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The giant awakes: Tesco fightback begins

Tesco, Britain's biggest grocer, halted its slide in customers and matched the market's growth for the first time since June 2011, new figures show.

Market researcher Kantar Worldpanel said Tesco's sales increased 3.3% in the 12 weeks to January 20, giving it a market share of 30.4% and putting its rivals under pressure.

"This improvement has put some pressure on the rest of the big four, with Morrisons in particular suffering," said Kantar director Edward Garner.

Morrisons saw its sales fall 1.7% over the same period as its market share declined by 0.6 percentage points. Sainsbury’s sales grew, by 3.2%, but its market share ticked down 0.1 percentage points to 16.9%.

Things were worse at Asda, whose sales rose 2.1%, but market share fell by 0.2 percentage points to 17.6%.

How Tesco is fighting back

Tesco launched a £1 billion plan in April to revive UK sales by investing in more staff, revamped food ranges, refined marketing and smartened stores that give more space to food.

"These positive results are a sign of stabilisation for Tesco as the retailer gets back on track with its customers," said Kantar's Garner.

"Whilst our seasonal performance is encouraging, there is a lot more to do," said group chief executive Philip Clarke on the company’s strong Christmas performance.

The Christmas sales rise was driven by a stronger food performance and an 18% rise in online food sales, though general merchandise - including electricals - was still a drag on growth.

[Related feature: Tesco’s comeback trail – putting the plan in action]

New challengers

While Tesco’s fight with the rest of the “Big Four” seems to be going well, they are no longer the only players.

Kantar said that the discounters Aldi and Lidl strongly outperformed the market with sales growth rates of 28.2% and 10% respectively over the same period.

And at the premium end, Waitrose continued to perform well, with sales growth of 8% echoing its record Christmas outcome.

[Related feature: Good food, fair prices – the Waitrose philosophy explained]

(Reporting by James Davey; Editing by Kate Holton, David Goodman and Yahoo! Finance UK)

Source: Reuters