Britain’s Tesco bets on a happy Christmas
By James Davey
LONDON (Reuters) – Tesco, Britain’s biggest supermarket group, has stocked up and launched seasonal products in anticipation of strong Christmas demand despite survey findings that people feel cautious about spending.
Research has shown UK consumer confidence plunged following warnings from Prime Minister Keir Starmer about the weakness of the British economy and the likely need for tax increases in an Oct. 30 Budget.
For big retailers, that has prompted fears about the Christmas trading period, traditionally the most lucrative of the year.
However, Tesco CEO Ken Murphy said the supermarket’s data showed the UK consumer was resilient.
“We track customer sentiment every week and while they’re not doing cartwheels down the hallways, they are in reasonably good shape,” he told reporters on Thursday after Tesco raised its full-year profit forecast.
“You’re seeing a stability in customer sentiment from a grocer point of view and also a willingness to spend a little bit more to treat themselves.”
Murphy said this was reflected in Tesco’s premium “Finest” range, whose sales volumes rose 15% in the first half.
“That’s a real signal of a resilient customer sector,” he said, and evidence that the trend of eating in, rather than dining out, continued.
He said he expected customer sentiment to improve ahead of Christmas, and that Tesco has launched 250 seasonal food and drink products.
“We are preparing for a good Christmas and we’re betting on a good Christmas,” he said.
“We’re buying up in terms of our volumes … There’s always an element of risk in that but we think we’ve got a very strong plan.”
On Wednesday, the boss of rival Sainsbury’s, told Reuters that discretionary markets remained difficult and that Britons would be reluctant to spend until the Labour government, in office since July, sets out its tax and spending plans, and interest rates fall further.
Murphy said Tesco had a relatively small non-food business, just 7% of its total sales, so was not overly exposed to big ticket items.
However, over the last few weeks Tesco had seen “fantastic growth” in its clothing business, he said, without giving numbers.
