As is the case for many grocery retailers, Tesco’s ecommerce operations have changed dramatically in the past two years. To understand just how significantly, however, we need to rewind a little and head back to pre-Covid times.
Back then, our online grocery business looked something like this: we were serving customers from around 350 large stores, picking and delivering across the country; we had six fulfilment centres surrounding the M25, designed predominantly to serve people in Central and Greater London; and we had a fleet of around 4,000 delivery vans, in addition to a well-developed Click+Collect business.
This infrastructure allowed us to process an average of 650,000 orders each week, making us both the largest online grocer in the UK, and one of the largest in the world.
This was the position we were in when, in March 2020, we started to see the impact of the pandemic. Immediately, the business set out four priorities: to provide food for all, safety for everyone, support for colleagues and support for communities. Our online team were vital to delivering these priorities and we held urgent discussions about how we could best respond to safely manage the huge increase in demand for online shopping, while also mitigating panic buying and prioritising those who needed to shield at home.
Naturally, this got us thinking about our own response, and how we could continue to serve customers as best as we could as the situation continued to unfold. Very quickly, this led us to two clear objectives – help as many households as possible, and prioritise people in a position of vulnerability, providing them with access to food where they weren’t able to get help from others.
In service of those objectives, we also set ourselves an ambitious overarching goal: to increase the number of online orders served from 650,000 per week to 1 million, essentially growing our already pronounced capacity by one third.
Assembling a team from across the Tesco business, including representatives from our online, fulfilment, technology, customer, and product teams, we put almost all of our other projects on hold and zeroed in on these new priorities. Daily meetings with our executive committee helped to keep us accountable, and focused on genuine progress.
Counting the changes
Over the course of the next two to three months, we made around 100 substantial changes across our online business. While there are obviously too many to recount here, four initiatives in particular proved to be particularly effective.
- We hired around 16,000 temporary workers to help us serve online customers specifically. With some colleagues needing to shield and others becoming ill, this helped us to cover absences and increased demand alike. I’m happy to say that those roles have now become permanent positions.
- We also completely rethought our picking process, starting much earlier in the morning – sometimes as early as 2am. This, in tandem with new operating hours that saw us delivering from early in the morning through ‘til midnight, allowed us to serve a greater number of customers than ever before.
- We opened a number of new Click+Collect sites, both across our own estate and a number of third-party locations. We also built two new sites dedicated to serving the NHS Nightingale hospitals, and introduced a programme specifically for NHS workers.
- Working with other supermarkets, DEFRA, and the governments of Scotland, Wales, and Northern Ireland, we were able to develop a vulnerable customer programme. This enabled us to make changes within our online platform and prioritise those people for delivery.
Alongside a number of other projects, these changes enabled us to increase our online order capacity to 1.6m per week and provide almost 900,000 vulnerable customers with priority access to home delivery services. This was the equivalent of adding as much capacity as our closest competitor had in total.
Lessons learned and future plans
While we’re delighted with the way that we were able to adapt from the demands of the pandemic, we also learned a few lessons that Tesco continues to benefit from today.
These range from the importance of having a “single-threaded leader” – one person who is completely focused and serves as the ultimate decision-maker – through to the value of setting audacious goals. Initially, we thought that scaling up to 1m deliveries per week would be an incredibly challenging task. It was, but we did it and even went beyond, and being ambitious played a big role in keeping us driving forwards.
All of this brings us to today, and indeed tomorrow. We’re building further on the new foundations that we established during the peak of the pandemic, and constantly thinking about how to do things better for our customers.
We see numerous opportunities to do that. From an efficiency perspective, for instance, we’ve put a lot of work into our fulfilment centre strategy. Part of that revolves around greater automation, with smart picking towers that allow us to further increase our capacity. But there are also logistical considerations, such as the opportunity to ensure that innovations like this are distributed rather than centralised, helping to fulfil new expectations around the speed of delivery.
That subject itself is likely to be one of the defining factors in online grocery over the next few years. Immediacy is quickly becoming a fundamental part of what shoppers want from online grocery, something that we acknowledged with the launch of our Whoosh service in May last year – a service that offers rapid delivery from hundreds of Tesco convenience stores.
As that trend gathers place, I believe that – thanks to our commitment to responding in a shopper-centric way to the events of the past two years – Tesco has never been better equipped to move as our customers need us to.
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