How Tesco is unlocking its logistics network

“We now live in the unplanned-planned world,” explained Adrian Letts, MD of Tesco Online. “You don’t actually plan anything, how many of you think of booking a taxi, or do you pull your phone out of your pocket and one just appears?”

He described how consumers are taking this same attitude to their grocery shopping – they don’t want to have to think too much about it. But Tesco certainly does.

Speaking at Shop Talk Europe in Copenhagen this week, Letts said Tesco moves enough groceries every week to fill 350 olympic-sized swimming pools.

“And we sell 23 million bananas every week – we’ve got to pick them, ship them, get them to a store, and try and sell them in a reasonable time as possible – it’s a logistical feat.”

He added: “As customers demand more and demand the speed, in the world of food you need to get closer to them."

He described how lifestyle changes are adding to the challenge Tesco faces, as customers' houses get smaller, as do their fridges and freezers.

"The way that they shopped is changing. And to satisfy that you need a pretty good infrastructure to build on.”

Research from IGD claims the food and grocery market today is worth £184.5 billion, while online grocery only accounts for £10.4 billion of that figure. But the grocery research organisation predicts the online segment will grow 53.8% over the next five years to account of £16 billion. 

Earlier this year, Tesco began offering same day click & collect and nationwide delivery – if customers order before 1pm they can receive their shop by 6pm in the afternoon. The grocery giant has also started one-hour deliveries in central London.

“In Central London you are never more than a five minute walk to a Tesco,” he said. “The logistical distance is about half a mile and we believe we can do it much faster, but for now we’re stopping within an hour.”

But Letts believes the infrastructure Tesco has built can be used for more than moving bananas quickly around the country.

“What other things can we sell?” he asked, pointing to Tesco’s fashion offering and how providing in-store availability for clothing online had a dramatic impact on sales last Christmas. “How else can we use the infrastructure?”

“The logistics of moving food are incredibly difficult,” he said. “But we're unlocking that network for other things and capatalising on the relationship with our Clubcard data and predicting into a future where everything is available to our customers, so they can truly live in an unplanned-planned world.”