Cantillon: Tesco turns its Christmas figures around

Not quite time yet for new-year champagne at Tesco’s Irish arm, perhaps, but a drop of own-brand prosecco might be deserved in the wake of this week’s Christmas sales figures.

The long-suffering retailer, victim of squeezes from SuperValu and Dunnes on one side and Aldi and Lidl on the other, said sales had "turned positive" over Christmas. Like-for-like growth was 2.9 per cent, hardly a landslide moment but creditable when compared with the 5.5 per cent decline recorded at the same stage last year.

Tesco also said that in the 19 weeks to January 9th its like-for-like performance was 0.2 per cent stronger, again not exactly overwhelming in accountancy terms but possibly the sign of a changing game in the context of post-recession Irish retail dynamics.

Last year was undeniably one of transition for the group in Ireland. It put its expansion on hold, having opened five new stores in the previous 12 months. The year also saw the retirement of Tesco Ireland chief executive Phil J Clarke (as opposed to plain old Phil Clarke, who was ousted as overall group chief in 2014) and the arrival of Andrew Yaxley to run the retailer's Irish ship.

Jobs were cut at the Irish head office and annual bonuses were not paid. SuperValu, fresh from digesting its acquisition of Superquinn, twice overtook Tesco as the State’s largest grocer by market share, and Dunnes kept snapping at its heels.

None of this can have been much fun for those involved, so they will be forgiven for a few sighs of relief at Thursday's numbers. They will also realise that the job is far from finished. SuperValu had 24.7 per cent of the market before Christmas, according to figures from Kantar Worldpanel, while Tesco had 24.1 per cent. Dunnes had 23.8 per cent, with Kantar noting "non-stop sales growth" for the year, helped by a well-received voucher campaign (Tesco noted this week that the Republic is a "more discount-prevalent market" than the UK). Aldi and Lidl were both hovering just below 9 per cent.

The German discounters are arguably the nimblest and most dangerous of competitors and both remain in strategic expansion mode. Aldi has plans to open seven new stores last year, while Lidl has said it wants to find 60 new sites across Ireland, north and south. It is fighting talk, pitched as much at the ears of the other players in the market as at each other.

Witness, for example, the discounter battle that will soon play out when Lidl opens directly across the road from Aldi in Dublin’s East Wall, a location that catches the well-heeled suburb of Clontarf in its net and can draw shoppers away from Tesco’s flagship at Clare Hall and from SuperValu in Killester and Sutton.

Repeat that scenario throughout the country and an interesting year in grocery retail will certainly lie ahead.