Opinion: Tesco shows the way to golden quarter success

Over the last week, the grocer enjoyed two big moments.

First, in the handbags-at-dawn Marmite showdown with Unilever, Tesco successfully positioned itself as the shoppers’ friend by refusing to accept price rises demanded by the FMCG Goliath.

It was reminiscent of the old days, when Tesco would routinely scour the grey market for big-name, upscale products to sell at knockdown prices to customers.

The message back then was that nothing was too good for its shoppers, who would not have to pay premium prices for quality goods.

Marmite, PG Tips and Pot Noodles may not quite be luxury items, but they are touchstone products of daily life and so resonate keenly with consumers.

Tesco and Unilever eventually struck an agreement, the terms of which are unknown. The best guess is there was some sort of compromise but, no matter, Tesco’s value credentials were burnished.

Just a few days afterwards, the latest Kantar data showed that Tesco had won market share for the first time in five years as 228,000 more shoppers flocked through the doors and much-maligned big sheds “supported” the advance.

Financial pressure

The combination of the value champion stance and strategic progress should stand Tesco in good stead in what are likely to be uncertain times ahead.

The Marmite row reflected price pressures following the UK’s Brexit decision, and there will be more to come. Some retailers have already indicated that higher prices will inevitably be passed on to the consumer.

If consumers start to feel under financial pressure as the country navigates an unknown political and economic landscape, that weight will be felt by retailers.

“The best retailers have proved themselves adept in the past at finding ways not just to survive but to thrive. Tesco at present is a great example”

Broker Numis reckons general retailers face a tough, “but not disastrous”, year. It estimates profits could fall by about 5% “before any company-specific self-help”.

The latter point is surely key. The best retailers have proved themselves adept in the past at finding ways not just to survive but to thrive. Tesco at present is a great example.

Market intelligence specialist Mintel forecasts retail sales growth of 2.5% to £42.2bn this December.

That’s good news. But come the new year, a new period of slog may begin and retailers will need to be on top form.

They can be if they take on board, as Tesco seems to have done, the deceptively simple words of the great Harry Selfridge: “People will sit up and take notice of you if you will sit up and take notice of what makes them sit up and take notice.”