In this assessment I will look at Tesco and how its aims and objectives are being met or not for 2012, the following assessment has taken information from Tescos own website on its financial and annual review report. 2012 has been a challenging year for the leading supermarkets due to high fuel costs, high taxes, real incomes not growing so people are adjusting their shopping habits.
The UK's biggest supermarket chain, Tesco, has reported its first fall in profits since 1994. Pre-tax profit for the six months to 25 August came in at £1.7bn, down 11.6% from the same period last year. The fall in profits was largely due to spending on the retailer's £1bn investment programme to improve its UK stores, which was announced by chief executive Philip Clarke in April. Mr Clarke put that down to the investment programme, which has already put 8,000 additional staff in existing stores at a cost of £200m a year. He also said that the Everyday Value range was growing fast due to the pressure being felt by customers. "They tell us they're resigned that this is the new norm. They don't have great expectations that things are going to improve in the short term," Tesco is investing £1bn in its UK stores and the money is beginning to show, although little of it is revolutionary. Modest profit growth is observed through 2011/2012 due to challenging economic conditions, strong international growth at the offset of reduction in UK profits. Tesco group sales increased by 7.4% to £72bn, group trading profit up 1.3% from previous year and profit before tax up to £3.9bn an increase of 1.6%. A share price of around 15p an increase of 2.1% from last year. In Europe, the retailer said it had been hit by eurozone austerity measures as well as the weakening euro, which meant the value of its sales had fallen 6.8% in the half. The UK business did not meet their expected targets and as a result have accelerated their plan to make improvements means it is necessary to curb expectations for 2013. A 7 point aim by Tesco was set up
1) To grow the UK core- high fuel prices and falling income has affected customers spending, disappointing sales in the 2nd half and increasing investment meant sales grew by 6.2% but trading profit declined by 1.0%. The shopping experience with Tesco has’nt improved so an action plan is being put in place to improve areas of concern. This involves a lot of investment and a six point plan. The six areas highlighted for improvement are, service and staff, stores and format, price and value, range and quality, brand and marketing, clicks and bricks.
Aim is not being met currently but improvements in line to make aims achievable.
2) To be an outstanding international retailer online and instore- the international business performed well with trading profits up by 18%, progress seen in central European markets, South Korea, Malaysia and Thailand. The fresh and easy market in the USA rapidly growing and Tesco Malaysia expanding fast.
Aim is being met
3) To be as strong in everything as well as food- This has been a tough area to achieve sales growth especially in the UK due to the fact specialist retailers are going bust ( comet, jessops, hmv etc ). like-for-like growth in general merchandise, clothing and electricals has remained negative. To adjust to this, Tesco have been allocating more space to the most popular products and improving merchandising. Tesco are committing less capital to new space for non-food and instead focusing more resource on continuing to develop online capability. Aim is not being met at the moment but SMART objectives in place to achieve this aim.
4) To grow retail services in all markets- Tesco bank is a key retail service with huge potential, Tesco took full control of the bank in...