Tesco Delivers Growth With a Little Help From Inflation

John Ibbotson

John Ibbotson / 16th June 2017

Dave Lewis’s back to basics approach to grocery is paying off and with Tesco’s immense buying power he has been able to keep prices low.

“Tesco has delivered a corker in its core UK market.

“Food, and fresh food in particular, is firing on all cylinders and that’s a huge shot across the bows for its competitors, in particular Morrisons.

“With inflation rising sharply, Tesco has used its immense buying power to keep prices lower for its customers. Against this inflationary backdrop, the numbers are all the more remarkable.

“But the toxic combination of rising inflation and low wage growth remains a major threat.

“As inflation continues to erode people’s spending power, more and more of Tesco’s customers could be driven back to the discounters, Aldi and Lidl.

“What’s particularly encouraging is that Dave Lewis is acutely aware of this and knows that nothing can be taken for granted.

“He is sticking religiously to the basics of grocery, which is delivering a robust food proposition, keeping prices low and putting a massive focus on customer service.

“Tesco’s looming merger with Booker could prove a distraction, especially as the Competition and Markets Authority starts its review, but if it goes ahead the deal will further cement Tesco’s comeback.”

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