The British supermarket giant Tesco Plc will be selling off its business interests in Poland in its continued efforts and strategic plan of scaling back its international business operations to reduce expenditure and focus on key growth markets.
The United Kingdom based retailer will be selling off its Polish business that has a total of 301 stores in the country to in a deal worth £181m to the Danish retail group Salling Group.
Following the completion of the deal for its Polish business, Tesco will be able to completely focus on the development of its business in Czech Republic, Hungary and Slovakia, market where the company has a dominant market share, the UK supermarket giant said.
In its strategy of scaling back its global ambition in recent years, the company has already retreated from the markets of Thailand and Malaysia so far this year.
“We have seen significant progress in our business in Central Europe, but continue to see market challenges in Poland,” said Tesco chief executive Dave Lewis. “Today’s announcement allows us to focus in the region on our business in Czech Republic, Hungary and Slovakia, where we have stronger market positions,” Lewis added.
“Good progress” has been made by Tesco with respect to selling its remaining Polish property that lies outside of its business deal with Salling, the company said. Over the past 18 months, the company has been able to generate £200m from either selling or agreeing to sell 22 stores, it said.
Tesco sold off its entire business interests in the Thailand and Malaysia markets in March this year in deals that generated funds worth $10.6bn. There were more than 2,000 stores belonging to the supermarket chain across both countries which operated under the brand names of Tesco Lotus brand. Tesco sold all of the business in the two markets, including the stores, to Thai conglomerate CP Group.
The funds generated from the sale were enough for the company to announce a special dividend for its shareholders.
Tesco, which was once the dominant player sin he UK market, has in recent years faced increased competition from discount retailers chains such as Aldi and Lidl as more UK shoppers have shifted to these budget chains.
But the chopping habits have undergone a change because of the novel coronavirus pandemic and the associated lockdowns and stay at home orders and social distancing norms. According to comments made by Lewis said in April, customers in the UK have shifted back to the way that they used to shop about a decade ago – by making one big weekly trip to the supermarket. He added that this was because of the limited trips to the supermarkets and stores by customers because of the coronavirus pandemic related social distancing norms. This therefore resulted in the a 50 per cent reduction in number of transactions in the month of April in supermarkets outlets but an almost doubling of the size of the average basket of transactions. That e=meant people were making fewer trips but were purchasing more.
(Adapted from BBC.com)