Tesco has told suppliers it is determined to capture more than 30% of the UK grocery market for the first time in 13 years, in a move experts said spelled bad news for rivals Asda and Morrisons.
The UK’s largest retailer, which had a market share of 27.8% according to the latest 12-week figures from Kantar, held its IGD supplier event at Alexandra Palace yesterday, with an estimated 1,400 in attendance.
In a keynote speech, chief commercial officer Ashwin Prasad said Tesco had targeted the sort of market dominance last seen in 2012, with its strategy focused on capitalising on its appeal to brands as the retailer most likely to bring about growth.
Prasad beamed a message on giant screens at the event declaring ‘To Grow Faster’ as the mission statement for Tesco. He told suppliers it could beat the offer of any of its rivals on value and quality, service and availability, and was the best vehicle for them to achieve growth.
“We want to grow with our suppliers and deliver against our priorities: ensuring we’re number one for value and quality; being their number one innovation partner; offering the best retail media platform; and delivering the best service and availability to our customers,” Prasad told the event.
“We’re encouraging our suppliers to work with us and make us their primary partner to deliver growth.”
A supplier at the event said: “Ashwin’s message was that Tesco is determined to get back to a 30% share which would be a huge milestone for them.
“Right now Tesco is a juggernaut and it clearly thinks it can get back to the sort of dominance we’ve not seen for many years.
“Its message was very clearly targeted at brands, more so than in previous events like this.
“Ashwin talked about having a comprehensive range. That’s a direct attack at Asda, which has taken out so much range it’s bonkers.
“They want to be seen as the number one retailer for brands and whereas in the past the focus of this event has been very much about Tesco’s own label, this year it will all about brands, which I think is how they think that they will get to the 30%.”
‘Tesco knows what it’s doing’
Ged Futter, founder of The Retail Mind, said: “Tesco is confident it can return to a 30% share because it’s winning customers and knows what it’s doing is working.
“They don’t need to reinvent the wheel either. I think the main targets for Tesco’s share growth will be Asda and Morrisons. They are the easy targets because they’ve got more branded stuff.
“Aldi Price Match is all about own label, it isn’t about brands. That’s working, what they need to unlock is investment from the brands.”
Another key focus at yesterday’s event was Tesco’s expansion of the use of personalised data with its Clubcard. The use of targeted pricing is set to be expanded following trials launched earlier this year.
Tesco CEO Ken Murphy told the World Retail Congress, also in in London yesterday, the personalisation of Clubcard and the expansion of its rapid delivery service Whoosh were examples of how it was continuing to “push the envelope” as a retailer.
He also stressed that Tesco had turned around its reputation since 2014 by focusing on the trust of customers.
“You grow this business when you do the right thing,” he said. “Customer trust has always been the currency of retail as we know at Tesco from bitter experience.
“My predecessor Dave Lewis led a major turnaround, and as Tesco recovered we saw a direct correlation between the public’s growing trust in our brand and our improving financial health. In our business, trust doesn’t follow success, it drives it.”
However, Murphy also warned supermarkets were facing huge external challenges that threatened their growth.
“We need to be honest about the scale of the challenge ahead. Things have rarely been as tough for retail as they are today.
“There is geopolitical instability from Ukraine to the Red Sea, which will continue to disrupt our supply chains and markets. We are only just beginning to reckon with an ongoing shake-up of global trading relationships and regulations. And in the background of all this is a very real climate emergency.”
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