Tesco eyes stronger grocer-supplier online relationships

Tesco's new online boss Adrian Letts has urged its supplier partners to help the supermarket group improve its digital merchandising proposition, saying customers' expectations are growing all of time.

He also indicated that online grocery is moving towards more video content and multiple images, and he highlighted the significant potential in terms of using 360-degree and relative size imagery.

Addressing suppliers at the grocery industry research group IGD's Online & Digital Summit this week, which brought together representatives from across the European food and FMCG markets, Letts said: "Together with all of you we need to evolve the merchandising proposition.

"No longer is it OK to have basic images – customers are expecting so much more."

He revealed that 96% of products available on Tesco online have images, but he emphasised the importance of illustrating the remaining 4%.

"All I would ask you is can all you help us with the images, pictures and metadata to make sure your product gets the care and attention it deserves?

"I think together we can build a really rich experience and build on the sorts of things we've started to do in store to online, and compliment both the on- and offline shopping journey."

Since CEO Dave Lewis joined the business a year ago Tesco spokespeople have, in public, appeared increasingly open to engagement with the supplier community. This was underlined earlier this month by Lewis himself, who announced new shorter supplier payment terms and pledged to deliver a simpler business model for its partners in the supply chain.

The collaboration theme was continued this week, with Letts revealing plans for an additional supplier conference in the spring of 2016, saying: "Success is a team sport and success will be a team sport – and that's all of us working together."

Letts, who is the founder of media streaming service Blinkbox which for four years was majority-owned by Tesco until being sold off at the start of 2015, returned to the grocer in the summer as part of Lewis's recruitment drive for a new leadership team. The online MD revealed on Wednesday that the grocer is opening up advertising capability on its mobile site to suppliers, with Tesco looking to facilitate conversations about how manufacturers and FMCG brands can raise awareness of their products to a burgeoning mobile shopper demographic.

More information on that will surely be shared in due course, but Letts also used his presentation, which marked the first time he had spoken publically to the industry following his return to Tesco in the summer, to call an end to the tablet phenomenon of recent years and emphasise the importance of optimising for people using their mobile phones to shop.

"I am going to call an end to the rise of the tablet," he said.

"I do think we're now in the phablet age and for those of you who have an iPad, I'd ask you how many times you are actually using it now – you're probably using your mobile much more frequently."

Figures from Apple's third-quarter statement in the summer, which showed that the company sold 10.9 million iPads in the three-month period to 28 June, would suggest these devices still have a significant reach. However, sales volumes had dropped by 18% over the course of the year, indicating dwindling demand for iPads across the globe.

The comments from Letts were perhaps more indicative of events closer to home, where Tesco has this week confirmed to trade magazine Engadget that it has no plans to launch a third-generation of its Hudl tablet and the company is no longer selling its Hudl 2 in stores or online.

With the sale of Blinkbox earlier this year and the disposal of its other streaming and digital content offerings, it appears the Hudl entertainment package no longer adds up for the retailer, despite promising early sales figures of the device over the last two years.

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