Tesco fails to attract market

Midway through reorganisation plans, supermarket chain Tesco is still waiting for its figures to turn for the better.

Having spent £1 billion revamping customers' shopping experience, Tesco would surely have hoped to see an increase in sales and improved market share. Unfortunately neither has materialised as yet, though it would be fair to highlight that they are only halfway through the proposed restructuring process.

One of the reasons that Tesco has failed to improve is the fact that its stores have a greater weighting towards non-core goods; the type of white label product that does not sell well when fiscal prudence is the norm. Online sales of groceries have improved, however, with a rise of 13% in the first half of the year.

Tesco's largest exposure is to the UK market, but it is the poor performance of its European outlets that will be the biggest cause for concern. Sales dropped by 68% in the first half of 2013, driven lower by poor performances in Ireland, Turkey and Poland.

Asia has also been a recent area of focus for the supermarket giant. Following the lessons learned from the company's failed efforts to charm the US market, it has decided to form a partnership with the largest food retailer in China. Tesco’s 20% stake should see it gain profitability at a quicker pace, with an improved return on investment.

Although recent figures have not been particularly strong, it is a little premature to be calling the demise of Tesco just yet.

Tesco chart

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