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Tesco to launch tablet device

TESCO is set to ambush Apple and Amazon with the launch of its own tablet computer as it fights to win back shoppers in its British heartland.

The iPad-like device is expected to go on sale in time for Christmas, with pre-loaded books, films and music. It will also have apps for Tesco’s digital grocery and banking products and Blinkbox, its internet film and music service.

The company has not decided how much to charge for the gadget. Sources said it would be a “high-quality” device similar to Amazon’s Kindle Fire, which costs £130.

The move is aimed at repelling the advances of Apple and Amazon, which have wreaked havoc with Tesco’s profitable books and DVDs business in recent years. The supermarket is also hoping to find new ways to connect with shoppers who have become less loyal since the downturn put a strain on food budgets.

The expected tablet launch comes as:
- Tesco faces calls to sell its struggling Turkish arm;
- Government plans to fine supermarkets up to 1% of turnover for using bullying tactics on suppliers were criticised by the British Retail Consortium as “excessive”;
- Norway’s sovereign wealth fund emerged as Tesco’s biggest shareholder.

Philip Clarke, Tesco’s chief executive, is fighting on a number of fronts after last year’s shock profit warning. He has moved to sell the lossmaking American business, entered talks to merge the China operations with those of a bigger rival and embarked on a radical reshaping of out-of-town stores.

The refurbished Watford Extra, a prototype for how the other 250 hypermarkets could look, includes a Euphorium bakery, a Giraffe restaurant and a Harris + Hoole coffee bar.

Clarke declined to comment on the prospect of a Tesco tablet but said Blinkbox was a “very important” part of the store’s strategy. “I’m very keen not to lose out when the millenials [people born between 1980 and 2000] come through — they’re already becoming homemakers,” he said.

The retailer is under pressure to address the issue of its troubled Turkish business. The 191 stores, which operate under the Kipa brand, lost an estimated £20m last year. Karolina Noculak at Scottish Widows Investment Partnership, which owns 1.4% of Tesco, said: “I doubt investors would like to see more capital allocated to the region and any steps to curtail trading losses would be well received.”

Clarke said Tesco had sorted its international operations into three categories: those with strong positions, such as Malaysia, South Korea and Thailand; those in need of minor repair, such as the Czech Republic, Ireland and Poland; and those too small to compete with rivals, such as China, India and Turkey.

“What it means for Turkey is we are trying to find a model that works, because that economy is going to grow enormously, and we’re saying no more than that at the moment,” he said.

Meanwhile, Norway’s sovereign wealth fund has quietly become Tesco’s biggest shareholder. Norges has bought a 4.99% stake in the supermarket, overtaking Warren Buffett’s Berkshire Hathaway, which holds 4.98%.

Source : Simon Duke and Oliver Shah – The Sunday Times

21 August 2013
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