Tesco Plans to Create New Private Label Brands to Enhance Global Expansion

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May 17, 2011

Tesco plans to create new private label brands to augment its appeal to increasingly “aspirational” global shoppers, according to the U.K. retailer’s new CEO.

The future also includes developing online shopping in all 15 global markets its serves, Phil Clarke, Tesco’s CEO told Reuters. Clarke's new seven-point strategy is an extension of a plan developed by Terry Leahy, Clark’s predecessor, whom he replaced in March.

"It is a change of gear, not a change of direction," said Clarke. A new focus, however, is the plan to create
"highly valued brands," he said. While this objective refers to all of Tesco’s existing private label lines, Clarke said new brands without the company’s banner on them will also be developed.

"As people develop their higher levels of disposable income, they want to treat themselves. They do not want to just buy Tesco Value shower gel,” he said. “They want to have something in their bathroom that looks like it is a brand. So you create brands,"

Tesco has been criticized for having weak general merchandise private label products, which Clark said is an area of focus. Brands such as F+F in apparel and Technika in consumer electricals have been revamped and repositioned.

Responding to criticism of its money-losing Fresh & Easy concept in the U.S., Clarke established some cost-cutting measures for this year as well as a break-even goal for the small-format chain by the end of fiscal 2012. "I think lots of people are poking at the strategy … In the end we all know what matters is performance, and I have set some milestones and I think that is the right thing to do," he said.

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