Tesco CEO Ken Murphy has said the supermarket has been “incredibly strong” in its value proposition as it looks to “take prices back down” for consumers.
As the retailer posted a 9% rise in UK sales in its first quarter, Murphy reassured shoppers that it is “the leading full shop grocer in terms of value”.
“We are at the best value position we have been in recent history,” he said. “Tesco has always in some ways thrived when times are hard because it is very close to the customer, looks to offer value at every level in society, and reacts very quickly.”
Murphy also claimed that “we’re past the peak in inflation”.
He added: “I think that’s reflected in the fact that we’ve been able to lead some of the worst affected categories like dairy and cereals down, which is a good indicator that we are hopefully going to start to see prices continue to moderate through the rest of the year.”
Murphy insisted that Tesco has “reacted quickly” when commodity prices have come down, referencing that in the past two months the leading retailer has dropped the price of milk and pasta by 16% and bread by 12%.
The Tesco boss said its focus on cutting costs for consumers had caused tension with some suppliers, which he claimed explained why the grocer had dropped from second in 2022 by partners in the rankings of the Groceries Code Adjudicator’s 2023 annual survey.
Murphy said Tesco had to “fight the fight for consumer”, which had caused “inevitable tension” with suppliers on how it will only pass through “absolutely necessary costs”.
However, he pointed out the initiatives the supermarket giant had introduced to help its suppliers: ” We were the first to take costs up for milk producers, we injected £10m into the pig industry, we support our egg suppliers through their needs.
“We’re a business that we believe acts fairly and transparently and we have very deep and long standing relationships with many of our suppliers, but there is always going to be tension.”
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The supermarket price cap and cutting red tape
Murphy also dismissed claims that the government’s proposed price cap was needed. He said: “UK grocery retailers are constantly having to be the sharpest possible in terms of value.”
He admitted he didn’t know the status on the proposed cap, but said he was “really confident” that Tesco “provides a very, very competitive environment and a strong offer for consumers in the UK.”
“We’re pretty sure that that will continue to be the case.”
However, the government could help supermarkets to lower prices by cutting red tape, he said.
“Brexit has had a meaningful impact in terms of the friction for grocery retailers from importing food into the UK.
“The Windsor Framework, while very welcome in terms of bringing a resolution to Northern Ireland, has also meant significantly increased cost to serve, and we’d welcome working with the government on finding a way to minimise the cost and therefore the impact on the consumer.”
