Tesco eyes expansion in central, east Europe

Tesco eyes expansion in central, east Europe

London: Tesco, the world’s No.3 retailer, plans to almost double selling space in central and eastern Europe over five years, including a step up in growth of smaller format stores and hypermarkets, it said on Tuesday.

The British group, on the third and final day of a trip with analysts to Asia, said it was aiming to have 4.1 million square metres of selling space in its central and eastern European markets by 2014-15, up from around 2.2 million now.

It also has high hopes for a hypermarket refurbishment programme, saying that average weekly sales at four recently refitted stores were up 19%, with average weekly customer numbers up 14%.

Tesco and international rivals like Wal-Mart, Carrefour and Metro are expanding rapidly into emerging markets as they look to bolster sluggish growth in western Europe and the United States.

Tesco said on Monday it aimed to quadruple revenue in China to about £4 billion over the next five years, by more than doubling its number of hypermarkets to over 200.

The group runs about 850 stores in the Czech Republic, Hungary, Poland, Slovakia and Turkey, making about £7.6 billion ($12.2 billion) of sales, or around 12% of the group total, in the year ended February 2010.

Its expansion plans include opening more hypermarkets of over 5,000 square metres. But the largest proportion of the new openings will be compact hypermarkets of 2,000-4,000 square metres and smaller formats, like its Express stores.

“Our experience tells us that if we give customers the opportunity to shop in multiple formats, we will achieve higher market penetration, increased loyalty, greater brand reach," Tesco said in presentation slides published on its website.

The group said hypermarket refurbishments in central and eastern Europe included adding at least 5,000 new products, as well as services including phone shops, opticians, pharmacies and photoshops.