Tesco strategy change on new superstores could indicate future plans in north-west

Wed, 17/04/2013 - 11:23 -- Editor

 Tesco's disastrous results announced today included a surprise £804m property writedown in the UK for projects it will no longer pursue because of its decision to call time on the so-called 'supermarket space race'.

Following Tesco's recent failure to obtain planning permission for a new superstore at Buncrana Road, which was rejected by Derry City Council earlier this month, this could indicate a change of plans for the north-west as well.

Philip Clarke, chief executive, said he expected the group to open fewer superstores and analysts expect the chain to announce it is cutting the amount of space it plans to open and to concentrate efforts on its smaller convenience stores and refurbishing existing supermarkets. He also hinted at an expansion of online shopping, saying that future strategy will take account of an increasingly multi-channel world.

Tesco said it had taken the UK charge because its decision to move away from building big stores and concentrate on online and convenience shops meant it had identified more than 100 sites – the majority bought between five and 10 years ago – that it would no longer develop.

This week's figure mark Tesco's worst trading period for decades.

Britain’s biggest retailer by sales said it had taken a £1bn charge for quitting its failed US venture Fresh & Easy. There was a £495m writedown in central Europe and a further £115m provision for the mis-selling of payment protection insurance.

Tesco said it had taken the UK charge because its decision to move away from building big stores and concentrate on online and convenience shops meant it had identified more than 100 sites – the majority bought between five and 10 years ago – that it would no longer develop.