The City had been eagerly awaiting Tesco’s Christmas trading statement and, while it showed like-for-like sales growth has accelerated of late, it remains at the lowest level among the Big Four.

The stock market seems sanguine about this situation, but at Oriel we are more concerned. We do not think Tesco is on the right wavelength with its customers right now and do not see the industry pecking order changing this year in terms of like-for-like sales growth.

Earnings momentum is flat or negative and, although we respect the view that ultimately Tesco is a fine company, we think change is afoot in the industry.

Last time Tesco reported – in early December – like-for-like sales growth was 2%, so the 2.5% for the seven weeks to 10 January was an improvement. Tesco reports that non-food sales improved: stronger categories included electricals, clothing and entertainment. However, the corollary of this is that although food like-for-likes may have ticked a bit better, it wasn’t by much, and given that the reported period is short, and included the Christmas spike, that’s a touch disappointing.

Inflation remains a factor in the industry and we feel Tesco’s like-for-like food volumes are some variation of flat right now. We do not think Tesco will be satisfied with that, nor do we believe the stock market should be either.

The other major players are improving their offer in a way that Tesco is not matching currently. We remain unconvinced by the move into discount tertiary, and our big fear is Tesco trying to close the gap on its industry peers by pressing the price button even more aggressively than it has been doing.

If this happens then all profit forecasts in the sector are under threat. We are not convinced it will work for Tesco this time in terms of galvanising sales and prefer the thinking behind Sainsbury's Switch and Save, which encourages purchases of higher-margin own-label products.

This year will be very tough for the industry and it must always be borne in mind that Tesco’s sales and profit densities are the highest, so any growth here will be “harder” to come by.

However, that’s been the case for some time and we sense that, for the first time in many years, Tesco is set to remain the like-for-like sales growth laggard of the Big Four.

Jonathan Pritchard is a partner at Oriel Securities.