RetailAnalysis
04 October 2012
Tesco and Sainsbury's results: what you need to know to win at Christmas and beyond

Following this week's trading updates from Tesco and Sainsbury's, what have we learned about the UK grocery sector outlook for Christmas and beyond?

1. Food focus brings new opportunities

Tesco's food first focus is a core feature of the retailer's plan for UK growth and it is growing the space allocated to food in-store, seen in the development of flagship new stores such as Bishop's Stortford and, to varying degrees, in the 230 plus stores it has refreshed in the half year. Tesco's determination to compete harder on core food, combined with retailers' continuing focus on developing own brand, is creating a pre-Christmas climate in which competition for food spend will intensify. Despite non-food growth, Sainsbury's has no intention of moving away from its food positioning and this will be a key focus as Tesco enhances its offer.

2. Private label to compete harder for Christmas premium spending

A retailer focus on driving private label will intensify Christmas competition. Waitrose's expanded Heston range, Morrisons' M Signature premium range rollout and Asda's expansion of Leiths endorsed Extra Special products, all sit alongside the latest developments from Sainsbury's and Tesco. Sainsbury's is moving into the closing stages of its by Sainsbury's rollout, with the range continuing to deliver impressive growth. Meanwhile Tesco's renewed focus on wider private label development also stands out. The programme includes renewing its entire standard private label range sits to support the rollout of Everyday Value, and new venture brands, such as the hair care range T-H-X launched this week, should be expected.

3. Personalisation and localisation - opening up a new era of promotions?

With Tesco reaffirming the role of Clubcard at the heart of its strategy, and seeking to take this to new heights, localisation and personalisation have clear implications for suppliers in both in-store ranging, set to become more tailored by catchment, as well as in couponing and promotions. Alongside Sainsbury's seeing potential to gain further insight through Nectar and Morrisons also now using coupon-at-till, this marks a shift away from product promotions to more personalised and localised incentives. What opportunities - and challenges - does this create for your business?

4. Online key to growth ambitions - how to leverage cross- and omni-channel opportunities?

Mobile optimised websites, digital marketing initiatives and click & collect groceries are becoming increasingly key features of the UK market. Tesco and Sainsbury's both continue to achieve double digit growth: Tesco's rollout of click & collect for food and non-food will create opportunities for suppliers, not least in providing hassle-free Christmas shopping solutions. The power of mobile, too, remains one that could reshape the dynamics of the online sector in the UK, following the launch of new mobile optimised sites earlier this year. Whenever you've planned in to reassess your online and mobile strategies, the chances are it needs to be sooner.

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