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October 23, 2014updated 21 Oct 2016 4:03pm

Tesco: How mobility is impacting the troubled retailer’s business

Its moves in the mobile market. How does it view technology risk?

By Sam

UK retailer Tesco is still reeling from financial troubles which forced it to admit it overstated its profits by more than £250m. Tesco, the UK’s largest retailer has always embraced technology and seen opportunity in providing technology services.

As well as being a virtual network operator and a 3rd party device shifter the firm also sells its own brand tablets. And the firm has identified mobile as impacting every part of its business. In its last annual report (see below) the company said 43% of people in its stores use a mobile to conduct price comparison checks.

Tesco the device manufacturer
In September this year it announced it was dropping plans for its own smart phone due to the competitive nature of the market.
Tesco revealed it was shelving plans to build an own-brand Smartphone to instead focus on developing a successor to its popular Hudl tablet.

The company’s CEO Philip Clarke had announced earlier this year that a Tesco Smartphone would go on sale, but this will no longer be the case, Robin Terrell, Tesco’s multichannel director, said.

Although the company was confident it could offer customers an affordable, quality 4G Smartphone handset, Terrell said, these plans have now been put on hold, possibly indefinitely, due to the ultra-competitive nature of the Smartphone market.

Instead, in October Tesco launched the next generation of its Hudl tablet, a low-cost Android device which surprised many industry observers with its popularity last Christmas and which has sold over 500,000 units.

Terrell said the Hudl 2 improves on its predecessor in areas including screen size, speed, design and the number of apps available.
"Where the first Hudl was used by many as a secondary device, Hudl 2 has the capability to take its place as customers’ primary tablet in the home," Terrell said.

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"We are very excited and when we launch it in the next few weeks I think customers will be too. The opportunity remains strong in the tablet market," he added.

Tesco the mobile network operator
Tesco mobile launched in 2003. Operating as a virtual network provider it sits on the 02 network in the UK. Tesco mobile is generally well considered and its consumer data and mobile voice services are considered competitive.

The company is led by Anthony Vollmer, who became MD in 2013. It had turnover of £426m for 2012. It had gross profit of £52.7m and operating profit of £734,000. The firm is privately held with share capital company owned by Tesco Mobile Communications Ltd (45%) Tesco Mobile Services Ltd (4%) and 02 Communications (10%).

How Tesco sees Technology Risks
Any significant failure in the IT processes of our retail operations, online and in stores, would impact our ability to trade
As the digital marketplace grows, a lack of investment in technology, or investment in the wrong areas, may constrain multichannel growth and impact our competitiveness
Insufficient investment in, or ineffective implementation of, controls over our online presence could increase the likelihood of a successful cyber-attack
Whilst investment is made in new technologies, there is a risk that investment is not made to maintain the controls over the existing technology, which may impact systems availability and security, including the security of personnel, supplier or customer data
As customers and colleagues become increasingly sensitive to matters of data usage, storage and security, the inherent reputational risks of the IT control environment have increased, in conjunction with the financial and regulatory risks
– Our IT strategy is approved and reviewed by the Executive Committee to ensure that investments in IT systems and innovations improve business efficiency and customers’ shopping experience
– We continue to invest in IT to respond to the growing range of IT-related threats and risks
– The Group Technology Committee monitors controls to maintain the integrity and efficiency of our IT infrastructure and data
– The Information Security Committee meets regularly to review the development and implementation of policies
– Rigorous governance processes must be followed for new systems implementations and ongoing change management of existing IT
– The reporting lines of our Group Information Security and IT Security teams have been merged to allow for better integration and efficiencies in addressing IT security risks
– Processes are in place to monitor and deal with significant IT security incidents
– Improved Group Wide Area Network infrastructure and the standardisation and centralisation of systems across international operations
Source – Tesco Annual Report

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