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Why Supermarkets May Not Be a Super Investment in 2017

By Malcolm Stacey | Friday 6 January 2017

Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Hello Shares Casters. Though I’m bullish about UK shares generally, and while I hold quite few shares in Tesco (TSCO), Sainsbury (SBRY) and Morrison (MRW), I am worried about the ability of supermarkets to shine in Shareland in 2017. I suppose of all three stores, I’m most optimistic about Morrisons.

A recent trip to one of my district’s largest branches rather impressed me. There was plenty of choice, even for a veggie like me. The quality veered towards high to middling, without some of the higher prices of posher food outlets.

The store seemed full, too, though that might have been something to do with the nearness of Christmas at the time of inspection.

All three stores will report next week and I think all but Morrisons might disappoint. Only a feeling mind.

The problem, as usual, is the growing strength of opposition from foreign supermarkets which seem to offer cheaper prices. Though in my humble experience, this can sometimes be a false perception.

Tesco, Sainsbury and Morrison may redress some recent damage if some higher end shoppers decide to trade down as their salaries continue to be curbed by money-saving bosses.

Food is at last getting cheaper, or rather it’s not rising as fast, but I still think there may be better places to put your hard-earned than any British supermarket. The oil sector and banks are much more in favour with this old trader.

Sainsbury now has Argos, which may do better for it than its traditional food selling, but of all three supermarkets mentioned here, it seems to me - on my visits to them all - that Sainsbury's has not changed very much. And yet it probably needs to, to fend off competition from the likes of Aldi and Lidl.

And now for more spending - in the Punter’s Return.

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