THIS WEEK: Tesco launches hypermarkets

Tesco, which has already extended its brand into the Metro and Express

formats, is planning a move into hypermarkets with the opening of its

biggest UK store early next year.

The new store format, which completes Tesco’s portfolio of brands, is to

be called Tesco Plus.

The supermarket group has plans for about 50 of the hypermarkets across

the UK. Tesco Plus will have wider aisles, food courts with six

different operators, franchised shops at the front and larger tills.

As well as selling food it is likely to offer a range of higher margin

products, such as clothes, music, videos, and homeware goods. Dave

McCarthy, retail analyst at BZW, said: ‘They’re attacking on all fronts

as they now have a format for every type of shop.’

The first Tesco Plus will be at Pitsea in Essex, and at around 90,000 sq

ft will be the company’s largest store. An average superstore is

anywhere between 35,000 and 45,000 sq ft.

The news will put pressure on Sainsbury’s 12-strong Savacentre chain,

and on Asda, which has 11 large stores and is in the process of branding

them Asda Hypermarkets.

‘These are the type of formats that can really work for a retailer if

you’ve got larger than average stores where you can sell a bigger

selection of higher priced items,’ said Robert Clark of retail experts

Corporate Intelligence.

‘We are always looking at opportunities. We are the biggest retailer

with outlets of over 40,000 sq ft and we are looking for ways to extend

those outlets and the product ranges they offer,’ a Tesco spokeswoman

said.

In common with other retailers, Tesco is looking to its existing stores

for growth. It already has 22 stores over 50,000 sq ft, of which half

are over a decade old and are likely candidates for conversion.

The company is spending pounds 500m this year on adding 120,000 extra sq

ft to its total area.

Tesco is set to overtake Sainsbury’s as the country’s most profitable

retailer with a year-end pre-tax profits forecast of pounds 750m.

This article was first published on Marketing