Tesco boss Phillip Clarke (pictured) has said that the company is currently struggling to shake off "baggage" attached to the brand, while he unveiled plans to accelerate the turnaround planned plan for the UK's largest supermarket chain.
In an interview with English newspaper, the Daily Telegraph, the Tesco chief executive said that there was "a lot" of work to be done to reverse the company's recent decline. Clarke also said that Tesco "can't ignore" the rise of discount retailers Aldi and Lidl.
"You can’t ignore them. No retailer can. You have got to have sharper prices and better quality," said Clarke.
"But you can’t just be them, because you are not them. They have a couple of thousand SKUs [products], don’t have an online business, and [only] do a little bit of general merchandise.
"We have 25,000 products in an average big store, a couple of hundred thousand online. This is all about creating a differentiated strategy. We know we have to get the right blend of price, quality, range and service in the right environment," he said.
In the interview, Clarke said the aim of the turnaround programme is to improve Tesco's food range, revamp stores and cut the prices of key food products.
The performance prompted Tesco to confirm today that it would step up the pace of its large store revamp programme but cut back further on growing new selling space.
The chain is to focus on faster online and convenience channel growth, meaning group capital expenditure would be reduced to no more than £2.5 billion per year for at least the next three financial years.
Tesco also intends to significantly step-up a modernisation programme of its 900 large stores across the UK, of which only 100 have so far had a makeover.
Clarke did say however that Tesco has “really strengthened our foundations” since he unveiled a £1 billion turnaround plan two years ago and the company has the “right strategy”.
“We know that we carry some baggage,” he explained. “I think in 2007/2008 there was a fundamental reappraisal of what good looked like for business. Before then, in the time of plenty when there was no booms and no busts and it was only going to go that way, biggest was best. I really think that [now], biggest isn’t always best, better is better.”
Neither the statement or the interview made it clear if Tesco was planing to cut its profit margins.
© 2014 - European Supermarket Magazine by Enda Dowling
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