Tesco blames 6% drop in profits on shift to online retailing

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Tesco blames 6% drop in profits on shift to online retailing

Caroline Baldwin

Tesco has blamed a shift to online retailing, as well as competition marketplace, for its poor annual results.

Philip Clarke, chief executive of Tesco (pictured), said : “Our performance in the year was not where we had planned it to be. In the UK, we faced a weaker and increasingly competitive market in the second half. These conditions and the accelerating shift to online retailing particularly affected the performance of our larger stores.”

1: Philip Clarke, Tesco IT director and CEO-elect

While the supermarket is seeing strong UK growth of 11% in its online grocery division, it saw a 6% fall in annual profit to £3.3bn.

Clarke said profit had been affected by customers shifting from shopping in large stores to buying online and from convenience stores, as its Express shops increased by 1.1%.

In its annual results the retailer said it had 200,000 delivery saver subscriptions – which provides different delivery plans for a monthly charge. It also offers free click-and-collect for groceries in 260 locations, including trials in six London tube stations. Tesco also plans to launch a further 50 non-store collection points for groceries in 2014/15.

Tesco also has more click and collect locations for general merchandise, totalling 1,750. But it has plans to add click and collect for groceries and GM to a further 100 stores over the next year.

The retailer has also seen a strong growth in its clothing line, with growth of almost 60% in 2013/14.

“Regardless of these uncertainties, our overarching priority is delivering the most compelling offer for customers and we are retaining the flexibility to act accordingly,” said Clarke. “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.”

Tesco said its Clubcard continues to remain an important part of its brand, and has enabled the retail to deliver almost 60 million “highly personalised” mailings this year.

We are currently trialling a Digital Coupons app in Plymouth, another step towards creating a Digital Clubcard as part of our multichannel offer.

Earlier this year, the retailer said it would expand its multi-channel portfolio by launching a digital wallet, Scan as you Shop Mobile, Clubcard check-in and Clubcard voucher scheme this year.

In the annual results, the retailer said it is currently trialling a Digital Coupons app in Plymouth, which is “another step towards creating a Digital Clubcard” as part of its multichannel strategy.

The new services plan to sit alongside Tesco’s other digital offerings, including its magazine app, one-touch add-to-basket function and Click & Collect, to make up a “futuristic multichannel journey” for its customers.


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