Comment: Tesco’s woes are the dreams of others

Another week, another Tesco bashing. Whilst it is clearly going through a rough patch, its issues are exacerbated by the fact it is the bellwether, not just for UK retail but for the UK’s economy. But are all the negative headlines justified or am I missing something?

Tesco’s overall sales from its UK stores that have been open for more than a year fell just one per cent in the three months to the end of May (excluding the impact of volatile petrol sales and VAT), which is just marginally lower than analysts forecast - hardly a crisis!

People seem to forget that we’re currently in the midst of the biggest structural change to the retail sector that the global economy has ever seen - and yet the barometer for British retail is being lambasted for what is, in my opinion, a relatively small problem. Before judging Tesco too harshly, its critics should consider the bigger picture.

Think about how many retailers have gone into administration during the past year and how many shops have closed. Think about all the job losses that these closures represent and the shocking void rates that we are seeing on our high streets. In this context, are Tesco’s results really that terrible?

Philip Clarke continues to assert that his improvement strategy for Tesco is still on track - and he may end up being right. Even though Tesco’s non-food sales, particularly electrical products, are under pressure from online rivals like Amazon, Tesco is now re-focusing its efforts on higher-margin areas like health and beauty, stationery and homeware and furnishings - as well as its F&F clothing brand.

Acquisitions like Harris + Hoole and Giraffe will help Tesco to use its retail space much more effectively and plans are already underway to replace about a third of the space dedicated to underperforming general merchandise items like televisions, with more popular products like clothing and stationery.

At the same time, the company is also converting some of its non-food space back into food - and there are some encouraging signs here too, especially where Tesco has been revamping its private-label ranges. Excluding the frozen and chilled foods that were affected by the horsemeat scandal, Tesco’s food sales actually improved in the first quarter.

Against this backdrop, it’s unfair to portray Tesco’s latest sales figures as major crisis for the company - especially when you consider how well the company was performing just six months ago. Plus, Tesco is still way ahead of the curve when it comes to online sales. Turning a large operation like Tesco isn’t going to be easy and it certainly isn’t fast but Tesco’s supporters certainly don’t need to think about jumping ship just yet. When the dust settles from this latest announcement, Tesco will still be the largest supermarket in the UK and the world’s third biggest retailer.

• Dan Coen, director, Zolfo Cooper