Tesco profits from premium sales growth, improved stock management

Posted by Daniel Palmer on 7th October 2009

Britain’s largest retailer has seen like-for-like sales rise 3.1 per cent in the second quarter as consumers steadily return to the premium end of the grocery market.

Chief Executive of Tesco, Sir Terry Leahy, said that the company’s premium private label goods were outperformers along with organic produce, as the products most impacted by the recession showed signs of improvement.

“Some of the sectors that were hit hard are back into good growth and are growing faster than the rest of the business,” he advised, just-food reported.

The company has also profited from improved stock management, particularly with fresh produce.

“Improved technical standards, additional staff training, closer relationships with our suppliers, further improvements in the accuracy of our ordering and significant changes to the way we merchandise some key products – such as the transformation in the way bananas, tomatoes and other high volume produce lines are displayed in our stores – are helping us deliver a stronger range and better shopping experience for customers,” they advised in a statement.

As we reported in August, the company this year introduced a ‘weather team’ to help them adjust quickly to likely demand changes brought on by changing weather conditions.

A computer program used by the company includes detailed weather reports for all regions of the country for the past five years and shows what each Tesco store sold as a result of that weather. A rise of 10 degrees, for example, draws people back to the barbecue with a 300% surge in sales of barbecue meat and a 50% rise in lettuce sales.