Tesco plans to ramp up its UK turnaround strategy as boss Philip Clarke admitted there is still “a lot” of work to do to rebuild the brand.

Speaking ahead of a Tesco’s UK strategy day for investors today, Clarke said the business is carrying “baggage” and that it “can’t ignore” the rise of discounters Aldi and Lidl.

Tesco plans to accelerate its programme to refresh its 900 UK stores, of which 100 have had a makeover.

Tesco will also cut the prices of key food products. The grocer is expected to sacrifice some of its 5.2% profit margin, and could expand a trial of a scheme in Norwich and Wales which offers Clubcard users fuel discounts.

Tesco also wants to launch a digital model of its Clubcard.

Tesco has been undergoing a turnaround over the past two years as it has been underperforming the wider grocery market.

Clarke told The Daily Telegraph: “We are going to accelerate our rebuilding of Tesco in the UK. It was a brand that once was loved, we want to get it back to be that.

“We know that we carry some baggage. I think in 2007/2008 there was a fundamental reappraisal of what good looked like for business. Before then, in the time of plenty when there was no booms and no busts and it was only going to go that way, biggest was best. I really think that [now], biggest isn’t always best, better is better.”

Clarke said Tesco “can’t ignore” the discounters, such as Aldi and Lidl which have been growing rapidly.

“On a 20-year view discounters have got less share than they had 20 years ago,” he said. “We all remember Kwik Save and how much share they had and what became of them.”

“I would say it is a structural change that has been exacerbated by the current macro trends – the squeeze on consumers, having to shop more locally. What have the discounters done? Largely, they have put their stores on the end of a street

“You can’t ignore them. No retailer can. You have got to have sharper prices and better quality. But you can’t just be them, because you are not them.”