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Tesco's E-Spree: Britain's biggest retailer buys digital books company

By Jill Martin Wrenn, for CNN
September 5, 2012 -- Updated 0625 GMT (1425 HKT)
The deal will give retail giant Tesco access to Mobcast's more than 100,000 titles and counting.
The deal will give retail giant Tesco access to Mobcast's more than 100,000 titles and counting.
  • UK grocery giant Tesco is buying Mobcast e-books company for $7.15 million
  • Tesco will allow consumers to buy and read books on an array of devices
  • Experts: Expanding digital portfolio will allow Tesco to enhance its consumer data

(CNN) -- The latest chapter in British retail has grocery giant Tesco betting on e-books: it's buying Mobcast, a company that brings books to wireless devices.

The deal, worth about $7.15 million (£4.5 million), is small for Tesco, which is one of the biggest food retailers in the world.

But it's still significant: it marks the next page in Britain's digital transformation.

When he co-founded Mobcast five years ago, Tony Lynch, the company's CEO, says books weren't represented on wireless devices beyond offerings from online retailer "It was a very valuable hole in the market," he says.

Now, with Mobcast's more than 100,000 titles and counting, Tesco will allow consumers to buy and read books on an array of devices, from smartphones to e-readers.

And it also marks another avenue for the retailer to find out more about its customers - information Tesco can use to fine tune its targeted ads and, ultimately, sell more products.

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"Arguably, Tesco has the best data in the world on its customers," says Michael Comish, CEO of Tesco Digital Entertainment.

He points to a robust retail loyalty program that helps the company keep track of customers' shopping habits. "They (Tesco) have extensive data about purchase behavior and information about the customers."

Experts say that expanding its digital portfolio will allow Tesco to enhance that consumer data for years to come.

"Getting into the electronic purchase cycle of a family, whether it's for books or something else, gets you in much more regular touch with them than if they were just buying a physical product," says Sree Sreenivasan, Chief Digital Officer of Columbia University.

"This makes sense to have a whole digital portfolio."

Comish came to Tesco by way of Blinkbox, another digital player in the Tesco empire. The retailer bought the video-on-demand provider last year. "Part of Tesco's strategy is to acquire talent," he says.

Tesco also bought the Internet radio service radio service WE7 earlier this year.

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