Tesco sales slowdown may indicate strain on consumers

The strain of credit card debt and other financial burdens on hard-pressed consumers may account for the latest trading figures by retailer Tesco, which has suffered slower growth.

In its sales report for the second quarter of 2012, the supermarket revealed that its like-for-like UK sales (excluding petrol and VAT) declined by 1.5 per cent in the 13 weeks to May 26th.

Sales growth fell from 2.3 per cent to two per cent, while data from Kantar showed that market growth dipped from 3.7 per cent to 2.4 per cent.

Seeking to put a positive spin on the figures, chief executive Philip Clarke said: "Tesco has performed robustly in the first quarter despite subdued consumer confidence in all our markets."

The figures may show, however, how much consumers are having to cut back on spending due to the strain of falling real-terms income levels and also the burden of debt many have to deal with.

For people whose debts are particularly severe, however, cutting down on the regular groceries bill may not be enough.

Instead, more concerted action may be required to pay off debt, such as a debt management plan or even an individual voluntary arrangement.

One area of further concern for some may be the risk of unemployment if the recession persists, as this can leave people previously able to pay what they owe suddenly being unable to meet repayments.

Tesco's own employment has grown in recent months, but continued poor sales returns may even impact on this, either by leading to job losses or at least restricting further recruitment.

Last month, the Office for National Statistics revealed retail sales in April were only 0.4 per cent up in value on the same month in 2011, the slowest rate of year-on-year growth for any month since January 2010, with the year-on-year volume of sales down 1.1 per cent.

By James Francis