Tesco hails marketing for Xmas sales boost
Tesco has hailed better marketing, including more targeted promotions and in-store improvements for its rise in sales over the Christmas period, offering an early sign that the turnaround plan is making progress.
The supermarket reported a 1.8 per cent rise in same store sales in the six weeks to 5 January. Total sales increased 4.3 per cent excluding petrol.
It follows a 2.3 per cent fall in sales over Christmas 2011, when the supermarket posted a shock profit warning prompting an overhaul of the business and beginning three consecutive quarters of declining sales.
The improved performance signals the six-point turnaround plan unveiled by Group CEO Philip Clarke in April last year is paying dividends.
Speaking to journalists today (10 January) Clarke warned there is still more to do to return the Tesco business to full strength.
He says: “It’s not about just fixing Christmas, but about building a better Tesco … Tesco is changing and we’re determined to innovate.”
Tesco invested less in marketing in the run up to Christmas 2012 than in 2011, as it focussed on more targeted promotions, Clarke added. The supermarket sent its 10 million most loyal Clubcard customers personalised deals rather that the blanket Double Points promotion that had run the previous year, which Clarke describes as the “wrong strategy”.
W+K was apointed in July and was responsible for Tesco’s marketing during the period.
Online sales increased 18 per cent driven by multichannel initiatives such as click and collect and grocery ‘drive thru’ that lets customers order online and pick up shopping from the local store at a chosen time. Drive thru accounted for 5 per cent of all online grocery in the week before Christmas.
Online grocery sales outperformed non-food, which Clarke says is “still a drag” on growth.
Clarke echoed rival Sainsbury’s by saying that its own brand ranges, both Everyday Value and Finest, are growing at the expense of branded goods as shoppers look to balance their budgets.
Tesco has also named Chris Bush, who currently leads its Thailand business, as managing director for the UK business, nine months after group CEO Philip Clarke took over day to day control of the region following its shock profit warning a year ago. Clarke will now step back from the day to day running of the UK business turning his attention to the group’s multichannel strategy and the 14 other markets Tesco trades in.
The supermarket has also appointed former House of Fraser and Amazon UK boss Robin Terrell as multichannel director to continue its strategy of growing multichannel.
Jill Easterbrook, currently director of developing business, has been promoted to head up strategy for a number of Tesco businesses including Tesco Mobile and Blinkbox.
