Tesco growth slows to 1993 levels
While we have become accustomed to record growth figures from supermarket chain Tesco over the last few years, today there was a short sharp shock from industry with the announcement that like-for-like sales are down to 2% in the third quarter of 2008. These are figures not seen since 1993 and the company has also confirmed many shoppers are moving from the premium brands to their own line brands, which is impacting upon profit margins.
This move to non-branded food items has also been reflected in increased sales from Lidl and Aldi over the last few months. These are two of the U.K.'s leading discount supermarkets and fully reflect the increased interest in cheaper food items. However, Tesco is unlikely to sit back and let the cheaper chains take their business with rumours that a serious pricing war is set to start at the end of 2008 and carry on into 2009.
While this will hit some of the smaller operators in the UK, consumers will feel the benefit in their pocket as the likes of Asda, Tesco and Morrisons go head-to-head for your business. This is sure to impact upon profit margins for smaller operations but in the current climate it seems very much as if it is every company for itself.
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