Today’s profit warning from Tesco (its fourth this year) is estimated to translate to a UK profit margin of 1.5%. More detail of exactly what is behind the margin reset is promised in January, and it will take much longer still to see how its new competitive stance fares in the marketplace. This is just the latest in the progressive redrawing of the economic battleground of UK grocery retailing.
There are several huge questions prompted by this. Does this number reflect in full the scale of war chest needed to finance what Dave Lewis sees as the required lowering of prices to regain control of Tesco’s competitive agenda? If so, is it enough? And does 1.5% represent the new normal margin in UK food retailing? What will the knock on effect of all of this for the other players?
This is all much nearer the beginning than the end of the story of seismic change in UK grocery retailing. And by the way, given their massive share of non-foods, it would be a huge mistake to think that what is happening is confined to grocery.