Tesco enjoys online sales surge that boosts group revenues in Q1

Tesco has experienced significant online sales growth in Q1 that is predicted to add £2 billion of sales to the channel this year and which has driven strong overall group results.

As Tesco reported its Q1 results (for the 13 weeks to 30 May) showing UK and Republic of Ireland like-for-like sales up 8% to £12.2 billion, the company revealed UK online turnover has jumped 48.5%. This included an almost 100% growth rate by the end of May.

This level of demand required Tesco to double its capacity and it is now fulfilling 1.3 million online orders per week. This has pushed the online grocery business to account for 16% of UK sales in Q1 compared with around 9% before Covid-19.

Dave Lewis, chief executive of Tesco, said: “Through a very challenging period for everyone, Tesco colleagues have gone above and beyond, and I’m extremely proud of what they’ve achieved. In just five weeks, we doubled our online capacity to help support our most vulnerable customers and transformed our stores with extensive social distancing measures so that everyone who was able to shop in store could do so safely. The costs of doing this have been significant and only partly offset by business rates relief and increased volume. We see the balance as an investment in supporting our customers at a time when they need it most.”

At the present rate of growth the online operation will grow into a £5.5 billion business in the current financial year compared with £3.3 billion previously. To help the company handle the ongoing growth of the channel it has confirmed it will complete the first of a planned 25 urban micro-fulfilment centres in June.