The empire strikes back

For much of the past year, the rotten tomatoes have been raining down on Tesco. The launch of its Discounter range was labelled a panic measure, as was the recent relaunch of its Clubcard, and there’s no doubt the shine has come off its grocery market performance data.

Meanwhile, Sainsbury’s continued resurgence and adoption of imaginative tactics, such as “Feed your family for a fiver”, have won plenty of admirers.

Sainsbury’s ongoing momentum, combined with the impressive track records of Asda and Morrisons, has prompted some to question whether the relentless rise of the Tesco empire was headed for decline and fall.

The barbarians are certainly getting closer to Tesco’s gates, but they have a long way to go. There are signs the grocer is on the offensive again and initiatives derided in the past year may be some of its biggest weapons.

The latest Nielsen market data, for example, showed Tesco outperforming Sainsbury’s for the first time in a year, excluding Christmas. And Clubcard 2 is thought to have enabled Tesco to increase spend per visit by 5%.

It’s worth remembering too that Tesco has continued to make like-for-like sales gains – it has not gone into reverse as has been typical among the retail emperors that went on to lose their crowns.

People have become so used to Tesco’s success that numbers which once would have been stunning now barely raise an eyebrow. In its first half Tesco is likely to post profits of about £1.3bn: a six-month figure that has only ever been matched by any other retailer over a full year – and even then just a handful of times.

Tesco might remain out of favour. Food groups have been overlooked as investors sought value in general stores. But while Tesco may have been down, there’s no sign yet that it’s out.

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