What went so wrong at Tesco?
What, then, has gone so horribly wrong for Britain's biggest supermarket player?
A combination of factors. First, Tesco has expanded into non-food significantly in recent years and such non-essential goods have slipped down consumer shopping lists. Then there's image. For many customers, especially at Christmas, the Tesco (and you can Asda to that list) shopping experience is just too ordinary.
Even when many consumers are under huge financial pressure, there is still a willingness to splurge for special occasions. This is a feel-good factor that Waitrose and Marks & Spencer have long latched onto. (Which is why other low-to-middle-brow retailers like Argos and Halfords are also suffering currently and middle/upper brow John Lewis isn't).
Tesco's underlying sales were down 2.3% in the six weeks to 7 January. That's substantially worse than had been previously feared. But when you strip out inflation - a good 5% in real terms - then these results worsen significantly more.
Not cheap enoughThen there's the impact of German cheapies, Lidl and Aldi. Lidl and Aldi's prices, frankly, often put those charged by Tesco (plus Sainsbury's) to shame. Also, many consumers have cottoned onto the fact that though the Lidl/Aldi shopping experience is basic - there's no piped music and presentation is little to write home about - the quality is consistently strong. That's very appealing when cash is tight.
And around the edges, there's the Co-op too. Tesco's reliance on vast, out-of-town shopping centres may also be doing some slight damage given that some consumers will be looking hard at car use and opting to shop locally if they can save pennies on their fuel bill. Not all but some; it all adds up.
Is there, possibly, some kind of backlash against Tesco in particular currently? For the last decade Tesco has done outstanding well, drubbing its competitors regularly. Retail analyst Robert Clarke from the RetailWeek Knowledge Bank thinks there's something in the idea.
Backlash blues?"They're [Tesco] ubiquitous. There may be a 'backlash' element. But remember that Sainsbury's have been recovering after under-performing for some time. Morrisons has also improved. Tesco now has competition from up, below and all sides; that has an impact."
What Clarke is more bothered about is why investors weren't aware of how bad things would be much earlier. "if they had analysed the figures of the last year, they would have realised that volume sales were suffering and that market share was below its peak of a few years ago."
Meanwhile Tesco management will come under increasing pressure with its US Fresh and Easy operation. Given the difficult UK picture, that gives them less cash to spray around Stateside. Some think the US operation is do-able long term, but will the City give them enough time to sort it out? Possibly not now.
So, value investors might do worse than look at Tesco - despite its sales wobble it remains a massively experienced big retail hitter - this morning. "That 15% fall," says Clarke, "is overreaction on an extraordinary scale."