Sunday 11 December 2016

Online ordering and family shoppers driving Tesco turnaround

Tesco's Irish business is enjoying sales growth for the first time since March 2013

Published 11/10/2015 | 02:30

Tesco has reduced the price of commonly used items as part of its strategy to increase sales
Tesco has reduced the price of commonly used items as part of its strategy to increase sales

Tesco has upped its online grocery delivery fleet by a tenth and dropped the price of staple goods, contributing to early signs of a turnaround in its Irish business.

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Results released last week showed that a decline in Irish like-for-likes sales is narrowing. Data from consumer insights agency Kantar Worldpanel meanwhile showed the Irish business enjoyed a sales increase of 0.3pc in the 12 weeks to September 14, its first quarterly period of growth in this country since early 2013. Sales volumes and sales transactions have both increased in recent months.

Spending by families and an increase in online ordering is helping to drive growth, the Sunday Independent has learned.

While customer behaviour has remained relatively consistent of late, the company has seen an increase in the number of customers doing their grocery shop online.

To facilitate and encourage this trend it has added 10pc more delivery vans on the road and is opening new and extending existing delivery hubs to bring its total nationwide to 30. Delivery service charges have also been reduced.

Spending by families with children has also improved. The grocer saw its spend by families with children - a heartland for the retailer - rise by 4pc in its most recent results period.

The weekly shop has emerged as a key battleground for business. Tesco's strategy has been to lower prices on the most commonly used staples through its 'Staying Down' campaign.

'Staying Down' is a price commitment in which the grocer has lowered the prices of commonly-used products and committed to not changing the prices for a minimum of three months. The company is also maintaining its three distinct lines of own-brand products, Value, Standard and Finest.

"We have brought the cost of shopping in Tesco down by giving customers simple value prices on the everyday products that matter most to them," said Tesco Ireland chief executive Andrew Yaxley.

"We are improving the experience in our stores and online by investing in customer service and by simplifying our range to remove duplication and improve availability of our customers' favourite products.

"The grocery retail market in Ireland is one of the most competitive in Europe but we're really encouraged to see customers respond positively to this investment and we'll continue to work hard to give our customers the best overall shopping experience every time.

"Over the last six months our priority has been to simplify our business so that we can maximise our investment in price and service, and going forward simplification and managing operating costs will continue to be a priority so that we are able to invest in our customers."

The grocer has managed to keep its number one position as Ireland's biggest grocery retailer. The Kantar Worldpanel data shows Tesco had a 24.8pc share of Ireland's multi-billion euro grocery market in the 12 weeks to September 13, fending off a continuing challenges from SuperValu on 24.3pc and Dunnes on 22.7pc.

Kantar noted that customers are buying more products per shop. "A modest increase in shopper numbers overall has certainly played a part in Tesco's recovery, and its customers are also buying more products per shop in the latest period, helping to boost the retailer's performance," said Kantar's insight director Georgieann Harrington.

The company opened its 149th Irish store in February on Pearse Street in Dublin. Its portfolio includes 14 Tesco Extras, 97 Tesco Superstores, 38 Tesco Expresses and 21 filling stations. It does not have immediate plans to open more stores but its property plans are kept under review.

In other Tesco news, the Irish business has opted not to replace outgoing chairman Tony Keohane. Keohane, who retired from Tesco in June of this year after a 37-year career at the retailer, was appointed chairperson in recognition of his service to Tesco Ireland - traditionally the trading businesses within the Tesco group do not have chairmanships.

Sunday Indo Business

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