Tesco: New ways to drive growth in 2017

Date : 24 January 2017

Following Tesco's encouraging Christmas and Q3 results we explore the latest developments at the retailer that show how it plans to build on recent progress in the year ahead.

Food Love Stories

Following much work last year to enhance its own brand offer, 2017 has begun with Tesco emphasising its food quality credentials with renewed vigour. A new series of TV ads, "Love Stories brought to you by Tesco," will roll out through the year, each focusing on customers preparing favourite meals from fresh ingredients that are relevant to the season. It offers Tesco and its suppliers more opportunities to engage with food enthusiasts, a key customer group that are naturally inclined to trade up and be responsive to the investments Tesco has made in product innovation and reformulation.

Collaborative partnerships to develop distinctive products

Building on its 'farm to fork' initiative Tesco has launched a number of projects with suppliers to make use of less than perfect products from growers. 'Left Yeovers' for example is the result of a new partnership with yoghurt producer Yeo Valley and organic fruit grower Adam Wakeley. It uses visually imperfect fruit to create an exclusive and distinctive products. Not only does this bring newness to a mature category on the shelf but it creates charitable benefits with Tesco donating 10p per pot sold to the Fareshare food redistribution charity. Other examples include the launch of a ready meal by Branston and its supplier Samworths, which uses visually imperfect potatoes and the introduction of the Farm Brand and Perfectly imperfect ranges that allow Tesco to use up to 95% of growers' crops.

Responding to shopper preferences

In-store, Tesco is rethinking how it provides the right style of service for customers with differing preferences. On the one hand there is an obvious requirement for speed from many shoppers and Tesco has responded to this challenge by rolling out its PayQwiq payment app to all UK stores. Trialled last year, this enables shoppers to pay and collect Clubcard points with a simple swipe of their smartphone. But there are also many shoppers who prefer a more leisurely checkout experience. Recognising this Tesco is experimenting with different styles of checkout. Examples to date include the trial of a dementia friendly checkout, a 'quiet hour' at Crawley Extra to help autistic shoppers who find shopping stressful and a "relaxed" checkout in Scotland to help shoppers who need to complete their purchases.

New appointments to strengthen business

The new year has seen two appointments to strengthen key areas of the UK business:

  • Alessandra Bellini has been appointed as Chief Customer Officer. A colleague of Dave Lewis at Unilever she will join Tesco on March 1st after 20 years at the consumer goods giant. Replacing Robin Terrell who left Tesco last year, she will bring extensive experience in brand building and developing people.
  • Ashwin Prasad has been promoted to lead Tesco's general merchandise business. Formerly head of healthy and beauty, he takes over the division at an important time as Tesco works to reverse a decline in sales and faces new competition from Sainsbury's Argos. Prasad replaces Rob Hattrell who has left Tesco after eight years to become UK vice president of eBay.

Online innovation

Responding to the need for faster online delivery, Tesco has partnered with online start up Convibo to offer delivery within an hour to customers in parts of London. The venture will allow Tesco to compete head to head with Sainsbury's Chop Chop and Amazon Prime Now, whilst not incurring significant costs. Deliveries will be priced at £4.99 plus a surcharge of up to 15% on the products bought to cover operational costs.