In the latest quarter, Tesco, the UK’s largest supermarket chain, has reported a strong increase in retail sales, driven by a decrease in inflation. The company also noted a significant growth in market share, the fastest in the last two years.
According to Tesco, total sales across the group, including Ireland, rose by 3.4% to £15.3bn in the 13 weeks ending 25 May, compared to the same period last year. The company’s performance was particularly strong in the UK, with a rise of 4.6% to £11.4bn. This was due to a 5% increase in food sales, with a high demand for fresh produce leading to higher sales volumes. Tesco’s premium product range, Tesco Finest, also experienced strong growth as shoppers showed a preference for higher-end items.
Market researcher Kantar reported that Tesco’s market share grew by more than 50 basis points to 27.6% in the 12 weeks ending 12 May, compared to the same period the previous year. Tesco attributed this growth to its strategy of matching prices with discount retailer Aldi on key items and its clubcard loyalty scheme, which offers lower prices to members. To fund these initiatives, the company has reduced business costs and aims to achieve further savings of £500m by 2024/25.
Tesco’s CEO, Ken Murphy, expressed satisfaction with the company’s performance, stating, “We’ve continued to build momentum in the business, with strong volume growth across the UK, Republic of Ireland, and central Europe, supported by easing inflation.” He also noted that the company’s market share growth is a result of customers switching from other retailers, shopping more frequently at Tesco, and purchasing more per visit.
The company’s annual general meeting, held shortly after the release of these results, saw Mr. Murphy facing scrutiny over his £9.93m pay package for the past year. This amount is significantly higher than his £4.44m total pay deal for the previous financial year and equates to 431 times the average salary of a Tesco employee (£23,010). In response to the criticism, Mr. Murphy acknowledged his high level of pay but defended it, stating, “I absolutely accept that I’m well paid.” Tesco’s chairman, Gerry Murphy (no relation to the CEO), also came to his defense, emphasizing the complexity and scale of the business and its strong performance. He also noted that the company must remain competitive in the global market when recruiting senior executives.