TESCO revealed yesterday it would be spending £1bn on reviving its UK business as the supermarket giant attempts to restore sales growth and make customers “fall back in love again” with the brand.
Chief executive Philip Clarke outlined a six-point plan to hire 8,000 more staff, create “warmer” stores, lower prices and improve products after becoming too fixated on cutting costs and boosting profit margins.
“There has been too much running up and down the escalators”, Clarke said, referring to the group’s rapid expansion as the group reported a one per cent fall in UK profits to £2.5bn in the year to 25 February.
“We fully recognise that we need to raise our game in the UK. As we improve the shopping trip for our customers, it will follow that our sales growth and financial performance will improve too.”
The grocer also said it will scale back the amount of new store space it will open by 38 per cent to focus on its existing store portfolio.
Tesco will revamp 430 stores, or 25 per cent of its total selling space, improving their look and feel and focusing on fresh food and over the counter service, Clarke said.
Profits at Tesco’s international business, which spans 12 countries, rose 17.7 per cent to £1.1bn, resulting in a total increase of 1.3 per cent to £3.8bn across the group.
He dismissed calls for a more radical shake-up after some investors urged it to abandon its Fresh & Easy business in the US, saying the group had a “unique” opportunity and “needed to persuade investors we can get there.”
SERVICE AND STAFF
on hiring 8,000 new staff for its large stores and fresh food departments
PRICE AND VALUE
Step up its Price Drop campaign and increase promotions
STORES AND FORMATS
on revamping 450 stores
RANGE AND QUALITY
Relaunch Tesco Brand, which represents 40 per cent of UK sales.
BRAND AND MARKETING
Review and improve brand communication
CLICK AND BRICKS
on internet arm Tesco Direct and adding 750 new click and collect points