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Tesco

Tesco should split into three outlets with Tesco 'Finest' and budget stores, says former executive

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By John McCarthy | Opinion Editor

August 26, 2014 | 3 min read

An analyst has urged Tesco to split into three separate outlets, by opening high-end and discount stores, to more effectively combat rival retailers by accommodating consumers on different incomes.

Tesco is having profits eaten up by Aldi and Lidl in addition to Waitrose

Speaking before Unilever president Dave Lewis joins the retailer in October as chief executive, Bruno Monteyne, an analyst at Bernstein Research and former Tesco executive, told the Independent that the brand should split to attract a wider range of consumers.

Monteyne suggested that Tesco should supplement current stores with the addition of high-end “Finest” branches - to compete with the likes of Waitrose and M&S food - and discount retailers to combat budget behemoths Aldi and Lidl.

The move would help Tesco compete with budget and luxury stores who are sapping away customers at both ends of the consumer spectrum, claimed the former executive.

He also suggested tailoring stores to suit the average income of those in the area. “Rip out 20 per cent of the range, have cheaper shelving and cheaper products in the more deprived areas and give customers a better deal.

Monteyne admitted his suggestions would see radical change at the retailer but added that it is “exactly what Tesco needs”.

Self-imposed rules forcing the retailer to offer goods at the same prices nationwide are also hurting the store’s capabilities to adapt to competition, according to Monteyne.

This comes after the firm announced a six per cent drop in profit earlier this year causing CEO Philip Clarke to stand down.

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