Tesco places focus on global ambitions

Tesco will this week highlight the growth of its international division as the UK’s biggest retailer looks to downplay a dominant position in its home market where it sells over 30 per cent of all groceries sold in large supermarkets.

The retailer, which now commands a hefty 30.5 per cent of supermarket spending, is looking beyond the UK for longer term growth opportunities.

It is now in 12 markets across Asia and Europe and over half its selling space is outside the UK.

Sir Terry Leahy, chief executive, has focused increasingly on the international side of the business and, at the full-year results in April, talked about Tesco’s overseas march before even touching on the UK.

He said Tesco was only about 20 per cent into its international expansion plans, which last year generated £370m profit on £7.6bn of sales. However, Tesco does have the capacity to increase its market share in the UK.

It has a landbank of 185 sites – 4.5m sq ft of new space – that it could develop. It already has 24.2m sq ft of selling space across its 1,779-strong chain in the UK and is opening a further 1.83m sq ft – 93 more stores – this financial year.

The retailer entered China in 2004 through a joint venture. It now has a 50 per cent stake in Hymall, a chain of 31 hypermarkets and plans to a further 15 stores in the current year.

But the competition is fierce in the region with Wal-Mart, Carrefour and Metro – the top three grocery retailers in the world – also fighting for market share.

The Financial Times has learnt that in July, David Reid, chairman, staged the company’s board meeting in China – a move that reflects the importance that Tesco’s top management is placing on its international markets.

It has also held a board meeting in South Korea. Meanwhile, it is thought that Tesco has also sent a team out to look at Albertsons, the US supermarket chain that put itself up for sale this month.

However, analysts said that it was highly unlikely that Tesco would try to buy the chain, given that Sir Terry’s international strategy is to enter emerging markets with fragmented local competition rather than mature markets such as the US with dominant operators.

■Justin King, chief executive of J Sainsbury, will on Monday launch ‘Try Something New Today’ as the supermarket’s new advertising strap.

Sainsbury, which is nearly 12 months into a three-year turnround programme to deliver £2.5bn more in sales by March 2008, said its new advertising campaign – complete with new TV adverts featuring Jamie Oliver – marked the “next stage” of Sainsbury’s recovery.

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