Tesco focuses on fulfilment as like-for-like sales dip

The UK's largest grocer Tesco said today that becoming a leading multichannel retailer remains "a strategic priority" for the business, as like-for-like third-quarter sales in its home country dropped 1.5% year on year.

With sales across its global markets also weak in comparison to last year, the supermarket group is looking to digital retailing to drive growth and boost its customer offering, including some new in-store technologies announced this week.

A strong focus for the business – as it is for the wider retail industry – is on providing flexible fulfilment options for its customers, and the supermarket has now rolled out one-hour grocery home delivery slots to over 98% of the UK population.

In addition, Tesco now has more than 200 grocery click & collect drive-through locations in its stores and has started a number of trials in non-store locations, such as schools and libraries.

Underlining this strategy was the official launch of the company's sixth grocery dotcom centre in Erith last week, which employs 550 people and uses various new technologies that allow the retailer to stock 30,000 different product types under one roof.

Blogging on the Tesco Talking Shop blog yesterday, Simon Belsham, managing director for Tesco's grocery home shopping, said: "Retailing has been transformed over the past decade with so much choice now available to customers in how they can shop.

"Today, Tesco customers can visit our stores for the weekly shop, use our click & collect service to pick up their shopping on their way home from work or visit us online and have their groceries delivered to their home at a time that suits them.

"This approach – of putting the customer in control – underpins everything we do as a multichannel retailer and is an important part of our online offering to customers."

Like-for-like sales at Tesco fell in all of its territories in the third quarter, with the Republic of Ireland, Thailand, Slovakia and Asia all reporting declines of more than 5%, although there have been signs of improvement in Poland and Turkey compared to previous months.

Matt Piner, research director at retail analyst group Conlumino, said that Tesco has felt the impact of the economic downturn more than most, as it serves such a wide cross-section of consumers. But he suggested other supermarkets, such as Aldi and Waitrose, have been able to drive volume by providing an offering that resonates with their consumers.

In terms of the positives for Tesco, Piner added: "The push on convenience has seen positive like for likes in express stores, with the product range in each tailored to the needs of its local area.

"Online continues to go from strength to strength and Tesco is utilising more of its vast portfolio to provide click & collect services. The Hudl tablet, with more than 300,000 already sold, isn’t only a success in itself, but will help boost Tesco as a provider of entertainment content, competing with Apple and Amazon.

"Unless Tesco can build a clearer identity for its core food proposition it will continue to feel the squeeze."