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How will Tesco shares respond to the lifting of Covid-19 restrictions?

Tesco share price remains moderately flat.

Last month a basket of FTSE 100 stocks had a positive run, but the Tesco (LON: TSCO) (TSCO.L) share price has remained moderately flat since its sharp fall back in February.

Compared to a year ago, the supermarket share price is down by nearly 30%.

June promises to be another unsettled month for the retailer, and it’s unlikely, until the second quarter, that the supermarket giant experiences anything like a post-lockdown sales boost with the end of all Covid-19 restrictions still on the cards for 21 June.

How will the Tesco share price fair post-pandemic restrictions?

Tesco will most likely continue to feel pressure from budget chains like Lidl and Aldi as shoppers will no longer gravitate to the bigger supermarket chains for convenient online shopping should restrictions be lifted.

Tesco’s status as the nation’s largest retailer is also at risk if forecasts by Edge by Ascential prove to be correct. Edge predicts that Amazon will overtake Tesco as the largest retailer by 2025. Amazon sales are estimated to hit £77.1 billion, while Tesco sales will grow to £68.8 billion. Edge believes ‘digital marketplace giants’ like Amazon will continue to blossom and grow their online grocery business as well as launch further Amazon Fresh grocery stores across the UK.

It’s not all doom and gloom for Tesco’s shareholders. Edge’s recent study also stated that Tesco is an ‘omnichannel marketplace giant’ that can rapidly expand its online capacity.

Within its 2020/21 preliminaries, Tesco’s online sales rose 77% to £6.3bn in the year. The grocer doubled its online fulfilment capacity to 1.5 million slots per week.

Tesco’s year-on-year results also highlighted the impact of its Aldi Price Match, launched in March last year, which offered a price match on more than 500 products sold by the discount supermarket chain. Furthermore, the £8.2bn sale of its Asia concerns helped reduce its overall net debt to £12bn.

Not Investment Advice Note: Views expressed are those of the writer. The author does not own any stocks mentioned. The article is information, not advice. Share prices can rise and fall. Past returns are not a guide to the future. Please do your own research.

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