Tesco’s share price is up today, and by a lot: 9.8 per cent at the time of writing.
Tesco’s story has been well documented, with profit warnings and a severe overstatement all dragging the share price down. But Tesco was not alone: Sainsbury’s reported its worst Christmas sales for 10 years, and Morrisons hasn't had the best year either.
In fact, the traditional big players, Asda, Sainsbury’s, Tesco and Morrisons, no longer dominate the market in the way they once did. Discount alternatives such as Aldi and Lidl have been putting on the pressure. Now, together with Iceland, they make up around 10.7 per cent of the grocery market, a 2.7 percentage point increase in the last two years. You can read more about the battle for market share here.
The move towards budget alternatives has also affected revenues, as prices are forced down by the need to compete, and has led to some humorous conflicts between rivals:
It remains to be seen if Dave Lewis can turn Tesco around, but the market place has changed for mega-retailers where previously profits seemed on a never-ending climb.