Tesco’s food fight

It was only a matter of time before grocery market leader Tesco bounced back, and this week’s results have proved just that.

Tesco chief Sir Terry Leahy said Tesco is now “back in the lead” and he also believes the grocer’s strategy is sustainable.

When Tesco first took a hit from the hard discounters Aldi and Lidl, it launched its Discounter Brands range. Many saw this launch as an act of desperation, a sign that Tesco was not confident in its offer, and most importantly, thought it wouldn’t stop some shoppers from defecting to the hard discounters.

The discounter brands did help lift UK sales though, and the likes of Aldi and Lidl’s market share growth has slowed.

But that wasn’t the only trick up Tesco’s sleeve. Its loyalty scheme Clubcard was its trump card. The Double Points promotion – which remains ongoing – grabbed the headlines and made customers sit up and take notice. It also ensured their loyalty – more partners are being added to the scheme all the time and customers want to carry on collecting points to ensure bigger and better payouts.

Both of these tactics has meant some, such as Asda, have suffered. And Tesco is once again back on top. And there will be no let up this year either – the Double Clubcard points offer remains and Tesco is also going gung-ho on expansion of offers such as non-food, laughing off rival Asda’s ambitions to overtake them.

But as we know the grocery sector is extremely competitive and the rivals leapfrog each other constantly in terms of who is outperforming the most. Tesco is now back, but over the past year Asda, Sainsbury’s and Morrisons have outperformed.

If Tesco’s three big rivals are feeling the heat from the market leader at the moment, they will undoubtedly be plotting something back at their head offices. And there are whispers that Asda are a fair way down the line with their plans for a marketing fight back – watch this space for an interesting fight.