Tesco faces further Knock with Entertainment Sales Dip

Posted on 10 November, 2014 by Kirsten Kennedy

Tesco, once the most dominant retailer in the grocery market, has suffered a number of losses in the past few years, with profit warnings, falling sales and a plunge in market share all contributing to bringing the group back down to earth with a bang. Unfortunately, it appears that this situation is unlikely to be resolved any time soon, with new data from Kantar Worldpanel indicating that the retailer is now losing its grip on the highly prized entertainment market.

tesco-faces-further-knock-with-entertainment-sales-dip

During the 12 week period between the beginning of July and the end of September, Tesco saw market share in the entertainment sales sector plunge to just 15.1 per cent from the 20.6 per cent recorded during the same period last year. Although this is a slight improvement from the 14.6 per cent share of the previous quarter, analysts point out that a drop of this magnitude is especially concerning given the approaching festive season.

Tesco’s misfortune has allowed Amazon, the world’s largest online retailer, to claim the top spot in the entertainment market, with its market share climbing from 17.6 per cent to 22.5 per cent year on year. This is the first time an online retailer has had a controlling portion of market share within the entertainment sector, indicating that the pressure from e-tailers upon the High Street is still continuing to build in momentum.

This Christmas, the entertainment market is expected to be a prime source of growth for retailers able to capitalise on consumer demand, with 18.6 million consumers expected to purchase video games, DVDs or music for friends and family members. In fact, this year could see entertainment products top the £5.3 billion sales record set last year – something which Tesco could truly benefit from given its recent struggles.

Should Tesco manage to revive its fortunes in the entertainment market, the positive impact this could have upon the group could be astronomical. During a year in which consumers have increasingly turned to discounters despite heavy investment in price cutting measures, and in which a £250 million accounting “black hole” was discovered, the need to boost capital has become very apparent.

New Tesco chief executive, Dave Lewis, is urgently examining options to turn around the poor fortunes seen of late in a bid to battle the greatest crisis in the chain’s 95 year history. Although no courses of action have yet been confirmed, it is believed that he is considering selling a range of assets, including perhaps a number of the group’s out of town superstores, as a means of raising the billions of pounds required to place the group back on an even keel financially.

Kantar Worldpanel also revealed that Tesco was the worst performing food retailer in the UK during September, with a 4.5 per cent drop in sales comparing poorly to Aldi’s 29.1 per cent sales rise. With sales and market share falling away rapidly, it may take a Christmas miracle to save Tesco now.

Do you think focusing on entertainment sales would allow Tesco to boost its performance and effectively compete with discounters?




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