Supermarket battle to switch to non-food

The supermarket sector is well into the recovery phase, according to Tesco CEO Sir Terry Leahy as the supermarket posted a 10.1% hike in profit today (20 April).

Sir Terry Leahy
Sir Terry Leahy

The retail chief says Tesco had regained its market leading position in challenging economic times in a “sustainable and profitable way” while it’s competitors took short-term tactics.

“Tesco is geared for the global recovery and will continue to improve the shopping trip for customers.”

Adding that: “Tesco will continue to leverage stores, brands and customers through Clubcard.”

Leahy also confirmed that Tesco would expand its non-food offer including its standalone Homeplus stores, but gave no store numbers to rival Asda’s claims it will open 150 Asda Living non-food stores in the next five years.

He added that Asda’s big store number claims should be taken with “a pinch of salt”.

Retail analysts agree that non-food will be the battleground between Tesco and its biggest rival Asda.

Matt Piner, retail analyst at Verdict Research says that: “Tesco is facing battles on a lot of different fronts and will need a clear strategy in non-food, convenience, online as well as traditional grocery. It is probably most concerned about Asda’s non-food push.”

He dismissed claims that the non-food experience of Morrisons new CEO Dalton Phillips could make the chain a threat in the non-food arena, because it meant “competition in the market which is good for customers”.

Leahy also revealed that Tesco is unlikely to take over a portfolio of bank branches to expand its Tesco Bank business as it can take advantage of its existing branch network.

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