Morgan Stanley said it is struggling to see how Tesco (LON:TSCO) can gain any more market share as almost 80 percent of UK consumers already shop there.
The American investment bank’s UK research arm has just completed a survey of UK consumer attitudes on food retailers in Britain.
Analyst Geoff Ruddell said: “Our survey suggests that there is nothing wrong withTesco’s UK business; but with nearly 80% of UK consumers already shopping there and Tesco getting more loyalty from its customers than any other retailer, we struggle to see how it is going to gain much share in the future.”
Ruddell also highlighted that there is significant upside to Sainsburys’ (LON:SBRY) share price if it can find a way to change perceptions among consumers. But he added that so far the group has made very little progress on this key issue.
The analyst claimed that Morrisons (LON:MRW) came out ‘pretty well’ in the survey, but it is still the weakest of the big-four supermarkets.
Meanwhile he also highlighted that online supermarket Ocado (LON:OCDO) have a number of issues to contend with. According to Ruddell the challenges are perceived to be high prices, a dependency on stocking Waitrose products, and limited interest in online grocery shopping.
Morgan Stanley rate Tesco as ‘equal weight’ and it sees Sainsbury, Morrisons and Ocado as ‘underweight’ – these rating roughly translate to ‘hold’ and ‘sell’ recommendations.