Tesco is to spend £1 billion on a revamp of its stores across Britain after reporting a drop in UK profits for the first time in more than 20 years.
Pre-tax profits for its UK stores fell by one per cent to £2.5 billion, according to an investor update released today.
The supermarket giant admitted it needs to “raise its game” and will focus on improving the shopping experience for customers, including hiring more staff and introducing a “warmer look and feel” to existing stores.
430 stores will be revamped with a "warmer" feel and new signage.
Tesco plans to improve the overall customer experiance by doubling the number of products available to customers online. More money-off coupons will be given away to customers at the check-outs and permanent drops in prices of some goods will be introduced.
The company plans to improve its brand name by taking more time and putting in extra resources to find out what customers want. The Tesco "value" brand will cease to exist, to be replaced by its "Everyday Value" range.
It will also offer better prices and ranges and upgrade its online division.
Despite the knock taken in the UK, group pre-tax profits were up by 5.3 per cent to £3.8 billon, with £1.1 billion generated from its overseas operations, up 17.7 per cent.
This is the first time Tesco has made more than £1 billion from its non-UK businesses.
Part of the UK revamp plan will include the recruitment and training of 8,000 staff. This will be particularly focused on its fresh food departments.
The supermarket is also pulling back on expansion, instead concentrating on upgrading existing stores.
Chief executive Philip Clarke said: “We fully recognise that we need to raise our game in the UK.
“As we improve the shopping trip for our customers, it will follow that our sales growth and financial performance will improve, too.”
Phil Dorrell, director at retail consultants Retail Remedy, said Tesco had lost ground to its rivals through its ‘Price Drop’ campaign, but suggested that the company's recent spate of bad news was more of a hiccup than the start of a trend.
He added: “There’s nothing more dangerous in the retail world than a wounded Tesco.
“Its message to shareholders is: stay with us, we’ll be back. Its competitors, be warned.”
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