Groceryshop’s Post

Groceryshop & Shoptalk Exclusive: Tesco is one of the global pioneers of grocery ecommerce, its UK ecommerce business alone now generating turnover of nearly £6bn a year. And Today, Tesco has announced the creation of Transcend Retail Solutions, a new business unit to sell fulfilment solutions and consulting to other retailers. The first customer is Foodstuffs North Island Limited New Zealand, now operating stores with the Transcend manual pick solution. To understand this further, the Groceryshop team spent the day in Cambridge, England, at Tesco’s Bar Hill Extra store. Huge thanks again to Keith Chapman and Tom Williams for showing us around. This store has recently been “right sized”, with 20k sq.ft. sales area of the 105k sq.ft. repurposed to house one of Tesco’s nine UK micro-fulfilment centres (MFC). Most Tesco ecommerce orders are manually store picked from open stores. It operates centralised ecommerce warehouses (“dark stores”) around London, however store pick has been identified as the most profitable route, until sales densities reach a suitable level for an MFC. The Bar Hill MFC was installed once it reached sufficient demand to utilize the automation; manual store pick continues across the rest of the store to manage continued growth in demand. Our three key learnings from our day in-store with Tesco were: * People, processes and technology integration is key. Good automation is really important, yet only really delivers when all comes together. At Tesco a single store manager owns the full store, public-facing and MFC. They obsess over the end-to-end process & integrated its into the store, from having one single goods-in door for all deliveries, to grocery knowledge. Ecommerce systems are fully integrated into the store systems and tech stack. * MFC’s aren’t the one silver bullet, and only justify the CapEx once order density is sufficient. Primary focus must be on optimizing manual store pick models and systems. Tesco’s ecommerce operation & picking algorithm has been continuously developed for 25+ years, and since adopting this technology, Foodstuffs are recording pick rate increases of 70%. Network mapping is key to understand the tipping point where MFC’s deliver the required ROI. * Working with store teams and supporting a mindset change, from thinking as retailers to thinking as efficient fulfillers is critical, and often underestimated. Engaging and supporting this process, with appropriate tools and incentives, is critical to success. Against a backdrop of mixed news from the micro-fulfilment sector of late, seeing Tesco’s clarity that, when done right, MFC’s are working, was exciting. We’re looking forward to exploring all this in more detail at Groceryshop next month in Las Vegas (7th to 9th October). Dr. Oliver Vogt, who has led the development of Transcend at Tesco, be joining us on stage, as will Lindsay Rowles, General Manager Retail at Foodstuffs NZ. See you then.