Tesco says its customers’ loyalty helped boost sales and profit during the first half of the year as the business benefits from “tailwinds of recovery”
The supermarket chain recorded a 5.9% rise in sales to £21.8bn in the UK and 5% profit increase to £1,2bn for the six months ending 28th August.
Like-for-like sales, which exclude new stores and additional space, were up 0.3% which Tesco claims outperformed market performance.
Tesco says its performance has been “solid” during “a period of unusually subdued” growth and low levels of like for like sales across the industry thanks to its continued focus on the customer and building loyalty through its Clubcard scheme.
In a half-yearly statement, Tesco says: “Our strategy is to earn their loyalty by helping them to spend less – through low prices, good promotions and an increased investment in Clubcard.”
The supermarket claims to enjoy the highest level of loyalty among the major UK supermarkets as measured by the percentage of customers who do more than half their shopping with one retailer.
Tesco says while loyalty has decreased across the sector, it has widened the gap between its rivals and maintained its high loyalty.
Non-food sales n the UK grew by 2.5% to £4.4bn.
Tesco Bank added 200,000 customer accounts during the period and reported a 12.9% uplift in revenue to £474m and 12.2% profit growth to £129m.
Group sales across all Tesco’s territories increased 8.3% to £32.9bn while group profit before tax was up 12.5% to £1.6bn.
Terry Leahy, Tesco chief executive, says: “Economic recovery in the UK is slow and steady and I believe our investment in making the shopping trip even better for customers means that Tesco is well-placed to grow in this environment.”
An estimated 70% of sales revenue is linked to their loyalty card, which means they have a very clear understanding of who spends what in its stores.
52% of loyalty card holders convert rewards to money off at the till.
33% of holders redeem coupons and vouchers sent as part of a loyalty card scheme.
Only 21% of loyalty card holders save up rewards to help pay for something they need.
1 in 10 loyalty card holders collect points but rarely, if never, redeem them.
51% of holders say ’it’s really worth my while collecting points’.
10% of card holders say that the loyalty cards rewards are too small to be worth collecting.
As per the article by Marketing Week.