Tesco Sent Stock To Retailers Impacted By Cyber Attacks

Tesco’s CEO has revealed that the group’s wholesale arm stepped in to supply extra stock to Marks & Spencer and some Co-op societies when their operations were impacted by cyber attacks last month.

Speaking after posting robust first quarter results yesterday, Ken Murphy said that M&S and some of the Co-op’s independent societies asked Booker for support sourcing products while their supply systems were down.

“Over the period when they’ve been impacted, Booker has supplied both M&S and Co-op with products and supported them in any way they could,” he told The Times. “They asked us to supply products, and we said yes.”

In M&S’s case, Booker is understood to have increased deliveries of third-party branded items, such as Marmite and Coca-Cola, and shipped more items directly to shops.

The main Co-op Group did not request assistance for its stores, but the report by The Times said that some of its independent societies temporarily turned to Booker.

The support was short-term, and both companies have since restored their operations after the cyber attack.

Last week, Co-op said its recovery from the hacking incident was nearly complete.

M&S was arguably the worst affected, with it facing a hit of around £300m from the attack. Data released this week confirmed that sales in its food stores fell significantly during the period after it struggled to keep shelves stocked.

Tesco, which yesterday reported a better-than-expected 5.1% increase in like-for-like sales during its first quarter, insisted that this had not been because of the cyberattacks at M&S and Co-op. “We haven’t seen any uptick in activity or attacks since some of our competitors were attacked,” Murphy said. “We haven’t seen any material changes.”

He emphasised that cybersecurity was at the “top of my inbox on a daily, weekly basis”, adding: “We stay on top of cyber all the time. We have invested continuously in upgrading our cyber capabilities because this is a moving target all the time. As the sophistication of potential attackers improves, we have to keep investing behind it.

“We stay very vigilant. We invest substantially behind it. We seek to learn from what’s going on in the industry”.

NamNews Implications:

• This brought to mind an old comment picked up from a retailer in Tokyo about its rivals:
• “Of course we compete, but only on certain things”
• Tesco’s move will not be forgotten…

Poundland’s Sale Exposes Cracks In Value Retailer

Following yesterday’s news that Poundland has been sold for less than £1 to turnaround firm Gordon Brothers, Emily Scott, retail analyst at GlobalData, offers her view:

“Poundland’s sale comes amid mounting losses and declining revenue, as it has faced intense competition and the distraction of the failed introduction of its Pepco clothing and general merchandise range.

“Poundland’s appeal was rooted in its straightforward approach to value with a single price point. However, in recent years, the retailer has strayed far from this. The introduction of multiple price points has confused customers, while still not enabling shoppers to trade up within its ranges as it lacks the additional choice of mid to premium products. Poundland has lost out as consumers are becoming more discerning, seeking a better balance between quality and value for money, driving them to trade up.

“The British variety store chain has also faced increasing competition from the grocers, particularly as Tesco has leveraged its Clubcard loyalty scheme to offer customers exclusive discounts and enhanced value.

“GlobalData estimates that Home Bargains, B&M and The Range’s market shares in the UK discount market have increased by 7.2ppts, 6.2ppts and 1.3ppts, respectively, between 2019 and 2024, while Poundland’s share has fallen 2.3ppts. Poundland’s weak variety of branded goods at low prices has meant it has struggled to keep pace, damaging its brand perception amongst budget-conscious shoppers.”

NamNews Implications:

• Poundland’s success to date depended on decades of near-zero inflation.
• Meaning the £1 proposition was viable for much longer than normal.
• A return to ‘proper’ inflation rates undermined everything.
• With the inevitable result.
• Good while it lasted…

Sales Growth Accelerates At Tesco Despite ‘Intensely Competitive’ Market

Tesco has reported better-than-expected first-quarter sales growth as improvements in its product range and price competitiveness helped it win market share from rivals. However, the UK’s leading grocer left its annual profit guidance unchanged, with its CEO Ken Murphy noting that the market “remains intensely competitive”.

UK like-for-like sales up 5.1%, 13 weeks to 24th May vs 4.3% rise in previous quarter, 24 consecutive four-week periods of market share gains, now 28.0%, highest since 2021.

Tesco said its success was due to a 65bps YoY uplift in its brand perception (improvements in service, quality, and value). It price matches Aldi on 600 lines, 9,000 Clubcard Prices/week.

During the quarter, Tesco’s food sales were up 5.9% via fresh categories and 350 new Finest products, sales up 18% (home dining)

Non-food sales (excluding toys) up 6.2% via home and clothing.

Growth in all channels, (online sales up 11.5%, market share up 163bps).

Murphy: UK outcome reflected “our powerful value proposition, strong availability and focus on product quality and innovation”.

Republic of Ireland LFL sales up 5.5% (continued investment in fresh drove food sales up 5.8%).

Booker LFL sales up 2.0% (continued decline in tobacco and its Best Food Logistics unit) - catering sales up 7.3% and retail business up 5.4% (symbol brands).

Central Europe LFL sales up 4.1% (produce, dairy and bakery categories drove fresh food sales up 7.3%).

It still expects to report adjusted operating profit of £2.7bn to £3.0bn for year ending Feb 2026, vs £3.13bn 2024/25.

It had revealed in April that it expected profit to fall this year as it set aside cash to deal with a step-up in the “competitive intensity” of the British grocery market – (Asda pledge of sustained Asda price cuts to win back market share).

“We’re definitely seeing an intensification in competition, I think that broadly, though, it’s been a rational intensification, in the sense that everybody is kind of staying toe-to-toe with each other,” Murphy told reporters.

“So you’re not necessarily seeing massive movements in relative competitiveness, but everyone has, I think, upped their game a notch.”

He noted that price inflation at Tesco was running below the industry rate, which rose to 4.1% in May (Kantar).

Most analysts think Tesco’s strategy of price matching Aldi on key lines, together with its popular Clubcard Prices promotion, is working well. It is also becoming increasingly digital and developing growth avenues such as its online Marketplace and retail media unit.

“Tesco appears to be in a better position than many of its peers,” said John Moore, wealth manager at RBC Brewin Dolphin.

NamNews Implications:

• Tesco is patently firing on all cylinders…
• …and making it work, in unprecedented market conditions…
• …whilst determined to neutralise Aldi’s potential competitive edge.
• (It follows that they will increasingly require similar market fitness from its partner-suppliers)

Sainsbury’s Trialling ESLs

Sainsbury’s has become the latest supermarket to start testing electronic shelf labels (ESLs) that can offer significant efficiencies for store operations.

The retailer has installed the technology in three of its larger shops and has been trying it out across different sections, including alcohol, health, and general merchandise.

Replacing paper shelf edge labels with ESLs can offer retailers several advantages, including being able to display more product data and change prices instantly without the need for time-consuming manual updating by shop floor staff.

Price discounts and promotions can also be communicated more easily, whilst eliminating paper waste associated with traditional labels.

A spokesperson for Sainsbury’s said: “We are trialling electronic shelf-edge labels in a small number of our stores,” without providing any further details.

Last month, Co-op confirmed that it is working with VusionGroup to replace paper shelf edge labels with ESLs across all its 2,400 convenience stores.

Waitrose and Asda have also started trialling them in some of their convenience stores, whilst Lidl, Aldi, and several regional Co-operatives have been rolling out ESLs in recent years.

Despite the benefits, the leading multiples, including Tesco and Sainsbury’s, have been slow to adopt the technology.

NamNews Implications:

• Surprising it took so long…
• But now inevitable, in terms of adding some tweaks to on-shelf availability.
• (and providing another way to optimise Retail Media…)

New Rumours About Merger Of Aldi Nord And Aldi Süd

There are fresh rumours that the two Aldi entities – Nord and Süd – are discussing a merger, ending a separation that has lasted over 60 years.

German business magazine WirtschaftsWoche reported that discussions between the Heister family, which owns Aldi Süd, and two strands of the Albrecht family, which owns Aldi Nord, have been going on for several weeks.

Sources said a possible deal scenario included the two companies combining under a joint holding company with shares evenly divided between the families’ trusts.

The report noted that while a merger was initially targeted by the end of the year, this is now viewed as unrealistic. WirtschaftsWoche said a first step might be for Aldi Süd and Aldi Nord to combine their IT systems.

Aldi split into two distinct groups in 1961 due to an alleged difference in opinion between the founding brothers, Theo and Karl Albrecht, over whether to sell cigarettes.

The Aldi group as a whole operates over 12,000 stores worldwide. Aldi Nord is responsible for the stores in Northern Germany, Belgium, France, Luxembourg, the Netherlands, Poland, Portugal, and Spain.

Meanwhile, Aldi Süd’s responsibilities cover Southern Germany, Australia, China, Ireland, the UK, the US, and through its Austrian subsidiary, Hofer AG, Austria, Hungary, Italy, Slovenia, and Switzerland.

Internal disputes among family heirs had previously obstructed any strategic coordination between the two chains. However, following a series of court cases and a structural overhaul of Aldi Nord’s governance, the families have been pursuing closer alignment.

Whilst both use different branding, they follow a similar model and have been harmonising their ranges and product development in recent years.

A unified Aldi could pose a serious challenge to global competitors such as Lidl, Walmart, and Carrefour. Combining resources would result in greater purchasing power, streamlined supply chains, and coordinated international expansion.

Analysts believe that a merger could also allow Aldi to accelerate investments in digital retail and e-commerce, an area in which it has struggled to make an impact.

Whilst the families might ultimately pursue full consolidation, cultural differences between the two companies, legacy systems, and legal complexities are likely to remain significant obstacles.

The two companies have not commented on the report.

NamNews Implications:

•  A 50/50 split does not always make for easy decision-making
• ...but it is unlikely that an unbalanced split would suit either side
• Also the Asda/Walmart IT system-decoupling issues might be kept in mind..
• That said, the resulting scale from a join-up of this size would be of benefit to Aldi on global and local level..
• Watch this space..

Aldi Moves Ahead Of Asda

On the same day that Asda suggested that it was on the road to recovery, new figures show it has been overtaken by Aldi in market share terms across certain categories.

According to Kantar data published by trade magazine The Grocer, Aldi’s grocery market share was 9.8% over the four weeks to 18 May, compared with Asda’s 9.4%.

The figures include the food & drink, household, and healthy & beauty categories and are different from the widely covered numbers that the research group makes publicly available each month. They relate to all expenditure through store tills, with latest figures putting Asda ahead on 12.1% compared to Aldi’s 11.1%

The data seen by The Grocer is usually only shared by Kantar with the supermarkets. Over the longer 12 week period to 18 May, Aldi and Asda were neck-and-neck on 9.8%. Aldi’s grocery sales rose 8.2% year-on-year during the period, while Asda’s fell 6.7%.

Looking at just food and drink (excl. alcohol, household, toiletries and healthcare), Aldi is significantly ahead of Asda, with a share of 10.8% over the 12 weeks versus 10%.

Speaking to The Grocer, Giles Hurley, CEO of Aldi UK & Ireland, said: “In the latest data we have taken third spot. That’s not an objective for us. We don’t benchmark on placement in the market. But it’s an interesting output of our growth and it’s exciting. Seven in every 10 households shop with us.”

An Asda spokesperson commented: “The data upon which these claims are based is highly selective and does not capture Asda’s strong performance across George, Asda Express and Fuel, which remain a key point of difference to the limited-range discounters.”

NamNews Implications:

• By whatever cut, the impact is perceptible to both Aldi and Asda.
•  i.e. affects morale…
• …that eventually seeps into the aisle.
• Watch this space…

Head Of Aldi UK Dismisses Talk Of Supermarket Price War

Giles Hurley, CEO of Aldi UK & Ireland, has said he does not believe the supermarket sector is in the midst of a price war despite suggestions to the contrary, whilst warning rivals his business still had “huge potential” for growth.

Back in March, Asda raised fears of a price war after saying it was willing to take a hit to profits to finance a campaign of price cuts aimed at reversing a slide in market share.

The warning hit the share prices of Tesco and Sainsbury’s, with both supermarkets accounting for Asda’s statement in their annual profit outlooks.

However, speaking to Reuters on Thursday, Hurley said that there had been “more talk than substance”.

He added: “There has been a lot of talk about a price war, I don’t think that has manifested itself,” pointing to industry data showing grocery inflation hitting 4.1% in May, a 15-month high.

“I’d probably call it more of a phoney price war than a real price war,” Hurley said, maintaining that Aldi’s price gap to rivals “is as big as it’s ever been”.

Data from Kantar published on Wednesday showed Aldi UK’s sales rose 6.7% over the 12 weeks to 18 May, its fastest growth since the start of 2024, with its market share hitting a record 11.1%, up 30 basis points year-on-year.

“While I’m delighted with the growth that we have, there’s massive headroom for us,” said Hurley.

He noted that the group, which currently trades from around 1,050 stores, will invest £650m this year in opening 40 stores and refreshing existing ones. A further 40 openings are planned for 2026 as part of its long-term target to reach 1,500 stores in the UK.

NamNews Implications:

• What matters to the consumer-in-the-street: “Is it cheaper elsewhere?”
• A consumer who is increasingly prepared to shop around for value.
• Call it what you will…
• …but keener prices attract (and retain) shoppers.
• With depth of retailer pockets a key driver…
• …and suppliers needing to assess which retailers are best placed to reduce shelf prices.
• At whose expense…?

Strong Period For Discounters Amid Rising Grocery Price Inflation; Signs Of Improvement At Asda

Latest figures from Kantar show take-home grocery sales grew by 4.4% over the four weeks to 18th May, with more shoppers heading to the discounters and buying own label goods as inflation in the sector reached its highest level since February 2024.

Grocery price inflation now stands at 4.1%, compared to 3.8% the previous month, amid rising cost pressures for retailers and manufacturers linked to increased Employer National Insurance contributions and National Living Wage.

“This latest jump in grocery price inflation takes us into new territory for 2025,” said Fraser McKevitt, head of retail and consumer insight at Kantar.

“Households have been adapting their buying habits to manage budgets for some time, but we typically see changes in behaviour once inflation tips beyond the 3% to 4% point, as people notice the impact on their wallets more. Own label lines are ones to watch, with premium own label, in particular, being the fastest growing part of the market since September 2023.”

Squeezed consumers are also continuing to seek out promotions, with McKevitt commenting: “The growth of spending on deals has carried on this month, increasing by 5.1% versus May last year. Trimming prices remains the most popular way for retailers to draw in customers, with 80% of promotional spending this period down to straightforward price cuts.”

Looking at the performance of individual retailers, Ocado marked a full year as the UK’s fastest-growing grocer, with its sales climbing 14.9% over the 12 weeks to 18 May.

It was also a good period for the discounters, which achieved their strongest combined growth since January 2024 at 8.4%. Lidl reached a new share high of 8.1% after seeing its sales grow 10.9%. Compared with the same period last year, it attracted 419,000 extra shoppers through its doors – the most of any retailer. Aldi’s hold of the market reached a record high at 11.1%, with sales up by 6.7% – its fastest growth rate since the start of last year.

Tesco’s sales rose by 5.9%, driving its market share up 0.4 percentage points to 28.0%. Sales at Sainsbury’s accelerated by 4.7%, giving it a 15.1% share. Sales at Morrisons nudged up 1.1%, but its share slipped to 8.4%.

Meanwhile, Asda saw its best performance since May 2024 as it continued with its Rollback campaign. Its sales still slipped 3.2%, but this was an improvement on the 5%-plus declines recorded over much of the last year.

Despite grappling with a major cyber attack on its systems, spending on groceries at M&S rose by 12.3%.

NamNews Implications:

• The discounter opportunity leaps out (or should!).
• i.e. See yesterday’s Lidl-Schwarz piece in NamNews
• NB. In 2023, Aldi achieved a global turnover of €112bn and Schwarz (owner of Lidl) saw its sales hit €175bn last year…
• …compared to Tesco’s global sales of €78bn.
• i.e. The discounters have the option of subsidising share growth at local level…
• Meanwhile, with inflation at 4.1% (and consumer-in-street perception of ‘real’ ‘pound-in-pocket’ inflation even greater)…
• …there are short-term moves into own label and discounters for value by cash-strapped consumers….
• …where they find the compromises they were led to expect by brands and mults advertising was not as great in practice…
• …may become set in place and increasingly expensive to reverse.
• Especially as packaging taxes have yet to emerge and impact inflation levels, inevitably…