Supermarkets report bumper Christmas profits but struggle to beat discount rivals on price
Supermarkets including Tesco and Sainsbury's have had successful Christmas periods, and are predicting big profits for 2024, but they are having to take measures to fend off the advances of German discount rivals Aldi and Lidl.
Tesco, the UK's largest supermarket in terms of annual turnover, has said it is on track for bigger-than-expected profits this year after record sales over the key Christmas period.
The retailer said it has cut “nearly 2,700 prices” as part of this strategy to attract customers who have faced a surge in the cost of living.
On Tuesday, Tesco said like-for-like retail sales across the group rose by 6% over the six weeks to January 2024, compared with the same period a year earlier.
Tesco said it now expects a retail-adjusted operating profit of £2.75 billion for the year, up from a previous range of between £2.6 billion and £2.7 billion.
Christmas classics fuel sales uptick
The UK’s second largest supermarket chain, Sainsbury's, said total retail sales, excluding fuel, grew by 4.9% over the six weeks to January 6, with grocery sales rising by 8.6%.
On Wednesday, Sainsbury’s said it saw shoppers purchasing more products amid “lower inflation” over the latest period.
The chain said its customers bought record numbers of pigs in blankets, mince pies and sparkling wine over Christmas.
Sainsbury's has recently been in talks with the government however, over potential disruption as a result of shipments avoiding the Red Sea following a series of attacks by local rebels.
Marks & Spencer experienced a record number of shoppers in its food halls over the Christmas period, as like-for-like sales lifted 9.9% across its food arm.
Some of the gains were driven by price inflation, but M&S said food sales by volume rose around 7% and it increased prices by less than the wider market.
German supermarkets win on price
Aldi beat rival Lidl to be named the cheapest supermarket of 2023, according to consumer group Which?
Aldi was the cheapest supermarket for 11 months of the year, with Lidl beating the rival discounter for one month in October, the consumer group said.
December’s results show a basket of 43 groceries was £74.83 at Aldi, narrowly cheaper than at Lidl where it cost £76.74.
Waitrose was almost £20 more expensive than Aldi in December at £94.94 and was the most expensive supermarket every month throughout the year, Which? found.
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