Tesco expands in Scotland. #30m investment programme will create 915 jobs.

the coming year, creating nearly 1000 jobs.

Finance director David Reid said yesterday the new stores would be

situated in Dunblane, Falkirk, Inverness and Aviemore. Tesco also hoped

to open two others in the Edinburgh suburb of Colinton and at Cupar in

Fife, he added.

Mr Reid said this investment programme would cost over #30m and lead

to the creation of at least 915 new jobs.

It should also help Tesco to maintain strong growth in Scotland

following a 25% surge in sales at its Wm Low stores during the first

half of this year.

Wm Low suffered a 6% decline in sales during the first half of 1994

before the Tesco takeover, so the sales surge is quite a turnaround.

Tesco bought the Dundee-based chain of 57 supermarkets for #247.7m in

September 1994 after a contested bid with Sainsbury. All Wm Low stores

now trade under the Tesco name.

''It ended up being more expensive than originally planned, but we are

delighted that we have got it, and it has proved a very good investment

for us,'' Mr Reid said.

Marketing director Terry Leahy said the launch of a #35m programme to

refurbish all Wm Low stores was partly responsible for the sharp

increase in sales during the 24 weeks to August 12.

But he also cited the introduction of a wider product range and more

competitive pricing. Tesco offers 20,000 products, whereas Wm Low sold

only 8000.

Mr Leahy said Tesco added about 2,000 new product lines every year and

cited Chinese and Indian foods and chilled soups as recent successful

introductions.

Other factors fuelling higher sales were Lottery card sales, the

introduction of Tesco's Club Card scheme, which offers shoppers a 1%

discount, and a lull in expansion activity by other supermarket groups.

City analysts see sales growth at Tesco's 62 Scottish outlets slowing

to about 19% during the full year. But this is still double the 10%

increase in like-for-like sales achieved in the UK as a whole during the

first half.

The Tesco takeover has been good news for all Wm Low employees, except

for 300 headquarters staff in Dundee who were made redundant.

The application of higher Tesco wage rates gave the 8,000 retained

employees an average wage rise of 12.6%.

These staff have been joined by 1000 new recruits over the past year

as sales have steamed ahead.

Tesco is unconcerned by the possible introduction of a minimum wage,

since its lowest pay rate of #4.27 an hour is already comfortably ahead

of the #4.15 minimum wage demanded by the most militant trade unions.

''We have no real contribution to make on the broad issue of the

minimum wage, except to say that at the levels being talked about it

would not have implications for Tesco,'' Mr Leahy said.

Local suppliers have also benefited from Tesco's higher profile in

Scotland. Tesco outlets north of the Border are expected to order #120m

of goods from Scottish firms this year -- 50% more than Wm Low did in

1994.

Tesco's UK-wide chain of supermarkets is expected to buy #300m from

Scottish suppliers.

Over the past year, Tesco has doubled its market share in Scotland to

14.2%, putting it second equal with Asda behind Argyll -- the owner of

Safeways and Presto -- which has 17.4%.

But Tesco in Scotland still lags behind its overall UK market share of

18.6%. The group remains on the lookout for new acquisitions, but at a

Scottish level these are likely to be on a smaller scale than the Wm Low

takeover.

Tesco makes no secret of the fact that it would like to acquire some

Woolworth sites for conversion into high street stores.

Earlier this week the group announced a 15.1% increase in pre-tax

profits to #290m during the 24 weeks to August 12, on turnover up 25.6%

at #5891m.

Tesco now runs all its Scottish operations from Dundee, with a reduced

headquarters staff of only 20 people. The 12 former Wm Low stores in

northern England have been hived off to other divisions.

Tesco shares ended the day down 4p at 323p.