Given the combination of store closures, asset disposals, capital investment cut-backs and appointment of Matt Davies as UK CEO, it is now obvious that baggage-free Dave Lewis means business.
However, these moves are being made in order to shore up the Balance Sheet and cover some of the Pension Fund deficit. Closing 43 loss-making stores and selling dunnhumby and Blinkbox will yield no more than £2.5bn.
Therefore it is best to see this morning’s announcement as part of an overall disposal programme that has to see the disposal of Tesco Bank, and their SE Asia interests in order to give Lewis sufficient elbow room to tackle the real agenda - The neutralisation of the discounters…
In fact, the announcement of up to 25% price-cuts on 380 branded products could be seen as ‘one for the multiple team’ aimed at using big-gun brands to impact Aldi and Lidl's equivalent surrogate-brands. Note that there was no attempt to make the price-cuts via Tesco private label…
It follows that the other mults will need to follow suit to avoid becoming side-dishes on the menu…
Two issues remain:
However, these moves are being made in order to shore up the Balance Sheet and cover some of the Pension Fund deficit. Closing 43 loss-making stores and selling dunnhumby and Blinkbox will yield no more than £2.5bn.
Therefore it is best to see this morning’s announcement as part of an overall disposal programme that has to see the disposal of Tesco Bank, and their SE Asia interests in order to give Lewis sufficient elbow room to tackle the real agenda - The neutralisation of the discounters…
In fact, the announcement of up to 25% price-cuts on 380 branded products could be seen as ‘one for the multiple team’ aimed at using big-gun brands to impact Aldi and Lidl's equivalent surrogate-brands. Note that there was no attempt to make the price-cuts via Tesco private label…
It follows that the other mults will need to follow suit to avoid becoming side-dishes on the menu…
Two issues remain:
- What discounter categories will Tesco tackle next via what brands, in order to address the full discounter portfolio?
- Given Dave’s generation, will this first cut be the deepest….?
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