Tesco adds £1bn in online sales as customers splash out over Christmas period
Tesco added an extra £1bn in online sales in the run-up to Christmas as new lockdown measures accelerated the shift to digital shopping.
The supermarket said online sales growth surged more than 80 per cent in the 19 weeks to 9 January, and orders have continued to grow after the festive season.
Tesco broke its record for home deliveries and click and collect last week, as the increased demand for online grocery shopping shows no signs of slowing down during the second wave of the pandemic.
Total UK sales in the third quarter jumped 6.7 per cent, accelerating to 8.1 per cent over the crucial Christmas trading period.
The strong trading performance was driven by a 14 per cent increase in Tesco’s Finest products, as customers looked to treat themselves after a tough 2020.
Sales of plant-based products also boomed, with Tesco’s Plant Chef range recording 90 per cent growth in the run up to Christmas.
General merchandise sales increased four per cent, helped along by the closure of many non-essential stores across the country at various points within the trading period.
Tesco said the strong performance helped it offset additional Covid-19 related costs incurred during the period.
It estimated that pandemic costs – such as increased employee absence – will be £810m, an increase of £85m on its previous forecast.
Tesco chief executive Ken Murphy said: “Our focus on looking after our customers, including delivering record availability, robust safety measures and great value has enabled us to maintain strong momentum through the Christmas period, outperforming the market every week.
“We delivered a record Christmas across all of our formats and channels.
“In response to unprecedented demand for online groceries, colleagues delivered over seven million orders containing more than 400m individual items over the Christmas period.
“We’re now supporting 786,000 vulnerable customers with priority access to online slots and, as lockdown measures continue, we’ll keep doing everything we can to ensure everyone can safely get the food and essentials they need.”
Russ Mould, investment director at AJ Bell, said Tesco’s management have done a good job keeping the ship steady under intense pressure.
“What’s beneficial to the business is the fact we’re seeing a live stress test play out,” Mould said.
“If anyone ever questioned whether Tesco could cope under pressure from a significant change in circumstances, the answer is firmly ‘yes’.
“Stress tests tend to be a short exercise, but this one has been playing out for 10 months and it keeps taking a new direction, such as supermarkets now cracking down on the use of face masks and the impact that will have on trade and getting staff to make sure people follow the rule.”
Neil Shah, director of research at Edison Group, added: “Investors will be happy with the announcement however, going forward they will be keeping a close eye on costs associated with the virus as well as further improvements on the online experience and delivery processes as the UK national lockdown continues.”