// Ken Murphy has described Tesco customers as “savvy” when it comes to managing their grocery shopping habits
// He denied that grocers are being slow to pass lower prices onto shoppers, saying the supermarket is working “really hard” to help consumers
Tesco CEO Ken Murphy has claimed “we’re past peak inflation” today and hit back against the Bank of England’s view that supermarkets have not moved quickly enough to pass on price decreases.
When asked if the Bank of England’s claims were unfair, he said: “yes I do”.
“As an industry, we’ve worked really hard on efficiency and yet our operating margins are falling, despite really strong top line sales growth. That can only be attributed to the fact that we’re investing really, really heavily in value,” he said.
Murphy insisted that Tesco was passing deflation down to customers pointing out bread and pasta were 12% and 16% cheaper respectively month-on-month.
He added that the visible headline rate of inflation, which the BRC said was 15.4% in May, was not the same level experienced by Tesco shoppers.
Murphy also dismissed claims that a supermarket price cap was needed and insisted that the UK grocery market was “fiercely competitive,” which ensures Tesco remains “sharp” on price.
Discussing mooted price cap, the supermarket boss said: “UK grocery retailers are constantly having to be the sharpest possible in terms of value.”
Murphy said 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.”
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Tesco unveiled a 9% sales rise in its first quarter this morning, which was driven by shoppers looking for value.
“Our customers are really savvy, and they’ve been able to work across different product groups, different cheaper types of protein, etc, which allows them to manage the cost of their shopping basket more effectively,” Murphy said.
“They are looking for the best deals, they’re looking for great value, they’re looking for great quality.”
Murphy explained that shoppers are searching for different ways to save, whether that’s eating in instead of dining out, buying frozen instead of fresh, or preferring chicken to red meat.
“They’re finding ways of managing the household budget and its our job is to help them find those ways and make it as easy and as affordable as possible to feed themselves and their families well and that kind of behaviour is persisting as you’d expect.”
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