Tesco's year-old revamp weaned on fresh food focus

Fri Apr 12, 2013 3:00am EDT
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By James Davey

LONDON (Reuters) - After a decade pushing its non-food business, Tesco (TSCO.L: Quote), Britain's biggest retailer is changing, and a conspicuous focus on fresh produce greets shoppers at its newly styled superstores.

"Customers were saying they felt we didn't have the right products in our shop," said Kiran Sudan, store manager at the recently refurbished Kensington superstore in west London, whose catchment area is a multi-cultural mishmash of affluent dwellings and social housing.

Floor space for general merchandise, such as electrical items, has been cut by over two thirds at her store, part of Tesco's fresh food drive, which has introduced an additional 2,000 grocery lines and a recognition that the future of non-food retail is largely online.

So far around 400 of Tesco's 3,000-plus British stores have been refreshed, with wider aisles, warmer natural colors and wood cladding, and an array of fresh food counters.

In her 30 years at Tesco, Sudan has witnessed phenomenal success under Terry Leahy, chief executive from 1997 to 2011, when double digit yearly profit growth was the norm, and the recent stumble under his successor Phil Clarke.

Founded by Jack Cohen in 1919 as a group of east London market stalls, Tesco, which now turns over 65 billion pounds ($100 billion) and employs more than half a million people worldwide, was one of Britain's most consistent companies in terms of earnings growth, until it issued its first profit warning in over 20 years in January last year.

The breakneck expansion model couldn't keep delivering.

"We've run too hot for too long," Clarke acknowledged.   Continued...

Shopping trolleys are seen in front of a Tesco store in Kensington, west London in this April 19, 2011. REUTERS/Toby Melville/Files