"Tesco is at its best in tough markets, responding to changing needs of customers and that's why we've been able to make good progress this year," says Tesco chief executive Terry Leahy. "Our business is strong and I believe well placed, not just to cope with the challenges which lie ahead but also the growth opportunities open to us by continuing to invest in our strategy."

Shoppers are showing greater concern for value and seem to be trading down across several product categories to ease their budgets. In response, Tesco has launched Discount Brands at Tesco, described as "the biggest change to our grocery ranges for more than a decade". The range includes 400 products from 34 new brands across most categories stocked by Tesco. The products are higher in price and quality than the Tesco Value range and propose to match discounter ranges already stocked.

In light of changing customer priorities, Tesco has also changed its approach to in-store promotions. Promotional activity has been focused more on money saving deals rather than on multi-buys. Tesco's Price Check Survey has shown the retailer's price positioning has improved across 10,000 products this year compared to leading competitors.