Tesco 2014 Annual Report Download - page 12

2009
Source: IGD Datacentre
6,000
5,000
4,000
3,000
2,000
1,000
0
‘000 sq ft
2010 2011 2012 2013
In-store only
In-store + online grocery
In-store + online grocery +
general merchandise online
Average annual spend with Tesco
In-store General
merchandise online
Online grocery
2.98x
2.04x
Multichannel
Net new space
Industry trends
38%
less new space
than in 2009
Multichannel cuts across the digital
and the physical. It is transactional and
non-transactional. It is not just about
selling products but also about the way
we interact with and engage customers.
Being truly multichannel is not just about
having a website – it is about putting the
customer at the heart of our business and
giving them one seamless, joined-up
relationship, be that through media,
social media or even a customer service
desk in store.
Customers value retailers who get it right
In the UK, food retail sales growth has remained subdued over the
last year, reflecting the challenging economic environment and
continuing pressure on consumers. Although new space has been
a key driver of top-line growth for many in the industry, we have
seen a reduction in large store openings. In the UK net new space
among the largest four grocery retailers in 2013 was 38% lower
than in 2009. In many of our markets performance of larger stores
has been more challenged.
In response to a consumer desire to shop more frequently and closer
to home, many retailers are focusing their opening programmes on
the convenience market and smaller format stores. An acceleration
in openings of small format stores is something we have also
observed in our European and Asian markets.
In the UK the online grocery market has continued to grow strongly,
with all the major UK food retailers now operating a grocery home
shopping service. We have also seen a rapid growth in Click & Collect
over the last year, including trials of non-store collection locations.
While online grocery is still in its infancy in Central Europe and Asia
we expect it to continue to grow. In Poland, for example, the value
of the online food market doubled in size from 2008 to 2011,
and is expected to have more than doubled again by 2014.
Across our markets the industry remains highly competitive. In the
UK and Europe the discounters continue to grow market share and
open new stores. Promotional intensity has remained elevated in
the UK and couponing has been a feature in many of our markets.
We have seen continued development of own-brand products by
retailers across the globe as they seek to appeal to broader groups
of consumers and respond to demand for better value.
In the UK, food retail sales growth
has remained subdued over the last
year, reflecting the challenging
economic environment and continuing
pressure on consumers.
With this rise of technology and digital
capabilities, consumers are changing the
way they shop. Customers want to be able
to shop however, whenever and wherever
they want. They want to shop across store
formats, on smartphones and on tablets.
They are no longer choosing just a simple
trip to a store, but are making much more
dynamic and complex journeys to purchase.
They are bouncing between channels,
placing an order online and picking it up in
store, for example. They are combining fewer
big shopping trips with more frequent,
top-up shops at convenience stores. As their
behaviour is changing their expectations
UK largest four grocery retailers
of retailers are changing too and they are
looking to retailers to provide a truly
multichannel offer – one that joins up
all the different channels to give them a
seamless experience.
Value continues to be a priority for consumers
across our markets and they are changing the
way they shop in order to find the best value
for money. They are on the look-out for the
best prices, promotions and deals. The sharp
rises in fuel prices across the world coupled
with pressure on disposable income has
amplified a shift to smaller, more frequent,
convenience shopping missions. In the UK,
the proportion of customers shopping three
or more times a week for food and groceries is
up from 29% in 2009 to 49% in 2013.
Health and wellbeing is also a growing trend.
Over half of the UK population worry about
their health and food is at the centre. Quality
fresh food and provenance are priorities for
customers across our regions. In Europe and
the UK, interest in and awareness of
provenance have intensified since the meat
contamination issues last year. In Asia
wet-markets continue to be a popular choice
for fresh meat, fish and poultry.
Other information
Governance Financial statementsStrategic report
Tesco PLC Annual Report and Financial Statements 2014 09