Tesco strives to regain growth in spite of an ongoing price war against a supermarket. In the last three months up to May 31, the supermarket suffered a 1.3% decrease in the UK sales.
The decrease in sales was generally smaller compared to the 2.5% sales drop predicted by analysts. The figure also showed a development from the preceding quarter, where it had a 1.7% decrease in the UK sales.
Dave Lewis, Tesco chief executive, stated that the supermarket is managed correctly and is moving in the right path at an essential level. He said, “We are back on the side of customers.”
Tesco sales are increasing by 3% compared to its competitors. The decreased ranges to have more customer favourites and the chain cut prices contributed to the increased sales with fresh produce leading the growth.
The supermarket has cut down its product range in 15 areas by 20%. This includes soft fruit, takeaway sandwiches and bakery items. Customers can expect more significant changes said Lewis.
When the influence of the currency exchange rate was eliminated, all the international divisions of Tesco (Ireland, central Europe, Turkey and Asia) showed remarkable sales improvement.
Lewis said that they want to regain their customers so they are repairing the basics of shopping. They have also reduced short-term couponing.
The number of customers in the UK increased by 180,000, while there was a 1.4% increase in the volume of sold goods in the UK. The average cut prices at Tesco was 1 – 1.5% and a 2% food deflation. The improvements, such as the increased availability of products and better service, were well received by the shoppers
Lewis admitted that they expect changes to happen, such as a certain amount of “volatility” in 2016 for Tesco and deflation in the future, with the ever changing market. He stated that “We are not expecting a straight line, but Q1 is another step in the right direction.”
“Our goal this 2015 is to achieve a £1.4bn of operating profits,” said Lewis. He stressed that they are willing to invest more to serve the customers better if it showed a better performance than anticipated.
Tesco aims to get more customers by letting customers decide where to shop and by augmenting their offer. Lewis added that they were not able to see a basic change, but they see a more positive increase in their sales.
Lewis would be more confident to answer difficult questions about Tesco’s feeble performance and the senior executives’ generous remuneration on Friday at Tesco AGM.