sales growth since March 2015.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Foods including ready meals and produce have been among the fastest-growing areas at Tesco, helped by its ‘Farm Brands’ but also its standard own-label lines. Tesco has attracted a further 228,000 shoppers through its doors to help the grocer grow to a 28.2% share of the market – its first year-on-year market share gain since 2011. Sales growth has been strongest among family shoppers, while improved trading from its larger supermarket and Extra stores has supported this month’s gains.”

Tesco’s farm brands were launched in March of this year and attracted the ire of the National Farmers’ Union (NFU), which formally complained to the National Trading Standards Institute over the use of ‘fake’ farm branding by retailers. The NFU cited Tesco’s ‘Woodside Farms’ and ‘Boswell Farms’ as a recent and high-profile example of this practice.

In its interim results earlier this month, Tesco chief executive Dave Lewis said the new fresh food brands were “performing ahead of expectations”.

McKevitt said that deflation continued during the period, but the rate has slowed down. “While the threat of rising prices is on a lot of minds at the moment, we’ve seen the 27th consecutive period of grocery price deflation, albeit at a slower rate. The price of everyday groceries fell by 0.8% compared with a year ago and in contrast to the -1.1% reported last month, with deflation particularly noticeable among pork, crisps and poultry products.”
Elsewhere, Iceland increased sales by 6.9% with success across the store, helping its market share rise by 0.1 percentage points to 2.1% as a result.

The Co-op recorded its 17th consecutive 12 weeks of growth this period.
McKevitt said: “[The] Co-op’s sales are up by 3.1% compared to a year ago, taking its share up to 6.5% of the market. Consumers are continuing to buy from Co-op stores more frequently, with the average shopper now visiting almost twice a week – an 8% increase. The convenience retailer is responding to challenges from the wider market by focusing on its own-label lines, with its re-launched membership card rewarding shoppers who choose Co-op’s own products.”
Sainsbury’s sales fell by 0.4%, while Morrisons sales were down by 3.0%. The re-launch of Morrisons’ ‘The Best’ range has had a positive impact on its premium own-label sales, which increased by 6%. There was a similar picture at Asda, where sales were down by 5.2% – its slowest rate of decline for four months – despite a premium own-label sales increase of 8%.
Waitrose’s sales grew by 3.5% and contributed to a market share increase of 0.2 percentage points to a total of 5.4%.

Aldi’s sales increased by 11.4% while Lidl’s grew by 8.4%, taking their market shares up to 6.2% and 4.6% respectively and maintaining the combined market share high of 10.8% which the two retailers achieved last month.  

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