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Tesco to extend ‘compelling’ multichannel

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Supermarket group Tesco plans to extend multichannel across its business, it said as it released its end of year results today.

Immediate objectives included, Tesco said, becoming “a multichannel retailer wherever we trade” as “the combination of stores and online becomes compelling for customers.”

In the year to February 26, the supermarket reported group sales, including VAT, had risen by 8.1% to £67.6m, while pre-tax profits increased by 11.3% to £3.5bn.

In the UK sales growth was subdued, with sales up by 5.5% to £44.6bn and trading profit up by 3.8% to £2.5bn. But online the story was different, with double digit growth in the grocery delivery business and a 30% rise in sales at its non-food online operation, Tesco Direct. When operations in Korea and Ireland were included, online sales grew by 15%.

Profits in online services “advanced modestly” as investment went into providing one-hour time slots in London, and initiatives such as click and collect, refund the difference, and selling wine by the case. The company said its iPhone app accounted for 12% of customer traffic.

International sales were a key source of growth in the group, said Tesco, with almost 70% of its group profit growth coming from its Asia and Europe operations. Across its operations, it said, new management teams and structures had “equipped the business for global growth.”

Chief executive Philip Clarke said: “I am pleased with our strong overall performance in the face of some challenging conditions and we are well-positioned, with multiple opportunities to deliver long-term growth and rising returns.”

Our view: In its results today Tesco hasn’t given an enormous amount of detail about exactly what offering multichannel services “wherever it trades” means. Presumably it means across the world, but there’s also an implication that could see it offer, for example, click and collect services for delivery to UK stores of all sizes, convenience stores as well as larger ones. That could be very interesting for those who can’t or simply don’t often get to its out-of-town stores and would like the convenience of multichannel to extend to Tesco’s convenience stores.

We asked Tesco for clarification and a spokeswoman said her understanding was that the supermarket would do this “both where we trade and also in the services we provide.”

She said: “At Tesco we have a multi-channel approach so that people can shop how they want to, be that at home, in store, through their mobile, from the Tesco Direct catalogue. We have different shop formats to suit customer needs. Some like to drive out of town to a bigger store, our Tesco Extras or Superstores for example, others like to shop for their fresh food on their local high street, our Tesco Express for example, and some find it easier to shop online and order their shopping straight to their door.

“Long-term, we continue to focus on building this multi-channel offer, to continue to serve customer needs as shopping habits change and make shopping even more convenient for them.”

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