Tesco to invest in ‘better’ marketing to arrest decline

Tesco has pledged to invest millions in making its marketing “better, clearer and more relevant”, one of several initiatives the supermarket has announced to improve the fortunes of its UK business as sales slipped again.

The retailer will invest £1bn in improving stores, customer experience, promotion and pricing strategy and own-label ranges. It has already relaunched its Value range.

A review of Tesco’s brand communications strategy was recently called with an ad agency review announced last week. It has also appointed David Wood as marketing director to lead the UK team after moving former UK marketing director Carolyn Bradley to an international role.

Like-for-like sales, which excludes the impact of stores open for a year or more, fell 0.9% in the 12 months to 25 February. There was a more marked fall in like-for-like sales in the second half of Tesco’s financial year, when sales fell by 1.2%.

The decline in sales led to a 1% fall in UK profit to £2.5bn for the year ending 25 February.

Total UK sales increased 6.2% over the year to £47.3bn.

Philip Clarke, group CEO, highlighted six areas that Tesco would focus on improving including; service and staff; stores and formats; price and value; range and quality; brand and marketing and clicks and bricks.

Clarke, who took control of the UK business from Richard Brasher who stepped down in March, says: “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.

“These are decisive steps and this cost investment - as we have already announced - will constrain our near-term profitability. … We are adapting our UK capital plans so that we have the right store base for the future, to underpin the returns that create long term value for our shareholders.

“Together these steps are the right things to do both to improve the shopping trip for customers and to secure a return to profitable growth in the UK.”

More staff, ‘warmer’ looking stores and a roll out of click and collect services are also planned.

Expansion plans have been put on hold with the focus switching to the existing portfolio that will see 430 stores refreshed over the next 12 months.

Group sales, which includes Tesco’s international business, increased 7.4% to £72bn Group trading profit increased 1.3% to £3.8bn.

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