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Alison Horner, CEO of Tesco Asia, shared the region’s plan to maximise the mix in a meeting for investors and analysts at its head office in the UK.
Tesco announces positive first quarter results with Asian sales rising 2.6% quarter on quarter at constant rates.
Dave Lewis, CEO of Tesco, shared that the increase in Asia is supported by significant growth in the Bangkok area. The Asian business returned to like-for-like sales growth, up 0.1% to GBP1.2bn (US$1.5bn). It is helped by a stronger customer offer contributing to a better performance across all formats and categories.
Tesco grew faster than the market in the UK on both volume and value by 0.2% and 1.3%. He added, “our customer offer is more competitive than ever, with a wider choice of our ‘Exclusively at Tesco’ products available in more stores, helping to drive more than 10% growth across the range.”
Keep up-to-date with the latest retail developments from Asia.
Healthier products set to become a significant category for the retailer.
Since 2016, Star Bazaar, the supermarket banner operated by Trent Hypermarket, has seen steady growth in its herbal, organic and natural products. Though initial growth was driven by large corporates such as Hindustan Unilever and Patanjali Ayurved Ltd., more and more players are increasingly introducing its version of natural products.
Healthier products currently make up about 10% to 20% of Star Bazaar’s inventory. “This preference for healthier, ayurvedic and organic products straddle (all) economic strata of the society. In the West and other European countries, these kinds of products are at the premium end but not so in India,” said Uday Varma, Star Bazaar’s director of commercial and marketing.
To support this growth, Star Bazaar launched its “Closer to Nature” programme, a two-month campaign to raise awareness of this category.
The retailer currently operates 41 stores and has announced plans to expand to 200 locations over the next three years. However, instead of expansion into smaller cities, Trent Hypermarket will focus on the cities of Mumbai, Pune and Bengaluru as locations for its expansion plans. The retailer has adopted the strategy of saturating demand in the cities it currently operates in before considering alternate provinces.
Find out more information about Star Bazaar here.
Tesco has announced its full year results with LFL sales in Asia showing improvement in Q4.
Although full year LFL sales in Asia fell by 6.2%, it declined by 3% in Q4, showing signs of recovery. Sales in the first half was impacted by the retailer’s decision to exit unprofitable bulk selling. Thai government’s issuance of welfare card, which could only be used in traditional stores also impacted sales by 1.2% over the full year, but this had eased in Q4. Profitability was recorded at £286m, down 4.3% in Asia. There was a marked improvement in H2, as the retailer successfully completed renegotiations with suppliers and progressed quickly on its store restructure and office operations plans.
Tesco repurposed a total of 26 stores, the majority of which were in Thailand where it had formed new partnerships with Mr. DIY home improvement, Echo Game & Karaoke play centre and Cosmo Beauty. 70 of the 72 new stores opened were in Thailand, primarily in the convenience format. There were also 56 stores closed to optimise its convenience network.
Sales at the group level was up by 11.5% at actual rates to £56.9bn, boosted by its new partnership with Booker wholesale in the UK. In UK & ROI, LFL sales grew 2.9%, including Tesco UK gaining 1.7% and Booker increasing by 11.1%. Central Europe saw LFL fall by 2.3%, due to a shopping ban on Sunday in Poland and lower general merchandise sales.
Tesco CEO, Dave Lewis said, "After four years we have met or are about to meet the vast majority of our turnaround goals. I'm very confident that we will complete the journey in 2019/20. I’m delighted with the broad-based improvement across the business. We have restored our competitiveness for customers - including through the introduction of 'Exclusively at Tesco' - and rebuilt a sustainable base of profitability.”
Tesco Lotus has launched 45 Thai food products under the Tesco brand.
The food products include both savoury and sweet items with top quality ingredients from Thailand. These include sweet tamarind from Phetchabun, purple sweet potatoes from Ubon Ratchathani, durian from Chanthaburi, mangoes from Prachuap Khiri Khan and coconut sugar from Samut Songkhram. The ingredients are used in traditional recipes to deliver an authentic taste and at affordable prices.
Tesco Group collaborated with the Ministry of Commerce to develop a range of authentic Thai products that is internationally accepted in terms of safety and quality. The initiative will support Thai SME to expand their reach through Tesco’s distribution network both locally and overseas.
Sompong Rungnirattisai, Tesco Lotus CEO, said, “By working closely with Thai operators, we ensure that they achieve internationally accepted safety and quality standards required by the Tesco Group. We also share know-how in terms of packaging design, branding and marketing. Through this, we help to enhance SME capabilities and give them a competitive edge to succeed not only in Thailand but also in international markets, in line with the Ministry of Commerce’s Local to Global initiative."
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