No retailer is safe this Christmas as Tesco goes all out to grab market share with new products and expanded ranges. Retail and logistics chief David Potts outlines its plans to Jennifer Creevy.

Tesco has always been ferociously competitive, especially at Christmas. And this year is no exception. During the festive season, Tesco plans to go all out to grab market share from other retailers and soak up the share left by collapsed chains such as Woolworths and Zavvi.

The battle in both non-food and food is set to be more intense than ever. The grocer has ramped up lines such as toys and DVDs to win Christmas spend.

Showing off the Tesco Extra store in Beckton, east London, Tesco director of retail and logistics David Potts highlights the new products and expanded ranges. “We’ve adapted to the changing market now Woolies is shut,” says Potts. He points out expanded ranges in calendars, party products and toys.

The calendar offer, he says, is “the best we’ve ever done” and Tesco expects to sell 35% more than last year.

The party products range, including paper plates and party hats, has been expanded and added online.

And Tesco’s toys offer has been increased by a third this year. Potts thinks traditional toys such as Lego and board games will be big sellers. The grocer is selling 1,100 toys - including a Lego millennium falcon - and “many will be half price”. Tesco expects toy sales to be up 20% on last year.

Meanwhile, the gap left by Zavvi has prompted Tesco to ramp up its DVD section, stocking 27 new box sets this year. In the electronics department, Tesco Tech advice staff are now present in all Extra stores. Potts says Tesco Tech has helped boost sales 10% and reduce returns by 30%.

Perfume retailers such as Boots are also in Tesco’s firing line. For the first time, Tesco has introduced a small, staffed perfume counter and expects a 40% uplift in fragrance sales. Potts says: “Last year on Christmas Eve, Boots took £18m on perfumes and we were hardly in the market.”

In food, Tesco and the other grocers will obviously compete for the Christmas dinner spend. Tesco is selling its frozen turkeys half price until Christmas and offering weekly deals - customers spending £30 in-store, for example, will be entitled to a half-price bottle of Baileys.

Even niche retailers such as frozen food specialist Iceland are not safe. For the first time, Tesco has introduced a prawn ring, which it is selling at two for £5. “We will sell 150,000 of these this year, and we didn’t sell it last year,” says Potts. “It’s something that traditionally customers might have gone to Iceland for, but they [Iceland] will do a bit less well than they did last year now.”
For Potts, this year will be a “Mum’s Christmas” - meaning it will be traditional, “Mum will hold the purse strings” and “there will be treats but not extravagance”. However, he also says: “There are a few more shoppers saying they will spend a bit more this year.”

A winning seasonal performance would likely bring further rewards too. Potts says: “Christmas is more important than Christmas itself. If you do a good job for customers at Christmas, they will reward you in January and February.”

He jokes that Tesco is not expecting a “Finest” Christmas, but that it will be “a bit better than last year”. And Tesco’s “bit better” could have a massive impact on competitors.

Tesco ramps up online entertainment

Tesco has relaunched its entertainment website as it gears up for the key Christmas trading period.

Tesco Entertainment combines the retailer’s music, film and games products under one website. As revealed by Retail Week (September 18), the website offers both physical products and downloads.

The retailer has also signed a partnership with film studio Dreamworks, allowing Tesco to sell exclusive films and licensed merchandise in its stores. This Christmas, for example, it will sell Merry Madagascar - a short DVD film featuring the characters from the popular film Madagascar.

Tesco entertainment director Rob Salter said: “We hope to attract younger customers to the site as well as existing customers.”

He said the site is positioned as neither “cool nor uncool”, but rather “very credible”. He said: “We find that younger shoppers are looking for a great shopping experience rather than any fancy stuff and with our prices and Clubcard offers it will be very attractive.”

Salter said Tesco research showed half of shoppers who previously bought music and DVDs from Woolworths and Zavvi have stopped buying altogether, and “hopefully they will now come to Tesco”.