How did Tesco buck the woeful high street trend?

How did Tesco manage to record its best Christmas performance for almost a decade, just as the high street did exactly the opposite?

Dave Lewis emerged as one of the clear winners from this week’s brutally festive trading season. And if the figures were a touch flattered by tobacco comparatives (tobacco sales fell last year following the Palmer & Harvey meltdown as it struggled to shore up supply), a lot of the credit has to go down to its remorseless investment into improving the quality and value of its own label range, in tune with the new psyche of Brexit Britain.

The Festive 5 may have been flying off the shelves at Christmas, but the Farms brands, once seen as a potential banana skin for Tesco, are now just part of an almost completely revamped core range. So far, that’s helped Tesco ride out the economic storm caused by Brexit, while it desperately makes stockpiling contingency plans with suppliers amid fears of no-deal disruption.

By the time the crucial festive season came around, Tesco had spent more than a year painstakingly improving its core offer. As of the end of Q3, Tesco had relaunched 74% of its 10,000 own-brand products, including 95% of its Exclusively at Tesco value range. And while Lewis insists customers have not traded down over the Christmas battle, there is no doubt it is in this core area of keenly priced own-label products that the longer war (whether that’s the six weeks it reported or the 19 weeks Lewis referred to) has been won.

Read more: Aldi UK sales jump 10% over Christmas

This week Tesco kicked off the celebrations for its 100th birthday with a big in-store ad campaign focused on its value credentials. And though the prices didn’t quite take us back to Jack Cohen’s era, customers get the point. With economic confidence fragile and shoppers holding back on spending as they wait to see what our hapless politicians will finally come up with, food retailers have performed better than non-food. This is partly because they are more sheltered from the switch to online shopping, but also because they have done a better job of steadying the ship and getting the basics right. As the manager of our store of the week says, the closure of Tesco Direct has also focused online sales on the core - though it was interesting to note that its low-cost Jack’s proposition merited hardly a whisper from Lewis this week.

Meanwhile, Morrisons, another company that has invested heavily in revamping its core offer, also performed robustly. Boss David Potts also pointed to what he called the “change in consumer behaviour” since the “spend-up summer” of 2018, which saw Morrisons basking in its best quarterly performance for nine years during the heatwave and World Cup.

Opinion: Can Morrisons keep growing amid price cuts and Brexit?

For Morrisons it was customers filling their baskets with mid-tier own-brand items that allowed it, albeit with smaller growth than Tesco, to keep its figures pointing in the right direction.

Meanwhile, the rationale behind Sainsbury’s merger plans becomes even clearer, given its relatively poor performance over Christmas, though Mike Coupe had a similar explanation for the fall in sales. “Volumes have been robust, it’s the value that has come off the boil,” he said, as “very cautious” consumers “downtraded” to mid- and lower-tier groceries.

Asda, which reports on its Christmas performance later in the year, has been another of the big retailers ditching the price comparison gimmicks and concentrating on everyday low prices.

So while few supermarkets will be popping the champagne corks now Christmas is over, there is a sense that the majority of them are at least clear of their strategy. They have a strong ideas of who their customers are and they realise the battleground is about not just price, but value.

That will put them in a much better space to handle all the uncertainty of 2019 than some of their contemporaries on the high street, for whom the outlook seems decidedly grim.