Over the first two quarters there has been strong fresh food offers driving +0.4% UK volume outperformance. In addition, the new seasonal ‘Fresh 5’ offer has increased sales volume by 2% in fruit and vegetables. Six new plant-based brands have been introduced, totalling 90 new products on the market.
Helped by an increase in sales, Tesco has laid out expansion plans with 150 Express stores planned over the next three years, as well as 4 new superstores expected by the end of the year. Despite the closure of the first Jack’s store in East Lancashire due to consumer demand for a Tesco store, 3 more Jack’s stores are set to open by February 2020. Having established a more profitable, operating model, Tesco state online capacity in the UK will double.
Tesco outperformed the market in volume terms, which was supported by further investments in range, price and loyalty as part of their ‘100 Years of Great Value’ celebrations. In particular, the ‘Exclusively at Tesco’ range, which is made up of Tesco’s own brands, successfully gained competitors’ customers as they switched from comparable ranges. The full ‘Exclusively at Tesco’ range which compromises 417 products is now available at 550 stores across the UK.
Progress on Plastics
Following a successful trial, Tesco were the first retailer to roll out carrier bag-free deliveries to all customers in August, resulting in a reduction of 250 million bags per year. To further decrease the use of plastics, Tesco have introduced a new plastic strategy which involves 1500 supplier partners. The strategy focuses on a closed loop approach, sustainable packaging design, the 4R’s (remove, reduce, reuse and recycle) and tackling excess packaging.
Further acquisition
As part of Tesco’s strategy with Booker, Tesco announced the acquisition of Best Food Logistics which will add a further £1.1bn food service sales and maximise the growth opportunities with Booker by developing a more integrated business model. Booker service 69,000 pubs, 113 restaurants and 94,000 fast food outlets. The focus for Booker and Tesco is to weave food service and retail services together such as allowing catering customers to top up their shop in Tesco and find efficiencies with pack size, store space etc. Examples of Best Food Logistics customers include Pret A Manger, KFC and Burger King.
Dave Lewis steps down
In the report, it was announced that the current CEO of Tesco will be stepping down after 6 years in the role. Dave Lewis stated:
“With the turnaround complete and as we begin to implement the next steps of our sustainable growth strategy, now is the right time to plan a smooth and orderly succession. As such, I will step down as Group CEO next summer and pass the baton to Ken Murphy.
The leadership team is very strong, our strategy is clear and it is delivering. The Tesco brand is stronger and customer satisfaction is the highest it has been for many years. Colleagues are doing an extraordinary job and their expertise shows in every store and channel every day.
With these firm foundations and a competitive, sustainable growth strategy in place, I have no doubt that Tesco will kick on again under new leadership next year”.