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Tesco Partners with Brands to Grow Online

Tesco online
Photo: Tesco
LZ Retailytics estimates Tesco's share of the UK online market at more than 40%. This represents strong and valuable growth potential for branded manufacturers.

Tesco is partnering with its suppliers more closely to drive growth through the online channel. Through collaboration with the online teams from leading suppliers the retailer says it has been able to identify new test and learn initiatives and jointly find ways to increase basket size, Tesco’s Head of Online Business Services Propositions Samantha Hogarth told attendees at My Digital Shelf’s Online Grocery Summit in London.

This year the UK’s online leader plans to introduce a new responsive website to support its 5 million weekly online customers. The new site will have an improved search engine to help shoppers find items more quickly and easily. Tesco is also leveraging online to test the impact of range extensions for customers whose orders are delivered from its darkstores – starting with just one category for now. This is part of a broader drive to increase operational efficiency by increasing the average online order value. To support this, suppliers are delivering the large or bulky items to Tesco’s CFC just prior to delivery.

All of these initiatives are looking to drive growth in the channel, following a slower year for online in 2016 according to LZ Retailytics figures. Tesco has also stepped up its services to shoppers in recent weeks and months, offering same day click & collect from 130 stores and introducing monthly delivery saver plans, which were previously only available to purchase for three, six or twelve-months. 


A Channel-Focused Approach

In line with changing shopper habits, the UK online grocery market continues to provide much-needed growth for the UK’s Big Four grocery retailers. However, the days of guaranteed double-digit increases appear to be a thing of the past. Now we are seeing a trend for retailers to address the channel more thoughtfully, partnering with suppliers to drive volume growth as well as finding more cost-effective ways to serve this channel.

Partnerships with suppliers have been used as a lever for online growth by some retailers for a while now, but it is encouraging to see the UK’s largest online grocer, with around 40% market share according to LZ Retailytics, embracing this as a priority. The benefits of these type of initiatives are clear, and particularly when they involve the market leader. Online range extensions, bundles and exclusives such as free samples are among the ways in which retailers and suppliers can work together uniquely in this channel, to the advantage of both. Other presentations at the My Digital Shelf event highlighted how suppliers are working with other retailers including Morrisons, Sainsbury’s and Ocado in a similar way.

Beyond e-commerce, Tesco also highlighted the importance of its website in the omnichannel shopping journey, revealing that it continues to see an increasing number of ROPO (research online purchase offline) shoppers. Clubcard data is helping Tesco to track this trend as well as to serve personalised media content, working with its Berlin-based subsidiary Sociomantic. 

Topics: Tesco