-Supermarket giant Tesco has announced that it will cast aside its previously sacrosanct profit margin of 5.2 per cent in order to allow it to more aggressively push price promotions.
The move comes amidst a faltering performance which has seen the retailer sees earnings forecasts cut to £3.3bn this year.
Chief executive Phillip Clark is masterminding the push, which coincides with a marked reduction in store expansions – falling from 1.4msq/ft of space last year to just 700,000sq/ft of space this year – as shoppers increasingly shy away from the big stores in favour of convenience outlets and online.
Now instead of valuing margins above all else Tesco will seek to up its volumes by wooing customers with cut price produce and new promotions in the hope that this will turn around recent sales momentum.
Tesco is currently in the middle of a turn-around plan that envisages splashing out £500m a year for the next three years on refurbishing its 2,600 UK stores, 615 of which have already been given a makeover.