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Tesco planning to boost sales with new brands

Tesco, Britain’s biggest retailer, is preparing to launch the first of a range of new brands over the next few weeks as it seeks to bolster its performance.

Philip Clarke, the new chief executive, is expected to launch the new brands in both the food and non-food businesses. They will be Tesco-owned brands, but will not be branded with the Tesco name.

Earlier this month, Mr Clarke said he was planning to create new brands as part of his strategic blueprint for the world’s third biggest grocer by sales, after Walmart and Carrefour.

He cited the success of Florence & Fred, Tesco’s clothing brand, and Technika in electricals.

But he said he could “create some other ones. This will give customers another reason to come and shop with us”.

In the UK, Mr Clarke is seeking to bolster the supermarket chain’s performance after it admitted trading was “below par” last year.

He was particularly keen to shake up the group’s non-food ranges, which were not up to scratch. In the non-food business, Mr Clarke has brought Terry Price, a Tesco and Walmart veteran, back from China to the UK to lead Tesco’s general merchandise business.

But Mr Clarke said he would also look at introducing new products into Tesco’s food business.

Clive Black, an analyst at Shore Capital, said it was possible Mr Clarke could look to shake up Tesco’s core own-brand range, following similar moves by rivals Asda and J Sainsbury.

The work by Mr Clarke, and new UK chief executive Richard Brasher, appears to be paying off.

Last week, Kantar Worldpanel, the consumer research group, found that in grocery sales Tesco was the fastest growing of the big four supermarkets in the four weeks to May 15. Its sales rose 10.5 per cent, ahead of the market at 7.8 per cent, as well as Wm Morrison at 9.7 per cent and Sainsbury at 7.9 per cent.

Mr Clarke, who succeeded Sir Terry Leahy in March in Tesco’s biggest management transition for 14 years, is expected to reiterate other key points in his strategic blueprint in the annual report, such as continuing to expand the core UK business and seeking to be an outstanding international retailer.

He is also expected to reaffirm that Tesco’s aim is to be as strong in everything it sells as in food, and to develop its online and retailing services businesses outside of the UK.

Source : Andrea Felsted - Financial Times

31 May 2011
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