Tesco has reported a 5.1% rise in like-for-like sales in its UK stores for the 13 weeks to 24 May, driven by a surge in demand for its upmarket Finest range. Sales of the own-brand line jumped 18% in the first quarter, with analysts attributing the growth to soaring restaurant prices encouraging a home-dining boom.
The supermarket chain also increased its market share during the period, fending off competition from discounters Aldi and Lidl. Tesco matched Aldi’s prices on more than 600 items, a move chief executive Ken Murphy said was part of a commitment to offering the best value in an intensely competitive market.
Retail analysts pointed to the Finest range as a key driver of growth. Dan Lane of Robinhood UK described it as a “secret weapon” that entices cash-strapped shoppers to trade up to premium items at home, rather than dining out. “Shoppers looking to trade down from increasingly expensive restaurants are opting for the premium offering at home instead,” he said.
Grocery price inflation has risen to 4.1%, its highest level in 15 months, according to Kantar. The research firm noted that shoppers are increasingly seeking discount deals and turning to supermarket own-label products to manage budgets. The mounting cost of dining out is weighing on consumers, with a family meal at a restaurant often exceeding £100, said Shore Capital’s Clive Black.
Despite the challenging environment, Tesco has maintained its dominant position. Russ Mould of AJ Bell warned that the supermarket must remain vigilant, as rivals are poised to seize any opportunity to erode its market share.
