Tesco keeps online focus

Tesco is experiencing its lowest sales growth in the past decade

Tesco has said it will focus on its online retail operations to attract more customers after announcing slow overall sales growth today.

During the third quarter, total sales at the supermarket giant grew by 5.9 per cent, with like-for-like sales up by 3.2 per cent, including petrol. It is understood that this was Tesco’s lowest sales performance since the mid-1990s, attributed to the introduction of a low-cost product range intended to lure customers from rivals such as Asda and Lidl.

The retailer said its internet grocery business Tesco.com and Tesco Direct have both delivered “very strong sales” in the quarter and that a pipeline of new online products will also help in attracting new buyers.

To that end, Tesco has recently acquired the remaining 50 per cent share of its online financial services arm from Royal Bank of Scotland. The deal is expected to complete before year-end.

Last month, Tesco’s rival Sainsbury's reported buoyant interim results for 2008 and said that it will continue investing in web operations as part of a corporate recovery strategy.

The online home delivery operation represents one of the key channels through which Sainsbury’s intends to extend its brand reach online. The firm expects to generate £500m in sales annually via the web.