Tesco takes fight to discounters with new own-label ranges

People walk past a Tesco Extra store in Woolwich, southeast London, Britain February 26, 2016.  REUTERS/Stefan Wermuth

Tesco, Britain’s biggest supermarket chain, launched a new range of own-label fresh produce, poultry and meat on Monday, stepping up its fightback against German discounters Aldi and Lidl.

The seven new “farm” brands will consist of 76 new lines that will either match the price of competitors or beat them, Tesco said. Where there is duplication, the new products will replace Tesco’s existing entry point “Everyday Value” range.

Sales, profit and asset values at Tesco have been hit by shifts in shopping habits and the rise of the discounters.

Chief Executive Dave Lewis, who joined in September 2014, is trying to revive the firm with a focus on lower prices, improved product availability and customer service, along with better relationships with suppliers.

When Tesco updated on Christmas trading in January it reported its first like-for-like sales growth for four years. Improving monthly industry data has followed, adding to hopes the firm may finally be recovering.

Its shares have climbed 37 percent over the last three months, and last week Tesco’s UK boss Matt Davies said the retailer was “on the cusp of doing something special.” uu

The stock was up 1.5 percent at 198 pence at 1236 GMT, valuing the business at 16.2 billion pounds.

“We believe that Farm Brands will be price positioned to compete directly with discounters. Ninety percent of discount shoppers also shop elsewhere, so the opportunity is for Tesco to reduce cross-shopping,” said HSBC analyst David McCarthy.

He has a ‘buy’ stance on the stock, believing Tesco is trading better than the market recognises or the research agencies estimate.

Separately on Monday, Tesco announced the appointment of Lindsey Pownall as a non-executive director from April 1.

As a former CEO of food supplier Samworth Brothers, Pownall can assist Tesco as it seeks to build bridges with suppliers in the make of an accounting scandal in 2014.

[Source:- Reuters]