22nd Apr 2014 14:16
LONDON (Alliance News) - British supermarket chain Tesco PLC Tuesday said that it is slashing its online shopping delivery charges, and cutting prices on over 30 major products like bacon and baked beans.
Tesco continues to struggle to keep up with better-performing rivals and maintain market share, with discount supermarkets Aldi and Lidl also upping the pressure on the UK's big supermarkets of late.
In the UK, Tesco's biggest business, the grocer has been losing profits as sales continue to fall, as customers have begun to shop elsewhere for better bargains and value from its competitors. In Europe, trading profits have also dropped considerably as sales in the region decline dramatically.
Tesco announced Tuesday that customers shopping at its stores are set to make bigger savings on their shopping, as the supermarket has cut the price of even more food products, and is slashing online shopping charges, as well as a free click and collect service for groceries across the UK, which was a service previously charged for.
"Like the food price cuts, the new prices for home delivery and click & collect are down and staying down," Tesco said in a statement.
Tesco said it has now dropped its priced on over 30 more products, including bacon, baked beans, broccoli, peppers, sugar, lettuce, cucumber portions and lines from Tesco?s bread ranges.
The grocer is also now offering more GBP1 one hour home delivery slots, for orders GBP25 or over.
Tesco's grocery home shopping business continues to grow, with now over 200,000 delivery saver subscribers and over 260 click & collect locations, including its first trials at six London tube stations.
Offering a free click & collect grocery service is a savvy move by the supermarket chain, which is hoping to lure back customers to its stores, by pumping money into price cuts and pricing investments, at a time when click and collect services are becoming more and more popular with consumers looking for ease and convenience.
"The price cuts mean that Tesco.com customers could save up to GBP130 a year, while Click & Collect customers could save up to GBP111 a year. And the 200,000 customers already signed up to Delivery Saver could save up to a whopping GBP252 per year," the grocer added.
With Tesco's new price cuts, a medium box of 6 Tesco free range eggs will now cost GBP1, down from GBP1.38, while customers will save 13 pence on a can of Tesco baked beans.
Last week the supermarket giant gave a cautious outlook for the year ahead, as it expects the challenging consumer environment and competitive intensity in the UK supermarket sector to remain, and said that it will respond with even more investments in price cuts, to lure customers back to its stores.
In February, Tesco announced it would be investing GBP200 million to drive down prices on everyday items, but was trumped by Asda, owned by US retail giant Wal-Mart Stores Inc, which at the same time said it would add GBP100 million to its planned GBP200 million in price cuts this year.
"GBP200 million was just the start, and you will see more coming. We have a big and bold plan, and customers will be getting better value in 2014," Clarke said last Wednesday.
The Chief Executive did not put a figure on the scale of investment Tesco will be adding in addition to its GBP200 million initial investment, but said that the grocer will also be using its loyalty Clubcard, to reward customers for shopping there, including the recent launch of its 'Clubcard Fuel Save,' which gives its customers money off when they fill up with fuel at Tesco petrol stations.
Pressure has piled up on Tesco's management team, with the recent departure of the group's Chief Financial Officer Laurie McIlwee, and Chief Executive Officer Philip Clarke's ability to drive the business forward, after reporting another drop in annual group trading profit for its last financial year, as it saw falling sales in the UK and Europe.
Tesco said that revenue for the year ended February 22 held up, with group sales including VAT of GBP70.89 billion for the year, up 0.3% at actual exchange rates, and up 0.4% excluding petrol at constant exchange rates. Although group sales were down 0.2% at constant exchange rates when compared with GBP70.71 billion the prior year.
However, the grocer reported an underlying pretax profit, which strips out exceptional costs, amortisation charges on intangible assets and acquisitions costs, of GBP3.05 billion for the year, down 6.9% when compared with GBP3.28 billion. Tesco also kept its dividend for the year at 14.76 pence per share.
Tesco shares were up 1.4% at 293.60 pence per share Tuesday afternoon.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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