New shops key to Tesco’s growth in a shrinking sector

The opening of nine shops across Ireland was the engine for Tesco Ireland’s growth last year. The company managed to increase its market share and improve its sales despite a shrinking groceries sector.

Tesco reported overall growth of 2.8%, with total sales recorded in Ireland reaching €3.07bn. When sales from Tesco’s nine new Irish stores are stripped out, the company’s like-for-like sales were down by 2.4%.

Chief executive Tony Keohane said: “We are pleased with the overall position and particularly that we have outperformed the market in very challenging conditions.”

Tesco invested €127m in building nine shops and replacing two. The new shops were focused on the east and midlands. Three superstores were opened in Kildare and Dublin, while Tesco Expresses appeared in five locations and three replacements were also opened.

Tesco plc’s preliminary report ruled out any further store expansion in Ireland in the near future. The report states: “In Ireland and Hungary the current economic conditions, and in the latter case the present fiscal environment, mean that we will pursue growth predominantly through existing stores, rather than invest substantial new capital.”

Tesco’s expansion in Ireland created 770 jobs last year, with a further 500 people employed on construction and upgrading projects. Tesco Ireland now employs 14,925 people in Ireland.

Tesco’s online sales and delivery service grew 21%, to account for €57.1m of annual sales. Ireland is one of Tesco plc’s best online performers, with 41% growth in combined online sales recorded last year.

Mr Keohane noted that the recession had changed consumers’ shopping patterns.

“Despite a continuing stressed domestic economy, Irish consumers are proving resilient and adopting practical responses to the pressures on family incomes. We are seeing customers increasingly opting for fresh products in providing healthier meal options for their families, as well as shopping special offers and buying more own label products. Our out-performance relative to the market reflects the excellent efforts of our staff in Ireland.”

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