• Tesco to curb out-of-town expansion plans

    13th January 2012 | News | Claire
  • The firm yesterday announced its first profit warning in two decades, leading to almost £5 billion being wiped off the company’s stock market value.

    Announcing a major change to what has so far been a hugely successful business model, chief executive Philip Clarke said in future it would open fewer big Tesco Extra stores.

    The hypermarkets, which stock clothes and other household goods alongside food, spread rapidly across the country in the past decade and now number over 200.

    Instead, Clarke, who took over the business about a year ago, said the company would shift its focus to online shopping and smaller-sized food stores.

    He told the Financial Times: “I am not calling the end of hypermarket.

    “All I’m saying is that in the future, the likelihood is that stores that open will be largely food.

    “Do we need to continue to build large hypermarkets in the UK when the internet is taking so much of the growth in clothing and electronics?

    “You can reach your own conclusions.”

    Clarke blamed strong competition from rivals such as Asda and Sainsbury’s for Tesco’s poor festive performance and the failure of its much-heralded £500 million Big Price Drop.

    Yesterday Tesco shares fell 16 per cent – the biggest drop since 1988.

    My comment:  I hope very much that this will mean it will sell off its ownership of the factory warehouses in Ottery, instead of letting them become more and more ramshackle.

    I wonder have we seen Tesco’s success peak at last?  Nothing lasts forever, especially when a company has its eye on the profit margins and little else. 

    I have boycotted Tesco for over three years – ever since I encountered its unpleasant approach to planning.  Just after I joined Ottery St Mary Town Council in 2009, it had applied to build a supermarket in the town.  The process was illuminating and I was disgusted at the company’s arrogant and insouciant attitude.  I remember wondering at the time how long the bubble would last.