The UK’s biggest supermarket group, Tesco, has reported profits of over £1 billion for the first half of the year. The group is not just carving up the UK market but is expanding its overseas operation and exploiting the Internet.
The supermarket giant has turned in a profit of £1.15 making its forecast of £1.13 billion look like childsplay. Total sales for the six-month period hit £22.7 billion, a rise of 12.7% on the same period last year.
This success is due to a number of clever strategies to build market share and keep customers happy. The company has four key areas of focus: supermarkets; convenience stores; overseas stores and online sales. All have performed well and within the supermarket division non-food has been a strong growth area.
The core market has increased 10.2% with non-food contributing 12.6%. International expansion has resulted in an increase in overseas sales of 21%. Meanwhile the launch of online service Tesco Direct is still in its infancy as is the company’s new venture into the US.
BUSINESS FORUM COMMENT
Tesco was not always top supermarket. It has come a long way over the last 20 years to overtake rivals such as Sainsbury and to deliver customer service on a par with Marks & Spencers. But has it gone too far?
To many commentators it seems fair enough for Tesco to wage war against Sainsburys and Asda but the group is increasingly posing a threat to independent retailers. Tesco has moved into the high streets of our cities and market towns. It doesn’t just sell food and is increasingly adding new merchandise that competes with the offer from local independents.
The smaller shops were never able to compete on price and now they are struggling to compete on novelty. The Competition Commission is conducting an enquiry into the position of the company and may impose some restraints – but Tesco is unlikely to be held back in its ambitious plans to saturate the world market.
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