Tesco’s Sales in the United Kingdom Decline as Pandemic Restrictions Ease
Tesco is one of the largest retailers for consumer goods in the world. They provide a vast range of goods from food to fashion. The company has grown immensely since its foundation in 1919, with a current workforce of over 400,000 employees globally. The company was founded in the United Kingdom and now has its stores in 11 countries worldwide. Tesco is the largest retailer in the United Kingdom, with over 2,200 stores in this region.
The COVID-19 pandemic had an impact on the sales of Tesco, but surprisingly, it was a positive one. With lockdowns implemented all over the world and no access to supermarkets, delivery of groceries and other essentials to houses was the need of the hour. Tesco capitalised on this opportunity and increased its home delivery services to meet this essential need. In the United Kingdom, Tesco mobilised its logistic network to meet the increasing demand of online groceries. The sudden drastic effects of the pandemic resulted in stockpiling of essentials by the public, which increased the sales of Tesco tremendously. Data shows that the sales of Tesco have increased by 9.2% in the year 2020 as compared to 2019.
Following this growth at the start of the pandemic, the past few months, with the ease of the lockdowns in the United Kingdom, have not been so friendly to Tesco. With people flocking to the reopened pubs and restaurants, the sales of supermarkets reduced significantly. The CEO of Tesco, Ken Murphy, stated that the profits from people eating at home slowly started to decline as the lockdown was eased. Data shows that retail sales in the region fell drastically in the last month, leading to the fall of Tesco’s share price by 2.6%. The extra costs due to the pandemic also affected the company significantly. The need to hire temporary staff to cover for workers was a huge expense for Tesco. Also, ensuring its stores are safe with timely sanitation and other methods added to the expenses.
The CEO, Ken Murphy, also said that the shopping habits of people were changing with the ease of restrictions. It was observed that people were visiting shops more frequently now, unlike the trend of shopping weekly once during the lockdown. There were also changes in the products people were buying. With people wanting to socialize and go out again, the sales of general merchandise and clothing increased by 10.3% and 52.1% respectively.
Tesco focused on its retail operations in the fiscal year 2021-2022 to ensure a better recovery for the company. The CEO, Ken Murphy, believes that the strong start the company got off to is a good sign despite the uncertainty of the market. Overall, with the situation slowly returning to normalcy and the costs due to the pandemic gradually reducing, the company expects profits to increase soon. Tesco’s competitors, namely Sainsbury’s and Morrisons, also expect positive outcomes to follow given the ease of the pandemic restrictions. Thus, the competition in the supermarket space will be intense in the coming months.