Tesco customers feeling squeezed and buying less

View this email in your browser

20th June 2022

Bite-sized business news from the UK and beyond

Good morning Anyone travelling by rail this week is likely to face the biggest disruption from union strikes in a generation. Here’s a handy guide of which lines will be impacted and when.

Today's stories

Trading down: Tesco customers feeling squeezed and buying less
Out of fashion: Revlon files for bankruptcy after 90 years in business

RETAIL
Tesco customers feeling squeezed and buying less

What happened?
Tesco said that shoppers are changing their behaviour as they face “unprecedented increases in the cost of living”.

On Friday the UK’s biggest supermarket reported that sales dipped 1.5% in the past three months, compared to a year ago when the country was still in lockdown, as customers traded down to cheaper products and bought fewer items.

The latest official figures put the rate of grocery inflation at almost 7%. To manage this, along with soaring energy bills, rising interest rates and higher taxes, households are looking to economise where they can.

Tesco said customers spent 14.5% less online and 0.7% less in its big supermarkets but 6.2% more in its convenience stores, suggesting that consumers are trying to buy little and often to manage their grocery bills. The chain also said shoppers were starting to buy cheaper ranges of products like bread and pasta where some brands have increased prices by as much as 50% this year.

Tesco is taking market share from its main rivals - Asda, Morrisons and Sainsbury’s – but German discounters Aldi and Lidl continue to make inroads in the UK grocery market as cost conscious look for cheaper alternatives.

What next - food prices are forecast to go even higher. Last week industry body, the Institute of Grocery Distribution, predicted a peak for food inflation of 15% over the summer led by meat, cereal, dairy, fruit and vegetable products.

How come? Ukraine is one of the biggest wheat producers and the Russian invasion has led to soaring prices of the commodity. This then feeds into the cost of meat that relies on wheat for food, such as poultry. Brexit and supply chain disruption related to the pandemic are also affecting prices.

Other stories to keep you in the loop

Big pay rises could push prices up, says minister
Up to 20,000 people could get interest-free loan amid cost of living crisis
PwC UK partners to toast six-figure windfall from $2.2bn mobility sale
West End landlords plough ahead with £3.5bn London-focused merger deal
30-Year fixed mortgages may be coming to the UK
Magic Circle law firm lets lawyers bring dogs to the office

CONSUMER
Revlon files for bankruptcy after 90 years in business

What happened?
On Friday cosmetics giant Revlon filed for bankruptcy blaming too much debt and screwed up supply chains.

Founded in New York in 1932, Revlon grew to be one of the biggest, and most forward thinking, makeup companies in the world. It was the first to feature a Black model and made household names of models including Iman and Cindy Crawford.

But the company struggled to keep up with changing trends. Revlon broke through in the 1980s with splashy advertising and its line of bright lipsticks. But when cosmetics trends shifted to muted colours in the 90s, the company was slow to adjust. Revlon went from the world’s second-largest cosmetics company by sales to 22nd.

The pandemic created another challenge for the business. The advent of widespread mask wearing meant lipstick sales dropped 21% in 2020.

Competition also intensified with the emergence of a new generation of cosmetic brands. For decades, Revlon has sold most of its makeup in physical stores. But Millennials and Gen Z are now more likely to discover products on social media. Now Revlon is losing customers to the likes of online-first brands like Kylie Cosmetics, Glossier and Rihanna’s Fenty Beauty.

The global supply chain issues created as the world came out of lockdown is the final nail in the coffin. Revlon products require up to 40 raw materials and components. A shortage in just a few of these means the company can’t fulfill a third of its orders.

What next? By filing for Chapter 11 bankruptcy protection in the US Revlon will be able to continue to operate while it works out a way to repay its creditors. The company says it expects to receive $575m from its lenders to support day-to-day operations.

Stat of the day

Lego produces 100 billion brick every year

Interesting links from around the web

3 ways to boost your memory, according to brain experts
Just in case: 7 ways to prep for a recession
How to master the art of small talk

Forward to Friend

Not a subscriber? Join free

How did you like today's email?
Get in touch with any feedback or even just to say hi
hello@marketloop.co

Copyright © 2022 Market Loop, All rights reserved.

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.

This email was sent to you
why did I get this? unsubscribe from this list update subscription preferences
Market Loop · 16 Great Chapel St · London, London W1F 8FL · United Kingdom

Tesco customers feeling squeezed and buying less

Older messages

Interest rates rise to 13 year high

ITV goes back to nature

TikTok fuels book sale boom

Recession fears grow as UK economy shrinks

Student loan interest rate capped

You Might Also Like

How This "1 PAGE" Website Makes $21,000/Month!

$1,654 in DAILY sales 😮 (Beta-Tester results + NEW system)

Founder Weekly - Issue 669

Building AI Agents the Easy way

Are you a Chaos Coordinator? It's one of the top gifts on Amazon

The Market Is Pushing Asset Prices After Inflation Report — But Should It Be?

When Video Matters And When It Shouldn't

😎Wake up, babe. State of Marketing just dropped.

VC climate-tech funding falls for 3rd year

🦅 We're rescheduling Jesse Pujji's masterclass