BELEAGUERED supermarket giant Tesco has been forced to slash expansion plans and commit to spending over £1bn on improving stores and online shopping after admitting it needs to raise its game.
Britain’s biggest supermarket chain revealed a 1 per cent fall in UK profits to £2.5billion for the year to February 25 as rivals like Asda and Sainsbury improved their consumer offers and closed the gap on the formerly unstoppable retailer.
Chief executive Philip Clarke told a press conference that the UK business needed more staff, smarter stores, lower prices and better products after becoming too focused on cutting costs and boosting profit margins.
He announced a 38 per cent cut in the quantity of new retail space launched this year, as it scales down big store openings.
He said Tesco will focus instead on developing its Express convenience stores and open more picking centres to improve its online delivery service.
Existing stores will get a makeover to create a "less functional" look, with warmer colours, wooden fittings and big graphics.
Clarke, a Tesco lifer who stacked shelves at his local store as a youth, took over from long-serving predecessor Terry Leahy in March 2011.
He said: "We fully recognise that we need to raise our game in the UK.”
Once one of the most consistent UK firms in terms of growth, Tesco shocked shareholders earlier this year when it delivered its first profit warning in over two decades.