Tesco wants FMCG suppliers to think of dot-com as simply another format, according to its online grocery marketing director, Andrew Miles.
Speaking at the IGD’s Trading in a Digital World event, Miles revealed Tesco has appointed new roles in its commercial and marketing teams to accelerate its online plans and urged suppliers to engage with its buyers about tesco.com.
Miles shared current insights and how it is improving its online business. He also offered advice on working with Tesco.
Tesco generates £2bn in online sales in the UK with 400,000 orders a week, said Miles.
The profile of the Tesco online shopper is slightly skewed to younger families but “we want to make it more and more mainstream”, he said.
The appeal of online shopping is broad and across all affluence groups, said Miles. Growth is being generated by the less affluent because online provides a great way to manage a budget and avoid general merchandise, he said.
“Customers are wanting more for their money and looking for a better brand experience.
“The digital revolution is both shaping and responding to these customer needs,” said Miles.
Tesco is also talking to ‘digital natives’, who are already engaged online, said Miles. They are not yet buying grocery but will be in future.
The journey to purchase is as important as the purchase itself, Miles told delegates; and said the bigger spenders will expect richer content to come into the grocery world.
Miles highlighted Tesco developments including the launch of 100 click and collect drive throughs and said Tesco plans to have “an awful lot more of them”.
Mobile shopping is also growing with an increasing number of orders by smart phone and tablets, he said.
He showcased the mobile experience Tesco launched at Gatwick Airport, with four interactive fridges for online ordering and promised there would be “a lot more in the near future from us on this”.
Miles said shoppers want more help and advice on food and said Tesco has redesigned its Real Food website, integrating it more with the shopping side of the business and is beginning to ‘socialise’ by sharing recipes with shoppers.
“Customers love it, so we love it; but it is also driving incremental adds to the basket,” said Miles.
Lunchbox, another online tool, which provides advice and inspiration for young and old, is also adding to shoppers’ online baskets, said Miles.
Clubcard is also being developed online and provided an opportunity to create a unique profile of the customer to make it easier and quicker for them to shop with features such as ‘favourites’ and ‘my usuals’, for example. Offers will become more relevant too, he said.
Miles said the retailer would draw on the skills of dunnhumby and Tesco teams to move this piece on and personalisation is going to be key in future.
“Loyalty in a digital world is very hard, because it is so easy to be disloyal,” said Miles.
“Clubcard is as key to us online as in stores. It’s an opportunity to say ‘thank you’ and have a one to one relationship with the customer.”
Miles advised suppliers think about the opportunity of the London marketplace – 90% is served by Tesco’s dot-com only or dark stores, where space is less of a constraint. It enables Tesco to personalise messages around religious events and festivals and offer exclusive lines and bulk packs, for example.
On working with Tesco, Miles said suppliers had to get the basics right ie products needed images and a full and clear product description and they must understand how Tesco merchandises to ensure products are in the right location.
He also highlighted the Importance of favourites. “If you are not in their favourites, they are not going to buy you.”
Miles said Tesco media offered great opportunities for suppliers. These include its new product zones such as one for suncare products.
Media also helps drive sales in-store, he said.
Customers are more tech savvy – they are looking online and then buying in store. In categories such as BWS and baby, online promotion has worked very well, said Miles.
Up to 15% of sales can be generated in-store after seeing an online campaign, he said.
Sampling is another opportunity and Tesco can put 80-90% of products into the hands of dot-com customers.
Other opportunities to talk about products online include seasonal events, featured space, competitions and offers, banner ads and online only products.
“You can can do stuff online that you can’t do in-store,” said Miles.
Summing up Miles told suppliers to make sure dot-com is on their agenda, to understand the online customer and market, get the basics right and understand the opportunities the website and media can bring.
“Be bold with your thoughts and ideas and get the right resource focusing on online,” he said.