UK’s biggest supermarket chain, Tesco, is all set to record profits totaling £2.5bn ($4.9bn.) This amounts to a staggering, hold your breath, $7 million a day or £4800 per minute last year. The profit figure is up 12% from that of 2006. Amazingly, Tesco collects £1 in every £7 spent on groceries in the UK.
With this kind of stronghold on the market, it has often come under severe criticism accusing it of squeezing out many of the local stores across the country.
Competition Commission even launched a probe into the £95bn grocery sector earlier this month, amid accusations that Tesco was creating a series of ‘Tesco towns.’
The company argued that UK grocery market was now ‘national’ and a considerable number of buyers bought online. However, the latest figures from TNS market research panel showed Tesco expanding its share of the grocery market to 31.2% in the 12 weeks to March 25.
Owning almost 1,400 stores all across the UK, the company has forayed into several European markets last year. The supermarket group, last year opened 400 stores in Eastern Europe and Asia which is four times new space than the 7.5 million sq feet it has in Britain. US is the next target for the company and it has announced the location of its first American store that is to be opened in Arizona. This could see a further swelling up of its profits in the coming years as it competes with other global retail giants, including Wal-Mart.
Tesco is among the world’s biggest retailers, but still trails behind US grocery giant Wal-Mart and French supermarket group Carrefour.
Sir Terry Leahy, CEO of Tesco is credited with its amazing success, having been at the helm for a decade now. He, while announcing profits at a shareholder’s meeting, will show how its ability to second-guess customer behaviour, largely due to the ocean of data gathered from its ‘Clubcard’ scheme, has helped the business increase sales from £39.4bn a year ago to an expected £42.7bn - more than the GDP of Peru.
The fact that Tesco’s market share is now roughly equal to that of the combined number two and three, Asda and Sainsbury, has set alarm bells ringing. However, with the kind of ‘cradle to grave’ services and products it provides, the record sales and profits are not surprising for many trade analysts.
Source: kamcity
