Tesco is to open up to 25 One Stop convenience stores a year once it has pared back the existing chain to 500 outlets.
Colin Holmes, chief executive of Tesco’s convenience operation, said the retailer was “absolutely committed” to the fascia. “We will have 500 One Stops and then start growing. In the long term we will open 20-25 stores a year under the fascia.”
Tesco has reduced the number of stores from 810 to 601 by conversion to Express.
One Stop played a different role to Express, said Holmes. Its fresh food range was edited further and it also had a strong promotional offer. “We have refreshed 200 One Stops and re-
spaced the stores to give the right amount to areas such as off-licence. We have driven like-for-like sales by understanding the customer.” Research showed customers understood the price differential in convenience but this could only be 2-3p in the £1, said Holmes. “As soon as you push beyond that they think you are profiteering. We are rolling out a price initiative in One Stop because prices are a bit high on fresh and chilled.”
Tesco has also converted 14 Adminstore outlets, all of which had doubled turnover, said Holmes. “Customers like the fact we have brought Tesco prices and an edited Tesco range to the neighbourhood. We have done a lot of work to bring in cosmopolitan ranges, some of which are edited from our hypermarket offer,” he said.
Tesco chief executive Sir Terry Leahy said he wouldn’t rule out further deals in the c-store sector but the planning regime was more favourable towards small store developments than large ones. “There are lots of opportunities for organic growth. We don’t need to make acquisitions,” he said.
By the year-end, Tesco will have 500 Express stores and 100 Extra hypermarkets. It plans to open 20 Extras a year, mainly through store extensions. The 10 Safeway stores acquired from Morrisons add 250,000 sq ft of selling space, contributing to 1.5m sq ft of new space overall by the year-end.
In the 24 weeks to August 14, group pre-tax profit was up 28% to £804m on sales up 12.2% to £16.5bn. UK like-for-like sales growth was up 8.3% (including petrol), of which 1.3% was due to petrol inflation, 3% due to higher basket spend and 4% due to increased customer numbers.
Siân Harrington