Retailing services
It has been a big year for Retailing Services, which includes our online shopping channels, tesco.com and Tesco Direct; Telecoms; Tesco Personal Finance (TPF) and dunnhumby – our consumer research business.
We believe in creating value for all our customers because that is how we earn their loyalty. Over time customers have come to trust Tesco to deliver value whether they are buying their weekly shop or opening a savings account. Their trust is very important to us. So we take the same approach to financial services as we do to all other parts of our business and that means offering competitive, straightforward products with no confusing small print and hidden charges.
Unlike many of the high street banks TPF is well funded – we never got involved in any of the complicated financial products and toxic debt that has caused so many problems for the banking sector. So while many banks now have to grow their margins and rebuild their balance sheets, we can concentrate on offering competitive rates across our savings, loans, credit cards and insurance products.
We are aiming to add more value by rewarding our loyal customers with Clubcard points, which is of course unique to Tesco. Looking further ahead, it’s clear that customers want us to provide a real alternative to other banks and that means a broader product range, including a current account.
Andrew Higginson Chief Executive of Retailing Services
and Group Strategy Director
Board of Directors
Developing Retailing Services has been part of our strategy for over a decade – with the aim of bringing value and simplicity to customers through services such as telecoms and financial products. After ten years of success, we have given it a renewed focus and in July we announced that Andrew Higginson would relinquish his role as Group Finance Director to take on the role of Chief Executive of Retailing Services. He has assembled an experienced team to really drive forward this part of the strategy, which we believe has the potential to deliver £1 billion of annual profit in the next few years.
The aim is to develop our services business to offer customers the same convenience we have brought to food shopping, to all the other products and services we offer. Our dotcom grocery business and now our online non-food offer, Tesco Direct, have already added more convenient options for customers to shop – particularly those with very busy lives or limited access to transport. The growing power of the internet means increasingly that people look to this channel to buy everyday services and goods.
However, many people still like the reassurance of being able to talk to someone knowledgeable about the products and services they buy. We believe in offering customers the choice – to shop in the way which most suits their needs whether that is online, in store or by phone. That is why we now have 40 phone shops in our stores, and we plan to have around 100 open by the end of this year. This means more customers than ever can access our popular telecoms offer. We remain one of the fastest growing providers for pre-pay mobiles and we are now attracting more customers through our new contract mobile deals.
In December we completed the acquisition of the remaining 50% of TPF from Royal Bank of Scotland Group PLC (RBSG ). This was an important move for Tesco, allowing us to build on the success of TPF and eventually offer customers the products you would expect from a full-service retail bank. This will mean growing our existing customer base across the 28 simple products we offer from home insurance to credit cards, but also attracting new customers at a time when many have lost trust in their high street bank.
All our current financial products are available to buy online and at present over 50% of our customers choose to buy this way. However, in the same way as customers value the service offered by our telecoms centres, we understand that many would like to discuss their financial needs with someone knowledgeable. We plan to increase our presence for TPF by extending the trial of our in-store branches which offer customers the opportunity to talk to our specially trained finance advisors in a convenient location.
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