In a damning note published yesterday, Bernstein analysts said that Tesco has raised prices faster than any of its supermarket competitors since 2010, losing its value credentials along the way.
Using data collected over the last four years, Bernstein estimate that Tesco has increased its prices at an average growth rate of 4.6 per cent per year compared to 2.4 per cent for Asda, meaning its prices are now closer to those of Sainsbury’s.
The broker said Tesco had attempted to move upmarket into a sector that is already overcrowded with players such as Waitrose and “against their core DNA as a value retailer”.
“Tesco is now in an impossible position: it is neither value nor quality, it is simply everywhere, and can’t compete with either the quality or value retailers,” authors of the note Bruno Monteyne and Richard Clarke said.
The broker also accused Tesco of taking a “copy-paste approach” to international expansion, which it claims has delivered hit and miss results.
Tesco hit back at the price claims last night. A spokesperson said: “We don’t agree with the opinions in this note and we reject the claims about our prices. We compete very hard on price and quality to give customers the value they expect from Tesco.”
The claims come after a poor trading statement last week which revealed a 1.5 per cent fall in UK sales.
Market data also shows the group has been squeezed by discounters at one end and upmarket retailers at the other.