Attitudes have changed, supermarkets haven't

Telegraph
03 Jun 2014
The “big four” supermarkets are under more pressure than at any stage in the past two decades
This is turning out to be a uniquely challenging year for the grocery industry. Unwanted records are falling, from the slow pace of industry sales to the decline in Tesco’s market share and the growth of Aldi. The “big four” supermarkets are under more pressure than at any stage in the past two decades, partly because of flawed management strategies — Philip Clarke, at Tesco, and Dalton Philips, at Morrisons, face serious questions from investors — but also because the supermarket sector has matured in the UK.
Tesco, Asda, Sainsbury’s and Morrisons have raced to put down out-of-town space across the country. Now, however, there are no more postcodes left to fill with supermarkets. The grocery industry has effectively become ex-growth. In such a market, the winners tend to be those who stand out from the competition.
That is reflected by the latest Kantar market share figures, which one analyst described as “shocking” for the “big four”. The strongest performing retailers in the data are the discounters Aldi and Lidl, and upmarket chain Waitrose; they are growing because they have established clear identities at both ends of the pricing structure and are opening more shops, proportionately, than the established grocers.
Among the “big four”, only Asda and Sainsbury’s — which have the most stable strategies — grew sales. Sainsbury’s has focused on the quality of own-brand food, and Asda has set out to be 10pc cheaper than its nearest rivals. Asda, which started significantly cutting prices late last year ahead of Morrisons and Tesco, now looks to be the leader among the “big four”.
When Clarke presents Tesco’s worst sales figures in recent memory on Wednesday morning, he will be rightly challenged about how he plans to make Britain’s biggest retailer unique. But he is trying to run Tesco in a very different market from his predecessor, Sir Terry Leahy.