Tesco CEO Lewis says Christmas ad rerun worked 'really well' as festive sales rise by 2.2%

The ‘However you do Christmas, everyone’s welcome’ campaign.

Tesco, the UK’s largest supermarket, has posted a 2.2% like-for-like sales increase during the festive quarter in the UK. Helping to drive this was the second-year return of BBH London's ‘However you do Christmas, everyone’s welcome’ campaign.

The work featured an inclusive message and invited viewers to celebrate the holidays how they wish. It gained substantial media coverage for lauding the diversity of the UK. The Christmas work was noted for its inclusion of a hijab-wearing Muslim woman celebrating the festivities. On the decision to rerun the ad in 2018, Alessandra Bellini, Tesco chief customer officer, said: “We looked at whether to continue or find a different creative, but we felt really strongly that it worked really well for us last year.”

On the brand's quarterly conference call, Tesco chief executive Dave Lewis reflected on the campaign and the results it helped deliver.

He admitted that the inclusive work had not altered the makeup of Tesco's customer base due to its scale making it broadly representative of the entire population. He likened the brand to a "mirror" of the UK population in this respect. Lewis admitted that the creative helped return Tesco to its 'Every Little Helps' purpose with its "welcoming" message.

Citing research, he said: "On the basis of engagement, Tesco was strongest for brand engagement 6th but best for food retail. "In the report, value and quality perception were positive and net promoter scores were the strongest they have been in five years."

With a 2.2% increase, the retailer said it had outperformed the market in terms of both volume and value terms. Furthermore, it said customers also liked the proposition better too with quality and value perception both up year-on-year at 3.5% and 4.5% respectively. The announcement market the retailer's twelfth consecutive quarter of growth.

It reported its best performance in the food, clothing and general merchandise categories.

Online, it broke new ground, with like-for-like sales increasing by 2.6% over the Christmas period. This helped deliver its biggest-ever online sales week with nearly 51m items delivered and 776,000 orders fulfilled.

Lewis said: "As a team, we have achieved a lot in the last 19 weeks. In the UK we delivered significant improvements in our competitive offer and this is reflected in a very strong Christmas performance which was ahead of the market.

"We have more to do everywhere but remain bang on track to deliver our plans for the year and as we enter our centenary we are in a strong position.”

The retailer also pulled away from Black Friday, similar to Sainsbury's. Lewis said: "There was general merchandising focused activity, it was a very small activity as it is no longer that significant - not the way we plan our business."

Vegetable sales were up, indicative that consumers continue to buy into meat-free produce too. Lewis said: "Over the last two Christmas combined we have sold about 35% more vegetables than any previous period." Furthermore he said the free from range had grown by 11%, accommodating those with special dietary requirements.

Meanwhile, last year, it piloted an assault (called Jack's) on discounters like Aldi and Lidl who have seized significant market share in recent years. It promised that this new chain, which debuted in Cambridge, will undercut its continental rivals. It said it will open between 10-15 Jack’s stores in the following months. There was little Christmas activity from these brands as the drive continues uninterrupted,

For the year to come, it is worth noting that Tesco scrapped its brand guarantee promise in June 2018, it said, to instead just invest in lower price essentials, often own-brand. Thomas Brereton, a retail analyst at GlobalData, indicated to The Drum that there is an impending price war coming in 2019.

Derya Guvenc, principal analyst at Kantar Consulting, said Tesco's promotions proved fruitful. "According to Kantar Worldpanel data, Tesco’s larger stores attracted new shoppers during the season with heavier promotions compared to the previous year. Tesco’s largest-ever private label relaunch under ‘Exclusively at Tesco’ contributed to the performance with strong focus on total basket savings communication rather than individual items. This was supported by heavy discounts in key categories, such as fresh produce at 29p, which helped households manage their total food spend.

"The steady investments in product quality throughout the year also resulted in improved shopper perception, which has contributed to the store choice."

Anusha Couttigane, principal analyst at Kantar Consulting outlined that Christmas results need not make-or-break retailers and that they should look to embrace additional events.

"Christmas will always play a vital role in the British retail calendar, but it’s also important to be aware of other opportunities in the market that could fuel growth.

"We’re living in the age of not just commercial globalisation, but cultural globalisation too, and with that comes new opportunities in the gifting calendar for occasions like Eid, Diwali and the fast-approaching Chinese New Year, as well as growth through new categories as previously niche ethical or nutritional needs become more mainstream. Retailers needs to be aware of how this cultural diversity is impacting demand."

Bryan Roberts, global insights director at TCC global, said: “This was a decent showing from Tesco, outperforming some key competitors. Initiatives such as 'Farm' brands and the overhaul of 'Everyday Value' have created an improved resilience against the incursion of its discounter rivals."

As Tesco approaches its 100th year in business, Lewis was reluctant to say much about the marketing plans marking a century of Tesco. He hinted: "Tesco is 100 years old. It is a great British business that is built around customers. We are getting back into that."

Earlier this week, Sainsbury's posted a 1.1% sales drop in the festive quarter, a trend blamed on “consumer uncertainty” and its decision to reduce promotional activity during Black Friday. It, however, awaits a decision from the competition watchdog on whether it can merge with rival Asda.

Additionally, Morrisons said its like-for-like Christmas sales were up by 0.6% on 2017. Chief executive Potts said the ads from Publicis London appeared to have “worked well”.

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