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Tesco emphasises multichannel in journey towards the changing customer

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Tesco chief executive Philip Clarke today put the emphasis on customer-centric multichannel retail as he vowed the supermarket would be transformed by a “relentless focus” on giving its shoppers the “most compelling offer”.

Clarke said the supermarket group was “determined to lead the industry” at a time when the commercial environment is “changing faster than ever before.” The shift to online shopping, he said, was accelerating, hitting the performance of larger Tesco stores.

In its strategy to lead the industry, he said, Tesco would continue to invest in new sales channels such as online, while improving prices as well as product ranges.

“It is clear,” he said, “that the pace of change within our industry has accelerated and that uncertainties remain. Regardless of these uncertainties, our overarching priority is delivering the most compelling offer for customers and we are retaining the flexibility to act accordingly. By putting our customers at the heart of our business, we are determined to lead the industry in the new era of retail and in doing so, to create sustainable growth and strong returns.”

His comments came as the supermarket today unveiled flat full-year group sales, excluding petrol, of £70.9bn, up by 0.3% on the same time last year. In the UK alone, total sales fell by 0.1% to just over £48b, while like-for-like sales, including VAT and excluding petrol, were down by 1.3%. UK trading profit fell by 3.6% to £2.2bn.

Online grocery sales rose by 11%, while like-for-like sales in the supermarket’s Express, or convenience, stores rose by 1.1%. Online clothing sales grew by 60% during the year.

Underlying pre-tax profits fell by 6.9% to £3.05bn in the year to February 22, but at the bottom line, statutory pre-tax profits were up by 9.8% at £2.3bn.

Multichannel leadership, said Clarke, would be critical, at a time when shoppers want to buy where and when best suits them.

“The pace of change in customer behaviour means that this has never been more relevant and our determination has never been greater,” said Clarke. “In the year we launched grocery home shopping in five countries, opened 579 convenience stores across our markets and sold more than 500,000 Hudls, our first tablet.”

Tesco’s multichannel innovations over the year have included trialling a grocery home shopping hub in its Mansfield Extra store, fulfilling orders from larger stores and from a warehouse, while a digital coupons app is being trialled at its Plymouth store. Clubcard Fuel Save now enables customers to earn points against automatic discounts at the fuel pump. Meanwhile, its social network, The Orchard, shares offers through social media has now has 60,000 members.

Tesco said it now had more than 200,000 delivery saver subscribers to its online grocery service, with more than 260 dedicated grocery click and collect locations. It is trialling the service at six London tube stations and plans to launch around 50 collection points beyond its stores in the 2014/15 financial year.

Meanwhile, it now has more than 1,750 click and collection locations for online general merchandise, which now includes more than 0.5m lines and is supported by 50 third-party sellers through the Tesco marketplace.

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