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James Thompson: Despite this knock, reports of its demise are exaggerated

James Thompson
Tuesday 31 January 2012 20:00 EST
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The dire market share data from Tesco will have surprised few in the grocery sector, as it has under-performed its UK rivals for much of the past five years.

Among other mistakes, Philip Clarke, the under-pressure chief executive of Tesco, admitted that the group had lost out in the Christmas battle over money-off coupons. This was largely the result of it ditching double Clubcard points to fund its £500m Big Price Drop campaign, which has been a damp squib so far. More tellingly, he said it had run its UK business "hot too long", meaning it had operated its 2,700-store plus estate as a cash cow without investing sufficiently in staffing levels, service, store environment, ranges and product availability.

The group has vowed to address its UK woes by spending about £400m in 2012-13 whipping its stores and offer into shape. This will no doubt help it to regain ground but whether it will turn around Tesco's UK tanker is open to debate. The reality of business is that few, if any, companies remain dominant over more than 30 years. That said, Tesco still has operations in 14 countries, and growing internet and non-food sales on a global basis, which will help it to post profits of £3.6bn this year. Indeed, critics salivating at the prospects of its come-uppance should note that Tesco will have opened over 2 million square feet of new space in the UK alone in 2011-12.

While the grocery giant, which employs 300,000 in this country, has lost its laser-like focus of previous years, reports of its demise are greatly exaggerated.

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