Tesco boss Philip Clarke to reveal new strategy

 

Tesco boss Philip Clarke will tomorrow unveil his blueprint for
fixing the supermarket after a year of declining sales and market share
erosion.

The UK's biggest private-sector employer, which rocked the City with its first profits warning in 20 years in January, is expected to reveal further pressure over the three months to the end of February, with underlying sales down 2%.

While its profits for the last year will still hit £3.9 billion, the rise of 1.7% is slower than the 12% seen a year earlier and will reinforce pressure on Mr Clarke to unveil a strategy to restart the Tesco juggernaut.

He is likely to admit that its stores are tired and lack warmth and that more staff, friendlier service and a back-to-basics approach are needed.

A recent trial of 200 new look stores has offered encouragement and will prompt Tesco to commit £400 million to revamping its 2,800 UK stores.

Mr Clarke took over from Sir Terry Leahy a year ago, having previously been international and IT director. But the Liverpudlian started his career stacking shelves in a Tesco store and claims he understands retail and knows how to make stores appeal to shoppers.

He has already said he plans to cram a three-year overhaul into the next 12 months, including a raft of initiatives dealing with online, price and home delivery, and more detail will be provided tomorrow.

Tesco's website will be overhauled to better compete with internet rivals such as Amazon and a new pricing strategy will see it combine constant low pricing on staple items with eye catching promotions.

There will also be more focus on the quality of its food, particularly fresh items, and Mr Clarke is expected to confirm that the chain's expansion in the UK will slow as it opens fewer large out of town stores, which have been hit by the rise in petrol prices and falling demand for electrical items.

Instead it will ramp up its focus on its smaller Express formats, analysts predict.

And Mr Clarke is set to ignore radical calls from disillusioned investors to scrap the loss making US-based Fresh & Easy venture and its banking division.

Several year of success under previous chief executive Sir Terry drove Tesco's market share beyond 30% but the resurgence of rivals including Sainsbury's and Morrisons and the recent failure of Tesco's £500 million Big Price Drop has seen the chain fall back below that milestone.

Although the UK business is feeling the pain, the group's overall profits are set to be underpinned by a strong performance in Asia despite the floods in Thailand.

Jonathan Pritchard, an analyst at Oriel Securities, said turning around Tesco "is not mission impossible" but warned it must undergo root and branch surgery and it could be a year before like-for-like sales return to growth.

He said: "Many are keen to see the Tesco bandwagon roll again but our view is that the problems the company faces are very deep set.

"Tesco must show a willingness to take its medicine in the UK and play a longer term game in rebuilding its domestic position."

The group has already said it will hire 20,000 more full and part-time staff over the next two years as it focuses on improving its customer service.

It has recently overhauled its £1 billion Value range as Everyday Value by upping the quality and ditching the austere blue stripes for softer hues and its Finest range could be next in line.

Overall, it has been estimated that the investment in the business over the next few years will cost Tesco more than £1 billion, although it is expected to make cost savings to help keep future profits on track.

While the City expects that turning Tesco around will not happen overnight, they will be looking for any indication about future profits.

PA

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
News
i100
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas