Tesco pins hopes on promotions to boost UK

Tesco is hoping its investment in price and promotion, as well as a promise to spend on “quality and service” will kick-start performance at its UK business after sales dropped in the first-half.

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The supermarket says that sales at UK stores open for a year or more dropped 0.5% in the 26 weeks to 27 August, 0.9% in the final three months of the period.

“Weak” demand for non-food items such as consumer electronics was blamed for the dip.

Tesco launched £500m worth of price cuts last month, paid for in part by axing its Double Points ClubCard offer, to try and arrest declining sales and market share.

It hopes the move will boost shopper numbers by appealing to cash strapped customers struggling with austerity measures and rising utility bills.

Philip Clarke, chief executive of Tesco, claims in an interview to accompany the second quarter results, that “Price Drop” will “seize the advantage from our competitors”.

He adds: “It’s [Price Drop] giving customers an opportunity to just go to Tesco and buy their food and non-food items, and I think we’ll be able to demonstrate that volumes are increasing, that customers are increasingly turning to us. Which is what we needed.

“And then we’re going to layer on top of that investments in quality and in service, because we can see opportunities to improve our performance for customers, do the right thing for them and they reward you with their loyalty.”

Despite declining sales in the UK, group pre-tax profit rose 6.2% to £1.9bn, lifted by what Clarke described as “pleasing” growth from its European and Asian businesses.

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