Tesco has blamed a fourth consecutive quarter of falling UK sales on its Price Drop campaign.
In the third quarter, UK like-for-like sales excluding fuel and VAT fell by 0.9 per cent, mirroring the second quarter, while group sales rose by 7.2 per cent.
Tesco said: “Overall, our UK business continues to grow faster than the industry and its underlying health has strengthened despite the deflationary effect of our recently launched Big Price Drop campaign, which has significantly reduced the rate of inflation in the business.
This compares with increases reported by rivals Asda, J Sainsbury and Wm Morrison, albeit for different trading periods.
The group has suffered in part because it sells more discretionary non-food goods on which shoppers have been cutting back most.
Chief executive Philip Clarke said UK consumers faced severe financial pain: "The UK economy is fragile, unemployment's at a 15-year peak, under-employment's rocketing, so we're facing into tough times.”
The latest grocery share figures from Kantar Worldpanel for the 12 weeks ending 27 November 2011 show the grocery market growing at 4.2 per cent per year.
This remains below the 6.2 per cent inflation rate as shoppers continue to feel the pressure on their purse strings.
Tesco is the only retailer among the big four to see its share slip - from 30.7 pre cent a year ago to 30.5 per cent - and its growth rate of 3.8 per cent has also fallen behind that of the market.
Edward Garner, director at Kantar Worldpanel said:
“This may at first seem disappointing for Tesco given the ‘Big Price Drop’ initiative; however, it is not wholly unexpected. With more products available for less, the amount of cash taken at the tills has understandably dropped. Despite this, Tesco has successfully attracted more shoppers to its stores through the promotion. This strategy, coined ‘self imposed deflation’ by Tesco, is something we have seen in the past and it’s clear that Tesco is using this method again to help shoppers save their pennies.”
Morrisons continues its positive run, seeing share uplift from 11.8 per cent to 12.1 per cent, for the eleventh period running.
Asda has also posted its strongest growth since December 2009 as the integration of the UK Netto stores is completed.
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