Tesco Plc (Cheshunt, U.K.), Britain’s largest retailer, has announced plans to concentrate on renovating nearly every one of its more than 6000 stores by 2017.
More than a third of its stores have been updated in the last two years, and sales, profit and margins in those outlets are ahead of the others in the chain.
Though it will also add 150 new convenience outlets a year, it will reduce capital spending to no more than $4 billion a year. (The company’s capital expenditures were $5 billion last year, and a high of $11 billion in 2009.)
Plans to add nearly 1 million square feet of new retail space in 2015 represent half of last year’s 1.4 million square feet, which itself was down 40 percent from the prior year.
“Our numbers are not where we want them to be,” said ceo Philip Clarke. He said a reduction in spending on opening supermarkets will free resources to accelerate growth in the fast-growing areas of online and convenience stores.
Tesco’s move comes three months after Asda, Walmart’s British chain, said it would invest $2 billion in quality improvements.
The retailer also announced a new “permanently cheaper prices” policy, replacing its old special promotions policy that many called “overly complex,” alienating shoppers who have been deserting to German discounters like Aldi and Lidl, as well as to more upscale chains such as the British chain, Waitrose. Tesco’s market share has fallen to 29.2 percent from a 2007 peak of 31.8 percent.