Baptism of fire awaits the new grocery chiefs

The past decade has been a golden age for the supermarkets. As they’ve rolled out new formats and expanded into non-food, like-for-like growth seemed easy to come by, turning their general retail rivals green with envy.

This week’s updates from Tesco and Sainsbury’s showed just how much has changed. The days of easy like-for-like growth driven by inflation have gone, for the time being at least, with the ONS confirming this week that falling food and non alcoholic drink prices were the biggest driver of May’s fall in inflation.

Falling inflation isn’t the only reason why it feels a golden age of grocery retailing is coming to an end. Three of the big four are either under new chief executives or soon will be, while Asda and the Co-op in particular are finding business hard going at present.

Yet despite the market showing little growth, supermarkets are continuing to do all they can to lay down more space. What that means is that the grocery market is going to become even more competitive and the battle over price even more aggressive.

It is not going to be easy for anyone and in a low-inflation world the only way to grow like-for-likes is going to be to retail through it. Offering something distinctive that enables them to grab market share - whether its price, product or service - is going to be vital for any retailer that is going to demonstrate growth in the year ahead. The new generation of supermarket chief executives could be in for a baptism of fire.

Argos in the firing line

The build up to the World Cup is meant to be the prime time for selling TVs, so it was perplexing to see Home Retail Group blame the category’s poor performance for the 8.1% like-for-like decline at Argos in its first quarter - especially as rivals from DSGi to John Lewis say TV sales have rocketed ahead of the football bonanza.

Argos has real strength as a multichannel retailer, but the breadth of its range puts it in the firing line from competitors on all sides, whether from the re-energised electricals sector or the supermarkets’ ever-growing incursions into non-food. There’s no doubt that consumer nerves will have played a part in its poor performance. But as its rivals in all its categories raise their game, it is important that Argos too is clear in its mission and its point of difference.