Tesco revamps its revamp

The supermarket giant has announced an overhaul of its turnaround strategy for its UK business.

Tesco has announced an overhaul of its turnaround strategy for its UK business, which accounts for two-thirds of profits. It is cutting back on expansion and will focus instead on accelerating its store refurbishment programme.

At the same time, it is set to spend £200m on cutting the price of basic goods and will beef up its online offering by introducing more click-and-collect locations. Tesco is abandoning its industry-leading 5.25% profit margin.

What the commentators said

Tesco's rivals "will not be quaking in the aisles", said Nils Pratley in The Guardian. A £200m investment in lower prices isn't much: two years ago Tesco threw £500m at a "big price drop" and "hardly anybody noticed". It doesn't help matters that half of Tesco's floor space is in the large stores, which are in decline compared to online shopping and convenience stores.

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Clarke seems to be betting that his "behind-the-scenes work will eventually improve" sales and restore Tesco's reputation. This "wishy-washy" approach is likely to take a few years. The new pricing slogan is Down, and Staying Down', said Ian King in The Times. Let's hope that doesn't prove to be a description of the share price.

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Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.