Tesco chief executive Dave Lewis has said that the retailer is committed to "improving the quality" of its operations in Poland, in order to develop a "profitable, sustainable retail model" in the country.
Lewis was commenting following the publication of Tesco's third quarter and Christmas trading statement, which showed a 10.3% like-for-like sales decline in its Central European operations (total sales were down 13.7%) over the 19-week period, largely due to operational restructuring.
Format Repositioning
"We knew that we were at a disadvantage because we were in hypermarkets, and the growth was in smaller formats," Lewis said of the restructuring of the Polish business. "So we sold some hypermarkets, we downsized the estate, and we reduced the range – it's about making the offer a profitable, sustainable retail model in Poland."
At the same time, Lewis refused to comment on suggestions that the retailer was planning to sell its Polish operation, as had been discussed in the Polish trade press prior to Christmas.
"I never comment on speculation like that in the marketplace," he said. "The motivation for us is about improving the intrinsic quality of the Polish business."
'Improving The Relevance'
On its Czech Republic, Hungary and Slovakia operations, Tesco said in its statement that it was in the process of 're-sizing, simplifying and improving the relevance of its businesses' in these markets.
"When we talk about 'improving the relevance', you've seen it in the UK and Ireland, you've seen it in Asia; it's about general merchandising, changing the mix, reducing some of the size of stores," Lewis said. "This is what we mean by improving the relevance of the offer in those three markets."
Business Rates
Closer to home, while Lewis noted that Tesco did not see any significant uplift in sales following the recent UK general election, he did comment on the forthcoming UK Budget, scheduled for March, reiterating the retailer's call for a business rates review.
"We would desperately like to see a really significant review of business rates," he said. "Tesco as a group spends more than £700 million on business rates; that's doubled over the past three years.
"If you look over the last 12 to 18 months, the retailers that have failed include some quite large businesses, and there's no doubt that business rates have had some part to play in that. We would welcome not a 'tweak', but a fundamental review of business rates and how they affect retail in general."
He said that Tesco would like to see a 2% tax placed on online retailers, in order to account for the 20% reduction in sales felt by the traditional retail market.
"We just want the taxation to follow the way that sales have developed in the market in total," Lewis said.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
