Tesco posts slowest Christmas sales since last recession

by Miranda Fitzgerald, marketingmagazine.co.uk 13-Jan-09, 16:15

LONDON - Tesco has revealed its worst Christmas sales since the last recession. It appears that sales of Tesco's own-brand budget ranges have eaten into its profit margins.

Britain's biggest supermarket chain reported a 2.5% sales rise for the seven weeks to January 10, its smallest increase in Christmas sales since 1993. Its rival Sainsbury reported a 4.5% growth in like-for-like sales and Morrisons is expected to announce around 9% growth.

Last year Tesco repositioned itself as Britain's biggest discounter in an attempt to stop its cash-strapped customers defecting to budget supermarkets, such as Aldi and Lidl. Between September and November it introduced 390 discount brands, such as ‘Sun Grown' apple juice at 49p per litre, to sit between its Value and own-label ranges.

The risk is that its budget ranges cannibalise sales from its other lines and because they cost less the supermarket needs to sell more just to make the same sales.