How Tesco Plans To 'Put Love Back' Into Chain

Alistair Bunkall, business correspondent
Sky News18 April 2012

The boss of Tesco has vowed to turn around the company's fortunes after the supermarket announced a drop in UK profits.

Chief Executive Philip Clarke has unveiled a plan to "put the love back" into the chain following a 1% dip in full-year UK profts .

It has started a process of overhauling its stores, making them more consumer-friendly, warmer and with a focus on fresh food and customer service.

Branches have been decorated in warmer colours and will even feel warmer - the freezer sections will have sliding doors to stop the aisles being so cold.

The supermarket giant dramatically announced a profit warning in January - its first for 20 years.

Analysts put the bad figures down to neglecting its brand and cutting its prices too far, which resulted in damage to its image.

Tesco's Chief Executive Philip Clarke said: "The consumers have been feeling the pinch, petrol prices have been high, we just took a little bit too much out for customers.

"Late in the summer we corrected our prices, we really pulled down inflation which has been a big problem for everybody, and came out of January feeling what we really need to do is accelerate the pace of improvement of Tesco."

Tesco is also overhauling its website to compete with the likes of Amazon . The plan is to sell products from other companies, via the Tesco website.

The company also wants to extend its "click and collect" service, popular with other retailers, which allows customers to buy products online and collect them at Tesco stores.

Tesco puts much importance on its value for money, but had neglected the look of its shops and was even beaten on price by many competitors.

Natalie Berg from Planet Retail said: "I think Tesco stores have become a little bit tired.

"That comes from years of under investment. They've massively cut back on the number of staff in store and that's had a knock on effect in customer service.

"(But) they have a very strong convenience operation and a very strong online operation and for grocery retailing, these are really the two key growth areas."

Although Tesco is performing below average in the UK, it still has a very strong presence in Asia, particularly South Korea.

That is helping maintain strong global sales. The re-branding exercise is not a direct response to the poor figures in January - such exercises take longer in planning - but it is part of the supermarket's long-term strategy.

In a sense Tesco has been a victim of its own success. The reason it is perceived to be in trouble is only really because it has previously been so dominant.

The fact is it is still making money, lots of it, just not as much as it once did, although its latest results are predicted to show that it is not back on form just yet.

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