Tesco and Morrisons lose market share to discounters
Tesco and Morrisons continue to bleed market share to competitors, such as discounters Aldi and Lidl or upscale chain Waitrose.
Thus, Tesco's market share decreased to 28.3% over the last 12 weeks from 29.7% and Morrisons fell to 10.9% from 11.4%, according to the latest data from Nielsen.
On this occasion, however, Sainsbury's managed to retain its 16.4% of the market.
ASDA, which is owned by US outfit WalMart, increased its share to 16.3% from 16.2% the month before.
The above follows figures out on Tuesday from Kantar Worldpanel which showed that Tesco's sales dropped by 3.8% over 12 weeks ending on 20 July, sending its market share lower by 1.4 percentage points to 28.9%.
The difficulty in turning around the company's deteriorating competitive situation led to the ouster of its chief executive, Philip Clarke.
He was replaced by Unilever's Dave Lewis, who as Brewin Dolphin analyst Nicla di Palma said, has ample knowledge of strategy in the 'fast moving consumer goods' space but none in direct retail.
Di Palma believes Tesco will most likely respond with further significant price cuts in order to close the gap with Asda, together with heightened investment in personnel costs.
That bodes poorly for operating margins, which may drop by 150 basis points. More significant changes cannot be ruled out.
The probability of a cut to Tesco's dividend has also risen notoriously. Nonetheless, a 'fresh' perspective may be just what the retailer needs, but there will be short term pain, di Palma concludes.
As of 13:03 shares of Tesco were 1.94% lower at 253p, although Morrisons stock was edging higher by 0.3% to 169.1p.
AB