UK supermarkets are struggling to compete with discount retailers Aldi and Lidl. Who are taking an increasing share of the market. The two German companies now account for over 16% of the British market. A figure which industry executives predict will double within the next ten years. The incumbent supermarkets, including Tesco PLC (OTC:TSCDY), Asda and Morrisons, have been forced to cut costs in order to keep prices low and retain customers. Aldi CEO Giles Hurley has pledged to continue offering Britain’s lowest prices “no matter what”. During the Christmas period alone, Lidl gained £58m ($70m) worth of purchases from Tesco and Sainsbury’s.
Despite the supermarkets’ efforts to compete with the discounters, Aldi and Lidl continue to win over customers with their low prices. Over the festive period, the discounters’ sales rose by 26% and 25%, respectively. To keep pace with the German rivals, Tesco and Sainsbury’s have stripped out in-store meat, fish and deli counters and replaced checkout staff with automated systems. They are also matching Aldi prices on hundreds of key items and using customer loyalty schemes. Despite the narrowing of the price gap in recent years. Investors argue that the worst of the pain is behind the traditional players. The dividend yields of nearly 5% at Tesco and Sainsbury’s make them solid investments. However, the executives warn that the further rise of Aldi and Lidl is inevitable and could lead to industry re-basing or consolidation. Meanwhile, Bestway, the owner of Costcutter, has built a 4.5% stake in Sainsbury’s, while Qatar’s sovereign wealth fund owns 14.3%.
Tesco PLC Stock Analysis:
According to forecasts from one analyst, Tesco PLC has an average target price of USD 0.00 for the next 12 months, with an average rating of Hold. Stock Target Advisor’s analysis of the stock is Slightly Bearish, based on 5 positive signals and 8 negative signals. Tesco PLC’s current stock price is USD 8.96, which has changed by -0.05% over the past week, -0.31% over the past month, and -23.68% over the last year.
Tesco PLC, together with its subsidiaries, engages in retailing and retail banking activities. It provides food products through approximately 4,752 stores in the United Kingdom, Republic of Ireland, the Czech Republic, Slovakia, and Hungary, as well as through online. The company also wholesales food and drinks.. In addition, it offers banking and insurance services in the United Kingdom. Further, the company operates a network of one stop convenience stores; and provides data science, technology, software, and consultancy services. Tesco PLC found in 1919 and is headquartered in Welwyn Garden City, the United Kingdom.