Tesco is reaping the rewards of a focused recovery, as it continues to work to the six strategic priorities and overhead reductions that were set out three years ago by CEO Dave Lewis. In an intensely competitive environment the retailer has invested to lower prices, tailor its ranges and improve availability – resulting in increased customer loyalty and volume growth. Likefor-like increases were seen across all formats, with even Tesco Extra hypermarkets seeing a 1.6% increase.
Here the company revealed that it repurposed 410,000 sq. m of space so far this year to footfall-driving concessions from retailers including H&M, Decathlon and TK Maxx.
Fresh food has been a key driver in Tesco’s recovery, and increases of 5.0% were seen during the period. Tesco’s private label lines are also a strength and the company says its own brand ‘farm ranges’ of produce and meat were up 4.6% and are now included in more than 70% of shopper baskets. Although Tesco says it outperformed the market for fresh and packaged food, general merchandise continues to underperform and this will be a focus going forward. Work is already underway to rationalise and reset these ranges.
Much of Tesco’s recovery has centred around cost reductions and consolidation. At its head office a 25% cost reduction goal has led to job cuts in the UK. Tesco also closed nine stores in Poland as discounter pressure increased. Other initiatives such as stock availability improvements and one touch stock replenishment are helping to drive a better performance as the company works to drive efficiencies as rapidly as possible through its business. (LZ Retailytics)