Fears that the supermarket giant would record its first loss for more than 20 years proved unfounded, with pre-tax profits up 5.3% to £3.8bn in the year to February.
The vast majority of the £1bn budget will be spent on stores, although Tesco said: “We have already made changes in marketing, including bringing DunnHumby back into the heart of the UK business to provide more insight to the improvements we are making for customers.”
It also admitted that the Big Price Drop campaign – which many analysts have blamed for its current woes – “had not seen the desired improvement in customer price perception”.
It continued: “This was in part because we did not strike the right balance between price, promotion, couponing and loyalty investment for our customers, particularly in December and January.”
Going forward, Tesco will “increase the promotional element of it with stronger deals, including improved seasonal events. In addition, our trials of new activities to encourage higher basket sizes and loyalty, including money-off couponing through Clubcard and at the checkout will be applied more widely”.
The company is also planning to boost its digital offering, increasing its investment to £150m in the coming year.
Having already relaunched Tesco.com a few weeks ago, it stated: “The new website, which has been well received by customers, will soon house almost all of our UK online businesses. It is also a big step forward in terms of functionality and ease of use for customers, offering a much richer user experience and being fully configured for mobile devices for the first time. We have already doubled the number of products on the new website, bringing the total available to well over 75,000. Further platform upgrades are planned in the months ahead.”
Last week, it was predicted that Tesco will increase spend on direct, data and digital marketing, at the expense of mainstream advertising, on the back of its current marketing review.
Tesco ‘to boost direct, digital spend’
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