Tesco to take on Amazon with launch of 'online shopping mall'

Apr 15, 2012

Supermarket needs big ideas as it gets set to announce slowest profit growth in seven years

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TESCO is due to launch a game-changing internet-based service called the Market Place where it will sell products from rival retailers, making it "an online shopping mall" to rival Amazon.

The Market Place is expected to be announced officially on Wednesday by chief executive Philip Clarke as part of a package of profit-boosting measures. The other big move will be to "warm up" the supermarket giant’s UK stores to make them less "cold and industrial".

The measures are designed to persuade shareholders that Tesco can recover from a grim period of trading.

In full-year results due this week, the supermarket giant will report its lowest rate of growth for seven years. With like-for-like sales in Britain down one per cent, pre-tax profits are expected to hit £3.6bn, a very modest rise of 2.8 per cent on last year.

As The Sunday Telegraph reports, this follows the "disastrous" profit warning issued earlier this year when Tesco had to admit it had failed to win over customers from rivals such as Sainsbury, Asda and Morrisons during the Christmas period. The warning wiped £5 billion off Tesco shares, the Mail on Sunday reminds us.

If Tesco were only a British operation, this week's figures would be even worse, probably flat-lining at best. The increase in profits is down to a strong performance from Tesco's Korean and Continental outlets, and a slight improvement in trading at its struggling US subsidiary, Fresh & Easy - still losing money but less of it.

The Market Place idea is based on customers ordering online and then collecting at their local store, an option already available for groceries at some branches through Tesco's 'click-and-collect' service.

DIY and homeware retailers are expected to join the Market Place. "We have the ability to deliver to the store," one Tesco insider told the Telegraph. "That’s what gives us the advantage over Amazon."

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