Tesco Backtracks on Commercial Property Openings

Posted on 21 April, 2012 by Kirsten Kennedy

Tesco has unveiled a £1 billion scheme designed to raise standards and win back customers to its commercial properties in the UK. The plans include methods such as cutting the number of new store space opening by around 38 per cent and taking on more staff members in existing properties to provide a more efficient customer service.

The scheme was launched in a bid to counter Tesco’s poor performance in the past 12 months, which saw UK like-for-like sales fall by an average of 1.6 per cent in the last trading quarter of the financial year. Sales even fell during the Christmas period, with a dramatic 2.3 per cent drop – this was a huge blow to the supermarket giant, which had hoped the sale of food and non-essential items would boost their annual revenue following a difficult trading year.

Embarrassingly, the chain was forced to admit its last much-publicised revival plan, the Big Price Drop, had failed to entice customers from rival commercial property supermarkets such as Asda and Sainsbury’s. However, the £500 million initiative is due to be updated, and will incorporate successful initiatives such as savings coupons and special offers.

Chief executive, Philip Clarke, denied that the decrease in commercial property growth indicated a financial issue within the company. He said: “You might have the impression that Tesco is struggling. Well, we are not.

“We have decided now to focus on making the stores we have profitable first before pushing ahead with higher levels of expansion.”

Mr Clarke also revealed plans to expand the online arm of the chain, by providing existing stores with the facilities to provide “click and collect” services. Currently, around 800 Tesco commercial properties offer this option to customers, which, under the new scheme, will double to 1,600 stores within the UK.

These plans will primarily affect the opening of the large hypermarket commercial properties for which Tesco became known pre-recession, as more focus is to be put on the smaller “Tesco Express” outlets. However, Tesco is confident that, once profits begin to rise, the hypermarket will have a successful return, both in the UK and in its international market, which covers the U.S.A, continental Europe and Asia.


Mr Clarke stated his belief that the larger commercial properties in Tesco’s portfolio will show long-term success, saying “Before anyone writes the epitaph of the hypermarket, that’s a long way in the future.”

Tesco had previously stated the aim of expanding its commercial property portfolio to 300 stores by the end of the year; however, as expansion is being limited to only 50 new stores in 2012, it will have only 235 outlets in the UK by the beginning of 2013.

 

 




One response to “Tesco Backtracks on Commercial Property Openings”

  1. Mr A Niruwenhuys says:

    Would you please e.mail me with the contact name who deals with finding new tescos expess stores,I have a lease that would be perfect, The building is in Bramcote Nottingham , Look forward to your reply

    Mr Austin Nieuwenhuys

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