Tesco boss Philip Clarke embarks on digital revolution

He said: “The choice we face is a stark one. Do we lead the revolution or do we become victims of evolution?”

Clarke told the World Retail Congress in London this morning that “apps are the new high street” and that online shopping offers “all the core growth in the UK food business”.

“Food shopping online is all the growth we have in our core food business in the UK. People are opting out of the store,” he added.

Clarke claimed Tesco had called an end to the race against its rivals for new property in the UK. He said: “We’ve called time on the old retail ‘space race’. In this new world, retail will not be about buying large swathes of new real estate, but about how we, as businesses, relate to our customers, their communities and the countries in which we operate.

“Our stores approach is changing. We will build more but they will be smaller. We are personalising our offer.”

Tesco plans to consolidate all of its existing apps into one and Clarke said that apps are becoming increasingly important. “Customers are starting to assign specific roles to specific retailers, apps have become the new high street,” he said.

He added: “Digital does not just offer smart new ways to shop. It gives us the opportunity for a warmer, more meaningful conversation with our customers, local communities, our colleagues and the suppliers who we work with.

Clarke said Tesco is to expand its online grocery offer to Budapest, Shanghai and Bangkok, building on launches in the Czech Republic, Poland, South Korea and Ireland in the last year.

He added that over half of visits to the Tesco.com website are to check prices. “And this is our food site, not our general merchandise site,” he said.

Clarke is enacting a £1bn plan, unveiled in April, to turnaround Tesco’s core UK business. He is aiming to “warm” up the brand

He said: “Retailers need to build strong and trusted brands, that need is stronger than ever. More than half of consumers shop with just five retailers or fewer, showing the power brands can have. Brands which appeal to the head as well as the heart exerting an emotional ad rational pull.”

“I don’t want us to be a part of the future: I want us to help to shape the future. Fast, exciting, noisy, open to all, welcome to the new era of retailing: an era in which a seamless, personalised offer is critical to winning customers in a world of change.”

• Read Philip Clarke’s blog - ‘Winning customers in a world of change’