Tesco is poised to ditch a number of promotions in favour of price cuts as boss Philip Clarke seeks to inject more verve into the retail giant’s turnaround strategy.
According to reports over the weekend, Clarke is set to abandon the 5.2% profit margin – which he pledged to achieve within two years of its first profit warning last year.
He is due to reveal details of the new strategy in a briefing to the City later this week.
The move follows calls late last year by the City to ditch promotions – one even suggested it should scrap the Clubcard scheme altogether – and instead plough money into price cuts. At the time, Neev Capital retail analyst Rahul Sharma said: “If Tesco wants positive like-for-likes then there is no solution other than implementing price cuts.”
Meanwhile in January Dave McCarthy, an analyst at HSBC, estimated that Clubcard costs Tesco £500m a year, although some of this is offset by selling data to suppliers, and suggested that this should be spent on across-the-board price cuts instead.
He said: “Abandoning Clubcard would give Tesco extra firepower and allow it to use its resources across a wider market, and not just targeting Clubcard holders.”
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