Tesco reveals digital transformation plans

Tesco revealed plans for automated delivery services and e-commerce growth today, as part of its Capital Markets Day.

A wide-ranging presentation hinted at the launch of dedicated Tesco Finest stores, over 100 additional One Stop convenience shops, a shift towards more plant-based ready meals, and growth of its Booker wholesale operation.

Utilising technology was crucial to improving customer service, lowering the cost base and improving cash position, with details given on potentially expanding partnerships with Takeoff Technologies and Starship Technologies.

The supermarket group stated it would grow the distribution capacity of its e-commerce arm by 35 per cent, supported by developing a collaboration with urban fulfilment centre provider Takeoff, reducing customers’ last-mile delivery and assembly costs.

Meanwhile, delivery robot company Starship - which Tesco has already been working with to trial automated urban delivery services - was also referenced as a potential partner of the future.

It comes as the UK’s leading grocery brands race to provide same-day and top-up delivery services, with Co-op also trialling a similar robot delivery service at its Milton Keynes store last year, which is due to expand to a second trial in nearby Emerson’s Valley.

Analysts were told about ways that Tesco could grow its online business through changing processes. In addition to in-store picking and fulfilment centres, it was suggested that storage at the back of Tesco stores could be better utilised for online orders.

It also suggested the addition of bikes, use of drop-off lockers, and “crowd delivery” could help enhance delivery productivity by 15 per cent.

Tesco estimated an opportunity to drive £68 million in cash handling savings by migrating more of its in-store transactions to digital, via a consumer’s own mobile device or self-service machines that favour cards. These payments innovations would be made “in line with customer demand”.

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