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How Philip Clarke must have been hoping for an interesting Queen’s Speech. He did not get one. Its absence meant Tesco’s worst results in 40 years were the news. But don't kid yourself. Tesco is still a great business doing lots of things right. On the front page of the Financial Times were three graphs showing how badly Tesco is doing: ·         Five quarters of no growth in UK like-for-like sales (down 3.8% in Q1 201) ·         2.0 per cent fall in market share since 2010 as measured by Kantar. Aldi is up 2.7%. Lidl 1.2%. Waitrose 1.1%. ·         Total shareholder return since March 2011 down 13.9%. Only Morrison is worse at down 16.9%. The FT says Tesco’s big stores are out of favour with consumers who are “switching to convenience stores, German discounters and online grocery shopping”. Analyst Bruno Monteyne of Bernstein told the paper that half of the like-for-lik...

Two pieces of analysis in the Financial Times this week offer food for thought for local retailers in follow up to Tesco boss Philip Clarke's claim that shoppers would order ahead while driving to the store. His vision of drive-thru Tesco stores, captured by Chris Gamm in Retail Newsagent last week, includes the following: "As consumers become increasingly connected to the internet we will probably know your lounge light bulb blew this morning, so we will have already added a new one to your order as well." The first analysis by Jonathan Guthrie concerns the plight of Ocado, the delivery only service that purveys "chard and kumquats to yummy mummies". Its problem is that its supermarket competitors "appear happy to subsidise their own lossmaking online operations indefinitely." There is a persistent question mark over the business model of online grocery sales, which is that the cost of delivery is greater than the margin, which means the bricks ...

City analysts are in the business of talking shares up and talking them back down again. So you have to treat what they say with caution. Even so, their feedback about Tesco, offers some pointers about where the convenience market may be headed. At Citigroup they talked about a future Tesco that within a few years would be an "entity without growth or cash flow generation." That is, it would not longer be opening new space and it would be forced into cutting prices. The issues are: concerns that new space opened will reduce profit margins (which may include on line sales as delivery costs are subsidised by bricks and mortar shoppers) competition from Aldi, which is about 25 per cent cheaper and growing strongly. In the UK, Tesco has 39.1 million square feet of selling space. In the last half year it achieved sales of £23.9bn in the UK. That is just over £23 of sales a week per square foot. This compares with estimates for Spar of £13, Premier of £12 and Londis of £11...