Tesco CEO Philip Clarke today (19 September) praised predecessor Sir Terry Leahy for pushing the UK’s largest retailer into the online channel.
Clarke this morning told the World Retail Congress, that retailers must “harness the power” of consumers’ increasing use of the Internet to win over shoppers and boost sales.
There is debate in the UK over the benefits of selling food online. Earlier this month, Dalton Philips, CEO of rival UK grocer Morrisons, told just-food “nobody is making money delivering food online today”.
However, Clarke said today Sir Terry Leahy’s development of Tesco’s online business in the UK had helped the retailer “win” consumers in the country.
“The greatest initiative of all that has won consumers after Clubcard has been grocery home shopping,” Clarke said. “Retailers need to get into this multichannel world. People are opting out of stores and choosing the convenience of the smartphone, grocery home shopping. I’m enormously grateful to my predecessor for having the vision to say ‘We must go after it’ at a time when experts were saying all we’d do was eat our own lunch. Well, rather eat our own lunch then let somebody else eat it.”
Clarke indicated how important online had become to Tesco in the UK by saying “all the growth” from the retailer’s “core” food business in the country was from the channel.
Overall, UK retailers have found it tough to grow food sales volumes in recent months as consumers, facing squeezed incomes and higher prices, waste less.
Tesco is investing heavily in the UK to revitalise its whole business after quarters of falling underlying sales. The retailer is shaking up its service, revamping own-label ranges and investing in fresh foods.
It is also continuing to expand its multi-channel business. He pointed out Tesco was investing in its click-and-collect service in store, including for grocery shopping. By Christmas, Clarke predicted, one in five online orders in the UK are expected to be made on a mobile device.
Tellingly, however, Clarke also indicated UK consumers were using the retailer’s website not just to buy products but to compare prices. Clarke said 50% of visits to tesco.com were to check the price of food products, highlighting how the Internet has enabled cash-conscious consumers to hunt for value.