Tesco eyes Europe expansion

City A.M. Reporter
RETAILER Tesco plans to almost double selling space in central and eastern Europe over five years.

On the third and final day of a trip with analysts to Asia, the world's third-largest retailer said it aims to have 4.1 million square metres of selling space in its central and eastern European markets by 2014-15, up from around 2.2 million now.

It also has high hopes for a hypermarket refurbishment programme, saying that average weekly sales at four recently refitted stores were up 19 per cent, with average weekly customer numbers up 14 per cent.

Tesco and international rivals like Wal-Mart, Carrefour and Metro are expanding rapidly into emerging markets as they look to bolster sluggish growth in western Europe and the United States.

Tesco yesterday said it aims to quadruple revenue in China to about £4bn over the next five years, by more than doubling its number of hypermarkets to over 200.

The group runs about 850 stores in the Czech Republic, Hungary, Poland, Slovakia and Turkey.

These generated sales of about £7.6bn, or around 12 per cent of the group total, in the year ended February 2010.

Its expansion plans include opening more hypermarkets of over 5,000 square metres.

But the largest proportion of the new openings will be compact hypermarkets of 2,000-4,000 square metres and smaller formats, such as its Express stores.

"Our experience tells us that if we give customers the opportunity to shop in multiple formats, we will achieve higher market penetration, increased loyalty, greater brand reach," Tesco said in presentation slides published on its website.

The group said hypermarket refurbishments in central and eastern Europe included adding at least 5,000 new products, as well as services including phone shops, opticians, pharmacies and photoshops.