Tesco Grows Its Market Share For the First Time in 5 Years

October 18, 2016, 8:48 AM UTC
Customers leave a Tesco supermarket in w
London, UNITED KINGDOM: Customers leave a Tesco supermarket in west London 20 September 2005. Tesco, the biggest British supermarket chain, posted an 18.7 percent increase in interim profits and gave an upbeat outlook, but warned about the impact of higher oil costs. Tesco -- whose tills ring up one pound in every eight spent by shoppers in Britain -- said it had delivered a strong performance in a challenging trading environment. Pre-tax profit before one-off charges and goodwill items jumped to 908 million pounds (1.349 billion euros, 1.639 billion dollars) in the 24 weeks to August 13, from the same period of the previous year. AFP PHOTO/ODD ANDERSEN (Photo credit should read ODD ANDERSEN/AFP/Getty Images)

Tesco grew market share for the first time in five years over the last three months, the clearest sign to date that Britain’s biggest supermarket chain is recovering from years of turmoil to accelerate away from rivals.

Market researcher Kantar Worldpanel said on Tuesday that Tesco (TSCDY) grew sales by 1.3% in the 12 weeks to October 9, reversing 18 months of declining sales, and helping boost its share of Britain’s grocery market to 28.2%.

The news sent shares in the firm up 2% and shows that the steps taken by Chief Executive Dave Lewis are working, with lower prices, streamlined product ranges and better customer services winning back shoppers from rivals.

The group also won the backing of consumers last week when it publicly clashed with supplier Unilever which wanted to increase prices in the wake of the collapse of the pound following Britain’s vote to leave the European Union.

According to the data, second-ranked Sainsbury’s posted a 0.4% fall in sales, followed by Morrisons which declined by 3% and sector laggard Asda which recorded a 5.2% drop.

All four of Britain’s biggest supermarkets have been battling in recent years to cope with a sudden change in shopping habits sparked by the growth of online and convenient-store shopping and the advance of German discounters Aldi and Lidl.

Lewis joined Tesco two years ago to lead a recovery after sales, profit and asset values collapsed. It had also been hit by an accounting scandal that remains the subject of a criminal investigation by Britain’s Serious Fraud Office.

Tesco’s market share growth shows that its fightback against the German discounters is working, helped particularly by its basic own-brand products and the “Farm Brands” range of own label fresh produce, poultry and meat.

For more on Tesco, watch Fortune’s video:

“Tesco has attracted a further 228,000 shoppers through its doors to help the grocer grow to a 28.2% share of the market – its first year-on-year market share gain since 2011,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

“Sales growth has been strongest among family shoppers, while improved trading from its larger supermarket and Extra stores has supported this month’s gains.”

Tesco shares traded up 2% to 205 pence, outperforming Britain’s bluechip index which was trading 0.8% higher.

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