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Tesco to invest in non-food ranges

Tesco is likely to invest in strong category management across non-food, according to investors.

Group chief executive Philip Clarke is “determined” to get the grocer’s UK business back on track and will focus on health and beauty, electricals and general merchandise.

Clarke shed light on his plans at a meeting hosted by stockbroker Shore Capital in Liverpool last night.

Tesco has achieved some “strong progress” in non-food and will make further changes to its range against the backdrop of a difficult non-food market, according to a note issued by Shore Capital analyst Clive Black.

Black believes the retailer will strengthen its product availability and put a focus on fresh food. He also questioned its clothing brand, F+F, which “lacks authority in the UK”.

Analysts are waiting to see Clarke’s plans to turnaround the fortunes of the retailer’s UK business in April after it issued its first profit warning in 20 years in January.

Black said: “In this respect, the ongoing store refreshment programme is expected to continue, with again, most management focus on store standards and proposition whilst the balance between store and online is set to evolve with implications for capital expenditure – convenience, non-food and multichannel services remain especial expansion opportunities in management’s eyes.

“Importantly, Clarke stated that the days of ‘bricks and mortar’ retailing are not over, concurring very much with the view of [Sainsbury’s chief executive] Justin King.”

Black also urged Tesco to keep growth in its international and service propositions “firmly in mind, especially if and when the core chain stabilises.”

This week, Tesco made progress with two of its venture brands. The retailer launched a range of feminine hygiene products called Halo and extended its Chokablok brand into Easter Eggs, with a launch into chocolate bars expected next month.

Source : Alex Lawson - Retail Week

18 February 2012
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