Tesco is set to drastically reduce the number of products available on its shelves, in another cost-cutting move by new CEO Dave Lewis.
Meanwhile, the bad new continues for the UK's biggest grocer as reports have surfaced that it will face another investigation into its relations with suppliers, amid concerns that it breached the Groceries Supply Code of Practice.
Tesco currently offers about 90,000 stock-keeping units (SKUs) in store, taking into account products that come in different sizes and/or flavours. Low-cost retailers Aldi and Lidl, by contrast, offer about 2,000 SKUs, typically their own brands.
As reported in The Guardian, Tesco will bring in Boston Consulting Group to cut the amount of products down to 65,000-70,000 units in store. It will examine products such as air-freshener, of which Tesco offers 224 SKUs, while Aldi offers 12 own-brand units.
The aim of the cull is to not only reduce costs to Tesco, but to make the supermarket easier for the shopper.
"If you go into Tesco, you will be faced with three or four bays of air-fresheners [...] it’s painful for the shopper to navigate,” said Bryan Roberts, an analyst at the market-research group Kantar Retail.
The reduction of products is another cost-reducing move by 'Drastic Dave' Lewis, who has already made a number of big decisions in a bid to regain the ground lost to Aldi and Lidl. In recent months, Lewis has cut a number of poorly performing stores and services, including 43 shops across the UK.
Due to the number of products being removed from the shelves, Tesco may also be forced to undergo a change in appearance, as newly cleared shelves will become an issue.
INVESTIGATION
Regarding the concerns that it breached the Groceries Supply Code of Practice, it's being reported that the Groceries Code Adjudicator (GCA) joinig the Serious Fraud Office and the Financial Reporting Council in investigating the supermarket chain.
As reported by the BBC, The adjudicator, Christine Tacon, said she had "reasonable suspicion" that the code had been breached.
The GCA will look into Tesco's profits and delays in payments to suppliers, however, the GCA will not be able to fine Tesco for past offences.
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