Tesco plots new online shopping focus as customer habits change and 15,000 stores close

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The company has seen high demand over the past year after it remained open during lockdown due to its status as an “essential retailer”. During the same period, and in response to the “unprecedented increase in customer demand for online groceries”, Tesco doubled online capacity to 1.5 million slots per week. It opened an automated picking warehouse, dubbed an “urban fulfilment centre” – as UK online sales surged 77 percent, and yesterday announced plans to open five more within the next year.

It came as the grocer updated shareholders on growth plans as it showed how sales topped £54billion – up 7.1 percent – in the year to February.

However, pre-tax profits slumped from £1billion to £825million amid mounting Covid-related costs.

In a statement, the company said: “These urban fulfilment centres will enable us to provide access to more delivery slots for customers with an increased rate of picking – a scalable, efficient option to fulfil ongoing online demand.”

But Ken Murphy, the company’s CEO, reiterated that stores “will continue to be the backbone of our business”.

The company will likely expect to start seeing changes to shopping habits again after Prime Minister Boris Johnson eased lockdown restriction on April 12.

While essential retailers enjoyed a boom during the lockdown, it was still doom and gloom for UK retail as a whole. 

According to the ONS, total UK retail sales volumes in 2020 fell by 1.9 percent compared with 2019, marking the largest annual fall on record.

The British Retail Consortium (BRC) chief executive Helen Dickinson labelled 2020 as the “worst year on record” for retail sales growth.

And Centre for Retail Research director Professor Joshua Bamfield said there were around 14,809 permanent retail store closures in the UK between March 2020 and February 2021. 

These are said to have resulted in more than 180,000 job losses.

According to research by PricewaterhouseCoopers (PwC) and the Local Data Company, 17,532 chain stores closed down over the last 12 months, while only 7,655 opened up.

The likes of Marks and Spencer and John Lewis have announced radical strategies to try and turn their businesses around, but other retailers like Debenhams, Oasis and Warehouse, and Sir Philip Green’s Arcadia Group have all disappeared from the high street.

Experts say their demise cannot solely be blamed on the pandemic as they have been struggling for some time.

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Despite this, a wave of other retailers have followed suit.

H&M is set to close 250 stores globally this year, Thorntons is shutting down all of its standalone shops to focus on its e-commerce operations and ASOS has snapped Topshop, Topman and Miss Selfridge to sell online.

BRC business and regulation director Tom Ironside told Retail Gazette: “It has been an extremely challenging year for retail, and with several large retailers very sadly no longer in business, this is evidence of the extremely tough trading environment.

“Enforced closures during lockdowns have cost stores over £22billion in lost sales, and footfall has remained significantly down throughout the past year.”

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