Tesco CEO Philip Clarke today called for a “level playing field” on tax between web companies like Amazon and traditional retailers, after revealing a major retreat from non-food forced by the exodus of customers to online.
Asked during a press conference if companies such as Amazon were paying a fair share of the tax burden, Clarke said: “I think we need a level playing field in tax although we in Tesco know that our fate is in our own hands.”
Reacting to the challenge of online, Clarke said Tesco was reducing the size of new-build stores by up to a third and was staging an “active retreat” from areas such as consumer electronics to concentrate on food.
Clarke reflects on Tesco’s annual report for 2012-13, including its exit from the US, the writedown on its property portfolio, its investments in the UK and abroad, and its approach to online
He said a new model of 80,000 sq ft stores, such as the one just opened in Gateshead, would be used in the “relatively” few new stores it would open this year.
The new stores will feature food-to-go areas – “like a Tesco Express within a store” – much larger restaurants and bigger clothes departments but “much smaller” general merchandise sections, he said.
“It’s going to be a vibrant and exciting time,” Clarke added. “These stores will be much more of a destination.”
The Tesco boss added it was time for the government to act to help smaller retailers hit by sky-high rates. “You can see them battling with rates and feeling the pressure.” He urged the government to listen to the British Retail Consortium’s call for a freeze on business rates.
Earlier Tesco revealed a freeze of its own due to the horsemeat scandal, with a 1% fall in like-for-like sales in Q1 in part caused by a fall in frozen and chilled convenience food sales.
No quick fix
Analysts warned Tesco’s store rethink could take years to have a major impact on sales.
“Its challenges are much easier to identify than they are to fix,” said Matt Piner, research director at Conlumino.
“In non-food, for example, it will re-launch its range and re-configure space in larger stores, but this will take time to produce significant results.”