Tesco is focusing on its Express convenience chain and fulfilling online grocery and general merchandise orders in the UK in its bid to turnaround the business, which has reported its first profits fall since 1994.
Pre-tax profit for the 26 weeks ending 25 August 2012 fell 11.6% to £1.7bn, compared with the same period last year.
The decline was largely a result of Tesco’s £1bn investment programme in stores designed to improve the shopping trip for customers, launched earlier this year.
Despite a lower level of overall space growth in the first half, Tesco said it was focused on its smaller format, Express stores. It opened 60 Express in the period, taking the total to nearly 1,500.
Tesco said this trend will continue into the second half and beyond, with new space for the year expected to be just less than 1.5m sq ft, of which nearly a quarter will be in Express stores.
Tesco said its online grocery business continues to outperform, with sales up by more than 11% in the first half versus the same period last year.
The retailer highlighted its launch of grocery click & collect drive-through as an innovation and said there are now 90 locations in total.
Its online general merchandise business, Tesco Direct, has expanded the range of products offered from around 75,000 to over 200,000, many sold by the 14 marketplace sellers who have already signed up to sell through tesco.com.
Click & Collect continues to be the channel of choice for Tesco Direct, it said. The majority of customers choose to pick their orders up from one of the collection points in more than 1,300 stores.
In terms of range, Tesco said its re-launch of the Tesco Value range of 550 products as Everyday Value has proved popular with customers who love the contemporary packaging and increased quality at the same low prices.
Nearly 80% of customers are reported to have purchased Everyday Value since launch, and Tesco has added more than 100 new lines to the range.
The supermarket is also part-way through a programme of renewing its core Tesco own label food range of over 8,000 products, which represents approximately 40% of its food and grocery sales.
It has upgraded more than 2,000 products, including its Indian, Oriental, Tex-Mex and Italian ready meal ranges; and overhauled the in-store bakery offer, introducing over 30 artisanal breads and a patisserie range.
Tesco is planning to relaunch the fresh meat category, with more than 150 improed products over the next few weeks.