UK: Tesco to expand discount range
Tesco, the UK's largest retailer, will expand its recently-launched range of discount products in a bid to win customers as the recession bites.
A spokesperson for the company told just-food: "We're adding another 100 lines between now and the summer."
The new additions to the discount range of own label products will be "mostly in food but also some health and beauty," the spokesperson said today (13 February).
"New products will be launched across all food categories - from pasta sauces to a new kids' range called Jack and Molly."
In recent months, Tesco's share of the UK grocery retail market has shrunk, while that of retailers with a heavy emphasis on value - including the number two player in the market Wal-Mart's Asda - have risen.
According to the latest TNS figures, the UK grocery market as a whole grew by 6.4% during the 12 weeks to 25 January, although Tesco's share of the market fell by 0.5% to 30.7%.
Last month, Tesco posted the slowest year-end sales growth in its home market since the early 1990s. UK same-store sales increased 2.5% compared with a year earlier in the seven weeks prior to 10 January.
Meanwhile, Asda and Morrisons lifted their shares of the market after seeing sales growth of 8.1% and 9.7% respectively.
With sales measured in value rather than volume, TNS director of research Ed Garner said that the decline could be a reflection on Tesco shoppers increasingly trading down to discount and value ranges.
"This is a reflection of shoppers switching a lot of their spend out of Finest and into Value and Tesco Discount brands," Garner said.
Tesco declined to comment on the impact the line extension would have on margins or how the discount range was being funded.
However, at the end of last month, Tesco CEO Sir Terry Leahy told suppliers that they must cut prices on the back of falling commodity prices.
"These lower prices need to be fed into the supply chain, and passed on to consumers who are under growing financial pressure," Sir Terry said during a private City Food Lecture at the Guildhall.
"We want to ensure that all our suppliers understand this, which is why we are going to great lengths to talk to them about the new pressures that consumers are under."
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