Blog: Tesco boss Philip Clarke on the grocer's Christmas performance

As seasonal as the sales, the flurry of Christmas trading statements is well underway and we have reported our sales update this morning.

Standing back from the headlines, this year more than any other there are two clear trends for the industry.

The short term trend is that families are still experiencing household recession, by which I mean that, while the economy is improving, household incomes are growing slower than inflation. In real terms families feel like they have less to spend than they did last year and in previous years. While families still treat themselves and parents always want to give their children a good Christmas, budgets remained constrained and optimism around the economy and house prices led to slightly more borrowing on credit cards.

Tesco can’t do much to drive up incomes, but we can help customers get more from their shopping trip, so we did. Customers had a good Christmas from Tesco, benefiting from the investment we have made in price, quality, range and service, and we put in a bit more for customers this Christmas to help them when they need it most, for example through Clubcard Boost which rewarded our most loyal customers, many of whom save their Clubcard points all year to spend at Christmas. 

The second trend, longer-term and more fundamental, is the accelerating demand for multichannel retail. Not so long ago, an online retail strategy was a novelty, now it’s a necessity. In recent years, online sales increased steadily but still in low digits. Now the accessibility and convenience of mobile technology has driven online sales to double every three years. 

Increasingly having an online channel alone isn’t enough and multichannel is determining which retailers will thrive long term. Multichannel isn’t just online and it is more than the sum of its essential parts – online, stores, supply chain, customer insight.

For multichannel customers, technology is leading to ever greater expectations of service. Ordering from your phone is convenient, but not if you need to stay in for half the day, so we introduced Click & Collect - even for food - and one hour delivery slots. How customers are using stores is changing, so we have rethought the layout to suit different customer shopping “missions”. If you can get most of what you want online and in a convenience store, we need to rethink how large stores are serving customers, and that’s why we’re refreshing them to make them easier, less functional and more enjoyable shops to use and spend time in. Insight data from Clubcard lets us adapt the product range in each of our stores, from the largest to the smallest, so each offers the community it serves the products they want.

Our tablet, the Hudl, is a platform for customers to access Tesco simply and directly, opening up the multichannel world still further. By doing so it strengthens the relationship with our customers, which is what sets it apart from nearly every other device on the market.

Multichannel is about refining all these elements and making them work together to create an all-round shopping experience which feels like it was built just for you. How well it is done is the difference between delighting and disappointing customers and will determine the long-term winners and losers, which is why we are investing so much time, money and energy to be the best.

Tesco had a very good multichannel Christmas because the level of service we were able to offer customers was the best it has ever been and we will make it even better next year. One in three online orders was through a mobile app, up from one in five last year, helped along by our app lab which uses customer feedback to continuously refine our apps. UK online sales were approaching 8%, £450m in the six weeks of Christmas alone. Online grocery orders grew 11% and in the weekend before Christmas we picked 14.5m items, our busiest online food Christmas. Online clothing sales were up over 70%. In general merchandise, orders were up 25% and over 70% of those were collected in store from one of over 1700 Click & Collect desks.

We are making improvements big and small every month, from tweaking apps to building new infrastructure and refreshing more stores. We have been planning for and investing in this retail revolution since we launched Tesco.com 17 years ago, building those essential parts I mentioned earlier which give us a unique oppotesrtunity. Customers today are experiencing the benefits of the long term work we’ve been doing to create the best multichannel experience for them because wherever and however we trade, our focus is on delivering the most compelling offer for our customers.

Taken from Tesco’s Talking Shop