Tesco New Year promotions signal 2012 fightback

Tesco has let investors know how it plans to increase its UK sales following January’s shock profit warning.

Tesco has the largest market share of any UK supermarket but lost out to its rivals including Sainsbury’s and Asda over the Christmas trading period which resulted in Tesco having to announce a first UK profit warning in 20 years.

The period marked a low point for Tesco and increased the pressure on new chief executive Philip Clarke who has been at the helm for over 18 months now since Sir Terry Leahy resigned in June 2010 and has presided over some disappointing financial results.

Mr Clarke has been meeting some of the bigger investors in Tesco and plans to reveal its strategy for improving the business when it announces full-year results in April.

Mr Clarke will focus on the UK business and is expected to concentrate on improving fresh food products. This is likely to mean more staff and dedicated teams for fresh meat and fruit and vegetable departments.

Tesco’s own-label products are also expected to undergo a re-vamp and its advertising and promotions will also be reviewed and changes made.

Tesco has started 2012 with some aggressive promotions that are likely to be eating into profits in a bid to win back customers lost over Christmas. Tesco has offered customers who spend over £40, £5 off next week’s shop when they spend £40 the following week. Customers who spend over £60 qualify for this promotion and get 10 pence off a litre of petrol too.

New chairman Sir Richard Broadbent is also overseeing changes to the Tesco board that will see a former Barclays director, Deanna Oppenheimer become a non-executive director and Graham Pimlott, currently a director of Tesco Bank replace Andrew Higginson as chief executive of the retailing services arm.

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