Five questions answered on Tesco’s and Morrisons’ Christmas sales slide

Why did supermarket sales take a hit?

Morrisons and Tesco have reported a fall in their Christmas sales. We answer five questions on both supermarkets’ lacklustre sales.

By how much has Tesco’s and Morrisons’ sales fallen?

In the six weeks to January 5 2014 Morrisons’ like for like sales fell 5.6 per cent, causing its shares to plummet by 7 per cent.

Tesco's like-for-like sales fell by 2.4 per cent over the festive period. It’s shares fell by 4 per cent.

What have the companies attributed these weaker sales to?

Morrisons believe its sales were weak due to a lack of online presence, as well as competition by cut-price shops, such as Lidl and Aldi. The supermarket is set to enter the online shopping market on Friday, when it will launch a trial in Warwickshire, covering parts of the Midlands.

Tesco simply said the fall in sales was due to a "weaker grocery market" in the UK.

What else did the supermarket giants say?

Morrisons said it was "disappointed" by the sales. In a statement the retailer said:

"The difficult market conditions were intensified for Morrisons by the accelerating importance of the online and convenience channels, where Morrisons is currently under-represented, and by targeted couponing which was particularly prevalent in the market this Christmas."

Tesco, which also saw a 0.7 per cent fall in its overseas sales, said its move to open fewer stores in the UK was also behind the sales drop.

Philip Clarke, chief executive at Tesco, said: "Our overseas performance has improved since the third quarter, driven by an improving trend in Europe. This is despite continuing external challenges, including the recent political disruption in Thailand."

What have the experts said?

Will Hedden, sales trader at spread-betting firm IG, told the BBC: "There is the impression that more and more business is going online, and Morrisons has been slow to come into that area.

"Their online offering is going to need to become pretty good, pretty quickly to compete."

While George Osborne took the release of the figures as an opportunity to say they showed that the industry is "very competitive".

"We have to work through the long-term economic plan that is turning Britain around and we need to make sure we get balanced growth across the whole country and we get investments and exports alongside consumer spending,” he told the BBC.

How did the other big supermarkets do over Christmas?

Sainsburys posted its lowest growth figures for nine years prompting the company to scale back its growth forecast for 2014. It reported this week that its sales had increased by just 0.2 per cent in the 14 weeks to January, despite prices rising by some 2.5 per cent.

Waitrose, on the other hand, revealed on Wednesday a 3.1 per cent rise in underlying sales in the five weeks to Christmas Eve. This was boosted by a 33 per cent rise in online grocery sales.

Co-op reported a 1 per cent rise in underlying sales at its grocery stores in the 13 weeks to 4 January.

A Tesco Express on Clapham High Street. Photograph: Getty Images.

Heidi Vella is a features writer for Nridigital.com

Getty Images.
Show Hide image

The problems with ending encryption to fight terrorism

Forcing tech firms to create a "backdoor" to access messages would be a gift to cyber-hackers.

The UK has endured its worst terrorist atrocity since 7 July 2005 and the threat level has been raised to "critical" for the first time in a decade. Though election campaigning has been suspended, the debate over potential new powers has already begun.

Today's Sun reports that the Conservatives will seek to force technology companies to hand over encrypted messages to the police and security services. The new Technical Capability Notices were proposed by Amber Rudd following the Westminster terrorist attack and a month-long consultation closed last week. A Tory minister told the Sun: "We will do this as soon as we can after the election, as long as we get back in. The level of threat clearly proves there is no more time to waste now. The social media companies have been laughing in our faces for too long."

Put that way, the plan sounds reasonable (orders would be approved by the home secretary and a senior judge). But there are irrefutable problems. Encryption means tech firms such as WhatsApp and Apple can't simply "hand over" suspect messages - they can't access them at all. The technology is designed precisely so that conversations are genuinely private (unless a suspect's device is obtained or hacked into). Were companies to create an encryption "backdoor", as the government proposes, they would also create new opportunities for criminals and cyberhackers (as in the case of the recent NHS attack).

Ian Levy, the technical director of the National Cyber Security, told the New Statesman's Will Dunn earlier this year: "Nobody in this organisation or our parent organisation will ever ask for a 'back door' in a large-scale encryption system, because it's dumb."

But there is a more profound problem: once created, a technology cannot be uninvented. Should large tech firms end encryption, terrorists will merely turn to other, lesser-known platforms. The only means of barring UK citizens from using the service would be a Chinese-style "great firewall", cutting Britain off from the rest of the internet. In 2015, before entering the cabinet, Brexit Secretary David Davis warned of ending encryption: "Such a move would have had devastating consequences for all financial transactions and online commerce, not to mention the security of all personal data. Its consequences for the City do not bear thinking about."

Labour's manifesto pledged to "provide our security agencies with the resources and the powers they need to protect our country and keep us all safe." But added: "We will also ensure that such powers do not weaken our individual rights or civil liberties". The Liberal Democrats have vowed to "oppose Conservative attempts to undermine encryption."

But with a large Conservative majority inevitable, according to polls, ministers will be confident of winning parliamentary support for the plan. Only a rebellion led by Davis-esque liberals is likely to stop them.

George Eaton is political editor of the New Statesman.

0800 7318496