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Tesco plans first checkout-free stores and sees normal shopping patterns return
18 June 2021, 09:54
The supermarket enjoyed a boost in sales in the UK, driven in part by a strong recovery in its wholesale division, Booker.
Tesco is set to launch its first checkout-free store following a successful trial for staff at its head office over the past year.
Chief executive Ken Murphy said plans are in the early stages but he is hopeful it can match the appeal of similar scan-and-go stores being rolled out by Amazon in the UK.
He said: “We have a system installed in our Express store in Welwyn Garden City (at head office), and we’ll extend that to another store in the coming weeks and months to check it in a more urban environment.
“It’s been opened about a year now, and it’s working really well… One of the joys of machine learning is it is continuously improving, so we’re feeling confident that we can put it into another store with a higher traffic.”
The news comes as Tesco revealed sales managed to stay in positive territory in the 13 weeks to May 29 compared with a year ago, despite the same period in 2020 being during the height of the first lockdown when supermarket shelves were stripped bare.
Mr Murphy also called on the UK Government to come to an agreement with the EU on the Northern Ireland Protocol to avoid potential issues facing supply chains between Northern Ireland and Britain.
Sticking with political agreements, he added he does not expect to see any changes in Tesco stores following the recent free trade deal struck between the UK and Australia, despite ministers hailing it as a boost for consumers.
He said: “We have really strong supply chain partners and most of those partners are local to us.
“They’re British suppliers or Irish suppliers and therefore we don’t really anticipate any change from our perspective.”
Some commentators had raised concerns that supermarkets would take a hit from the reopening of non-essential retailers, and with restaurants, bars and cafes welcoming back customers in the past two months.
But the Tesco boss said the pandemic boom in online shopping is continuing and demand for home cooking remains strong, with cooking and baking products up 20%.
He said: “The key changes that we’re seeing since the restrictions have been eased is a return to more normalised shopping patterns.
“We’re seeing higher frequency shopping and we’re seeing smaller basket sizes.
“We’re also seeing a shift again towards the weekend days being our peak shopping days in terms of traffic.
“There’s definitely been a shift back to eating out (but) there continues to be a strong demand for eating at home.
“As a consequence, things like beer, wine and spirits have stayed remarkably strong.”
Recent good weather and the Euro 2020 football tournament have also helped, Mr Murphy added.
There have been some shortages in stores of products, with analysts suggesting this may be due to a lack of HGV drivers.
But Mr Murphy said this is more to do with demand outstripping supply during some of the hot weather.
“We’ve already got plans in place to address the shortfall and we’re working closely with our suppliers,” he added.
Other problems facing Tesco include the ongoing negotiations between the UK and EU over checks on goods coming into Northern Ireland from Britain.
Mr Murphy said: “We’ve found a solution for the vast majority of our product range in terms of local sourcing. For me it’s just about (addressing) the ease of movement, the paperwork and the bureaucracy involved.
“I think it’s important to settle down everybody in terms of making sure that the United Kingdom can operate as a functioning country moving product across the borders with ease.
“We’re very keen to preserve the kind of harmony and the movement of products as freely as possible across those borders.
“If there’s no solution the truth is we will be able to service our business in Northern Ireland. We’ll be able to supply the vast majority of what we supply today at competitive prices.”
The comments come as sales in its UK supermarkets grew 0.5% to £10 billion in the 13 weeks to May 29 – up 9.3% on the same period two years ago before the pandemic.
Its wholesale Booker business saw the strongest growth, with sales up 9.2% to £1.77 billion driven by a 68.1% rise in its catering business.
In the Republic of Ireland, sales slumped 6.1% to £641 million and central Europe dropped 1.6% to £940 million. Total sales were up 1% to £13.4 billion in the period.
The shift to more households using online grocery services looks set to become permanent, with 1.3 million orders a week being placed.
This means online sales are now up 81.6% on pre-pandemic levels and up 22.2% on the same period last year.