Saturday, 14 January 2012

# 14 Tesco shares are down, for what?

It's remarkable how quickly the mighty can apparently fall out of favour.

Over a pot of tea at my favourite coffee house Friday lunchtime I was reading in the Times about poor Christmas sales at Tesco. I mean - really???? This is one of the leading supermarket chains in the UK. So it experienced a profit downturn over the festive season, but for investors to shed their shares in the company quicker than you say 'Tesco price drop' is just ridiculous.

As a result there is probably going to be a massive price drop campaign across all its stores, meaning other supermarkets are going to have to follow suit to remain competitive. Good news for us shoppers. But isn't this a little bit of an over reaction? We all know Christmas has been tough, we're still a suffering economy after all and regular shoppers have pulled the purse strings tighter than ever. I'm sure no one was expecting to make huge profits but it isn't as if Tesco are going to fold. Give it a month or so and it'll be back to the old prices again.

The Times further reported that we were going through the most prolonged squeeze on spending power since records began in the early 1950s. But whilst smaller well known brands have fallen by the way-side the big brands are still here and aren't likely to be going anywhere anytime soon.

And no matter how much we complain about the prices, profit margins and the loss of our High Street, we all keep going back for more, because we like convenience, choice and cheap as possible - which let's face it, it is.

No matter how nostalgic we get about buying local we will never ditch the supermarket and put our money where our mouth is.

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