// Tesco said that customer behaviour was changing in light of soaring inflation with shoppers trading down to its own-brand products
// CEO Ken Murphy also flagged that average basket sizes were coming down and shopper frequency was rising
Tesco chief executive Ken Murphy revealed that customers are changing their shopping behaviour and trading down due to the soaring cost of living.
Murphy said that shoppers were trading down into Tesco own brand and ‘Exclusively at Tesco’ ranges.
Staples such as pasta, bread and beans were the products shoppers were trading down the most along with items that had seen the biggest price increases, he said.
The Tesco CEO also flagged that shoppers were making more frequent trips to its stores and the average basket size was coming down, which could indicate that customers are buying food as they need it in order to manage slimmed down budgets.
However, Murphy noted these were very early indications and that it was difficult to separate these trends from the impact of “lapping last year’s lockdowns”.
Tesco revealed that its sales in the three months to 28 May fell 1.5% on last year, although it was pitted against a boom period for the grocery market as the UK was in lockdown the previous year.
Despite the sales fall, Tesco said it had gained market share against big four rivals Sainsbury’s, Asda, and Morrisons.
Keeping prices low
The trading down trend comes as UK shoppers face the biggest squeeze on household incomes since at least the 1950s amid surging fuel and energy costs and the impact of the national insurance hike.
Murphy said that Tesco is “resolutely committed to value” and is working with suppliers to mitigate price rises for consumers. He said Tesco’s price rises would be “a little bit less and a little bit later” than the rest of the grocery market.
“Being competitive on price is the most important thing we can do for our customers,” he said.
Tesco’s value push helped drives sales during the quarter. It grew the distribution of Aldi Price Match and Low Everyday Prices products by 19%.
Murphy said: “Whilst the market environment remains incredibly challenging, our laser focus on value, as well as the daily dedication and hard work of our colleagues, has helped us to outperform the market.
“Our material and ongoing investment in the powerful combination of Aldi Price Match, Low Everyday Prices and Clubcard Prices is removing the need for customers to shop elsewhere.”