BRITISH supermarket chain Tesco has been careful not to upset businesses, employees or customers since the announcement of its move into Ireland.

But it must now plan how to generate a return from its £630 million investment. To boost profitability, it will expand the supermarkets operations of Quinnsworth/Crazy Prices and Stewarts into new areas such as pharmaceuticals.

The goal will be to bring the customer a wide range of services under one supermarket roof. The result will be a powerful new competitor not only for the other supermarket chains but also for other areas of the retail business.

Tesco chief executive, Mr Terry Leahy, is reluctant to be drawn on specific plans for its Irish operations. The company, which had a bad experience in its previous foray into Ireland, will talk to the managers and the customers to see what suits Ireland, he says.

The company, understandably, wants to boost margins on supermarket sales to about 6 per cent, from their current 4 per cent. The Irish market is extremely competitive, with good retailers who have upgraded their services. It is certain that Tesco, will also concentrate heavily on non food items to boost returns.

In Britain, the company has zoned in strongly on customers, and what they want. The focus is very much on making the shopping trip a complete experience. "Our research shows customers want more services, rather than just food when they come to a store, says one London store manager.

In Britain the company utilises every square foot of retail space and constantly refurbishes its stores, extending where possible. It has introduced a range of services, including pharmacies and photo development laboratories.

Its chairman, Lord MacLaurin, said last week that last year alone the company introduced 47 new bakeries, 108 serviced meat counters and 48 new photo laboratories to its stores in Britain. It also added clothing as a retail item to 36 stores.

Many of the stores bake their own products from scratch, while others finishing the baking process on parbaked items.

Tesco found, through its research, that customers preferred to buy their meat fresh, rather than pre packed so they introduced serviced meat counters. When the BSE crisis struck, it introduced more fish and poultry options. "We are now the biggest fishmongers in Britain and fish sales increased by 27 per cent share last year," said Mr Leahy.

The company believes the pharmacy business is a growing sector, with good potential. It is likely to introduce the service to Ireland. This sector is already highly competitive.

Property sources say chemists are fetching very high prices. There are restrictions on General Medical Scheme (GMS) dispensing licences, which are highly sought after because they bring customers into the shops for prescriptions.

Many chemists in Ireland have formed consortia to buy pharmacies, because they realise - like pub licences - the GMS licence is limited. However, others contend that dispensing prescriptions is only one part of the business. Toiletries and cosmetics are also a big part of the business.

For Tesco, its strength is that it knows its customers. Last week at the presentation of its annual results Mr Leahy was asked who the company's customers were.

"People are buying more convenience foods, they want to spend less time in the kitchen," he said. "They want more variety in their food, more international cuisine and are concerned about their health.

"They may watch their weight during the week, buy low calorie products, but are prepared to break out at the weekends," he said.

Mr Leahy can answer such questions without hesitating. His senior staff and store managers are also very conversant with Tesco shopping trends and what the customer wants. Such attention to detail is evident in a trip to a Tesco store.

In Southwark, a predominantly lower income area, the Tesco store is the equivalent of any Irish supermarket, although it is not accorded the company's superstore status.

The aisles are wide, there is feeling of airiness and space around the store. No goods are placed higher than head height because Tesco found customers did not like having to stretch to reach the shelves.

There is a fresh baking section, where customers can see the items being baked. There is also a pharmacy with a wide selection of goods, which also dispenses prescriptions.

The average spend per customer is £15 sterling per week, not very high by Tesco standards, but the store has a throughput of 40,000 customers per week.

The goods are ordered from a central warehouse, consequently very little extra stock is held on the premises. This gives the company far more retailing space. Technology keeps the manager, staff and the central warehouse, fully briefed on what lines are selling well and what is running short.

The goods are delivered during the night. A scaled down workforce is on duty throughout the night, restocking shelves and taking in deliveries. Tesco has introduced the 24 hour store concept on a trial basis in some areas and is monitoring its performance.

Across London, in Cheapside, the company has a smaller store. The only supermarket in the City, it caters mainly for people working in the city. Here the average spend per customer is around £7 per week. It opens from 7a.m. to 10 pm. Its peak hours are 7 a.m. - 9.30 a.m. when it services approximately 1,500 customers, lunchtime (noon - 2.30 pm.) and 5.00 - 7p.m. when the offices close.

The store has 22 tilts and is designed to get customers in and out as quickly as possible. Food items, such as apples, yoghurt and fresh bread are placed at one section of the store, sandwiches in another, convenience foods in another. The staff can tell you that the average spend of an early morning customer is £2.20. He/she may buy a yoghurt, orange juice, a bagel or a croissant.

Customers can shop, pay for their goods at designated tilts and collect them after 5 p.m. on their way home from work. Meantime, the goods are stored in chillers downstairs.

Knowing its constituency, the company keeps a range of champagnes in coolers ("because sometimes when stockbrokers or bankers conclude a good deal, they want to celebrate"). It has a pizza counter, where pizzas are made on the premises, which it will have to extend, because of demand. It also stocks cookery books, which it says are £5 cheaper on average than in the local bookstore.

Undoubtedly, Tesco can be expected to introduce a range of formats in Ireland. Mr Leahy said it would examine individual stores to see what the best option is.

Asked if Tesco would not be limited by the size of stores in Ireland, he replied that this was not the case. "On average our British stores are 25,000 square feet, in Ireland they are approximately 20,000 square feet."