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Product Rationing In Stores A 'Dynamic' Situation, Says New Tesco CEO

Published on Oct 7 2020 10:29 AM in Retail tagged: Featured Post / UK / Tesco / Jack's / Ken Murphy / Product Rationing

Product Rationing In Stores A 'Dynamic' Situation, Says New Tesco CEO

Product rationing in Tesco stores, whereby a cap is placed on the number of items a customer can purchase, is a "dynamic" situation that will be applied "based on the circumstances" at a particular time, the retailer's chief executive has said.

Newly-appointed CEO Ken Murphy was commenting following the recent announcement by the retailer that it was implementing bulk-buy limits on certain categories, such as toilet roll, pasta and flour, to prevent unnecessary panic buying.

"To be honest with you, we are keeping an eye on it," the former Walgreens Boots executive explained. "If we think that particular categories or products are being overtraded, we try and maintain a cap on the number of items bought to ensure that we stay in stock for customers.

"That's working reasonably well for us, but it's dynamic – we flex it based on the circumstances."

Half-Year Results

Murphy made the comments in a conference call with journalists following the publication of Tesco's half-year results, which showed a 6.5% like-for-like group sales increase, including a 7.6% like-for-like sakes increase at its core UK business.

Its Republic of Ireland business saw a 15.5% like-for-like sales increase, meanwhile, which was "almost entirely driven by COVID", according to Murphy, while Booker was up 2.2% and Central Europe was down 0.9%.

Other notable takeaways from the conference call include the future of the Jack's discount chain, and whether the business could be expanded in the event of a deep economic recession.

"One of the pleasant surprises of the pandemic is that Jack's has performed quite strongly in the first half, it's definitely improved," said Murphy.

"The most important thing for me about Jack's is what we learn from it. We've learned an awful lot from the Jack's initiative, and quite a few things we've actually used to put back into the core retail offering. So watch this space."

Elsewhere, as to whether Tesco is planning to exit Central Europe altogether, following the recent sale of its Poland business, Murphy said that further sales were not on the cards.

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"At this stage there are no plans for further retrenchment," he said. "Right now, I'm just really focused on getting to know these businesses, getting to know the team in central and eastern Europe when I'm allowed to travel, and really understanding the drivers of that business."

Brexit Threat

On Tesco's preparedness for Brexit, and the threat of a no-deal exit from the European Union, Murphy pointed to the retailer's recent experience in dealing with these concerns.

"Clearly these are uncertain times, but the truth is that Tesco has had the benefit of having to prepare for the potential of a no-deal Brexit on at least one occasion in the past," he said. "If you like, we've had a couple of dry runs at this. So we're prepared for the various different scenarios that might emerge."

And as for arriving into the role – albeit later than planned – in the midst of a pandemic, Murphy acknowledged that it was something of a baptism of fire, said that he was spending some time "listening and learning" about the business.

"My first week has been a whirlwind as you can imagine," he said. "I've spent it meeting as many colleagues as possible and getting out to as many stores as possible.

"In terms of change, you can take it that I'm really happy with the strategy and the direction of the company. As far as I'm concerned, my job is to maintain the momentum of the business and keep us focused on delivering a brilliant Christmas."

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine

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