Tesco 'to launch tablet computer' to compete with Amazon and Apple

Retailer expected to compete in digital downloads market for TV, films, music and ebooks

Tescos (REUTERS/Luke MacGregor )

In a bid to compete with the entertainment ecosystems created by the likes of Apple and Amazon, retailer Tesco is reportedly planning to launch its own “iPad-like” tablet computer.

The device would be priced at around £100 and come loaded with Blinkbox, a video-on-demand service bought by Tesco in 2011. Set to challenge the likes of Netflix and iTunes, Blinkbox is Tesco’s attempt to move into the digital download market, a sector that’s growing by 17 per cent annually.

Although the digital download marketplace is certainly crowded, retailers like Tesco have the distinct advantage of a customer-base of millions, the majority of which are signed up to loyalty schemes with a whole range of built-in incentives.

If both iTunes and Tesco are offering customers the latest episode of Game of Thrones for the same price, then the added bonus of money off your next groceries shop might prove a deal breaker.

The move is part of a wider scheme by Tesco to reinvigorate its business, after annual profits fell for the first time in decades this April. The retailer recently unveiled a new-look ‘hypermarket’ in Watford: part of a new breed of ‘destination supermarkets’ that are trying to recapture the customers lost to online shopping.

Watford’s store includes the first Giraffe restaurant opened inside a Tesco (a family-friendly chain bought by the retailer in March for £49m) as well as a nail salon, an artisan bakery and an outlet of Harris + Hoole, a coffee chain boasting professional baristas.

No further details about the Tesco tablet have been released, and Tesco have declined to comment on the reports which appeared in The Sunday Times. Analysts say that the retailers could either re-brand existing devices or create their own operating and ecosystem, like Amazon.

“Releasing a tablet linked to its own digital download service, Blinkbox, is a smart move by Tesco," said Fiona Keenan, consumer insight director at Kantar Worldpanel. "Tablet owners are incredibly loyal to the download store they are first linked to – 92% of Apple customers that download digital video do so via iTunes and Google has also been successful in attracting its tablet users to the Google Play store. While this level of loyalty will be challenging to achieve, Tesco is in a good place to profit from both initial hardware sales and the long-term boost to its digital services.”