The juggernaut is in trouble

Tesco has not always been an easy company to love, but that has not stopped it conquering Britain. For two decades it has trounced its rivals and carpet-bombed the country with stores.

In London, some high streets have three or four Tesco branches within a few hundred yards. But suddenly the juggernaut is in trouble.

The old Tesco under Sir Terry Leahy simply did not do profit warnings, share price collapses and store closures - so why has it all gone so disastrously wrong?

One obvious reason is the economic squeeze. Tesco is more dependent on non-food sales than its rivals and as even worse figures from Argos show today, we are all cutting back on non-essential purchases. All the supermarkets are in the same economic boat.

But over the past year or so Tesco's big rivals, which for so long foundered in its wake, have all raised their game. Sainsbury's boss Justin King yesterday trumpeted its best Christmas ever.

Morrisons and Asda have also prospered under new leadership, while smaller competitors such as Waitrose at one end and Aldi at the other have had "good recessions".

Another factor has been the recent regime change. Unflappable Sir Terry was always going to be a tough act to follow, but several of his generation of Tesco "lifers" have decided to call it a day at the same time.

It was bad luck for his successor Philip Clarke that his much hyped Big Price Drop appears to have been such a flop. The old days when a cut here and a cut there could bring in the punters have gone.

In a way it is a tribute to Tesco's bar-raising achievement that we expect our supermarkets to offer the keenest possible prices on everyday food all the time. But that will be little comfort to Clarke today.