Tesco, the UK's most successful
retailer, is growing more dependent on information technology for
new sources of revenue and to underpin the main
business.
This emerged this week when chairman
Terry Leahy announced a sales increase of 9.1% to £22.6bn, and
earnings per share up 21% to 11.65p.
Leahy did not refer to
Tesco's ClubCard loyalty scheme, a database of some 11 million
customers. However, the database underpins the retailer's marketing
programmes and drives sales, so much so that Leahy was moved to say
last year that if the firm's IT failed, the firm failed.
One example of Tesco's increasing reliance on IT is its new
thermal imaging technology to monitor customer queues and open new
tills to meet its "one-in-front" promise.
The firm also leverages different parts of the business to
measure and improve overall performance. For instance, Leahy said
Tesco had improved on-shelf availability, as measured using
in-store picking to fulfil tesco.com orders.
"There is still scope to get better so we have been developing
more sophisticated systems to deal with the impact of weather on
store sales to make sure we stock the right products at the right
time. We have also improved our in-house systems for forecasting
and ordering which allow us to manage our stock levels better," he
said.
Sales at Tesco Direct, the non-food catalogue offer that uses
the tesco.com web site to take orders, rose 9.9% to £3.9bn, with
consumer electronics rising almost 40%.
Leahy said, "We started Tesco Direct in a low key way - with
initially 8,000 products offered on-line and 1,500 by catalogue,
including new categories such as furniture. We now have 12,000
products on-line and the catalogue range has been expanded to
7,500.
"Tesco Direct [also] provides customers with the choice of
ordering on-line, by phone or in selected stores. The option to
pick up items from some stores is proving very popular. We have
desks in 75 stores with plans to add a further 125 by the end of
the year."
Leahy said Tesco Direct should contribute more than £150m this
financial year compared with a loss of £15m during start-up.
He said tesco.com sales were up 35% in the first half to £748m.
Profit excluding Tesco Direct rose 62% to £54.7m. "We are
particularly pleased with the performance of our tesco.com-only
store in Croydon which serves our customers to the south of London.
Sales in this operation are up 66% year-on-year to almost £1m a
week," he said.
Leahy said Tesco Telecoms now has more than two million
customers. "Our branded telecoms hardware business (landlines,
branded mobiles, accessories etc.) has grown by 27% in the first
half. Tesco Mobile remains the UK's fastest growing mobile brand in
the pay-as-you-go market and it has remained the number one network
for overall customer satisfaction.
"Tesco internet phone is performing well, attracting new
customers to this exciting new technology. We have just announced
the introduction of new landline-style call plans that will enable
consumers to use our internet phone in exactly the same way as they
use a home phone service - but with very competitive UK and
international pricing."