The growth of online music downloading has presented an opportunity for companies to enter the music retail industry. Tesco.com already has a high profile due to its popular online grocery service, and the website’s status as a trusted extension of the leading retail brand suggests the music service should prove a recipe for further success.
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Tesco, the UK’s largest supermarket chain, has in recent years turned both its website and its non-food line into lucrative parts of its overall portfolio. The chain’s decision to combine the winning elements of both by selling music downloads via Tesco.com should therefore come as little surprise.
The new music download site includes over 400,000 tracks priced at £0.79 (US$1.47) each – the same price as Apple’s iTunes and a penny less than competitors Virgin and Mycokemusic.com. However, Tesco differentiates itself from competitors by offering Tesco Clubcard points on all purchases, which could be the deciding factor for consumers in a competitive market with largely indistinguishable products.
Other services include a network that remembers what an individual has bought in the past. If the customer then breaks their player or computer, or has it stolen, they will be given a free download of their back catalogue up to three times.
The online music service is likely to take sales away from Tesco store sales of CDs, though this change is seen as inevitable. “Music buying is changing… as the price of portable digital players falls, customers will demand more choice,” said Tesco.com chief executive Laura Wade Gery. Tesco will also be hoping that its tremendous brand reach enables it to tap into an audience that is currently unfamiliar with the concept of music downloading. However, if the sounds emanating from the record industry are to be believed, downloading is very much the future of music purchasing – therefore being the site of choice for older consumers could give the company a major first mover advantage.
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By GlobalDataTesco is the first major British supermarket to enter the online music market, aiming to replicate the success of Wal-Mart’s site in the US. It looks like a shrewd move: Tesco’s well-known and, perhaps more importantly, well trusted online image – helped by competitive prices and add-on services – suggests Tesco may have stolen a march on its domestic rivals in its bid to attract the digital generation.
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