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Four years ago Dave Lewis, the head of Tesco, conducted a “doomsday” management exercise in which the UK’s largest supermarket chain imagined its headquarters in Welwyn Garden City would have to shut down entirely. .
“At the time, people said it was kind of ridiculous and extreme,” says Lewis.
As a result, it wasn’t extreme at all, and now it looks remarkably prophetic.
Fewer than 30 people have worked at the vast supermarket chain campus in Hertfordshire, which generally houses about 6,500 workers, in the past six weeks. Lewis is one of them, appearing frequently from his nearby apartment.
Thanks to an informed plan for that end of the world exercise, Tesco already had the kit in place to work remotely. Some teams have been using Zoom calls to gather hundreds of employees for about two years.
In January, Tesco’s first concerns about the coronavirus focused on ensuring that its non-food ranges were not affected by the impact of the outbreak in China. But by the end of that month, the supermarket had spotted big potential problems looming, and it had a crisis response group in place that held daily meetings.
As the UK government hesitated to implement a national blockade, Tesco’s chief executive signed the retailer’s plan to help feed the nation in mid-February.
Lewis, 55, who will leave the retailer in October after six years on the job, says Tesco has “fundamentally changed” how it works. The most visible change is in stores, with one-way systems, physically distant queues, and staff protection kit.
Lewis says the industry has now bounced back from the shock when the panic buy occurred and buyers loaded the equivalent of Christmas trading day into their baskets for five days in a row.
“Our biggest day of the year is normally December 23rd. We know when that is and we have the whole year to plan it, “says Lewis.” Without warning, we had five days at that level and no chance to plan. In certain categories, we sold for seven weeks in five or six days.
“That rate of demand is incredible. The entire industry emptied the front of the supply chain and then we had to bounce back. ”
Lewis says it has been a privilege working with teams that have shown great spirit in difficult store conditions and quickly adapted to the change. “We have seen difficult things, but also humanity and acts of kindness that I do not think I have seen before. It has been enormously humiliating,” he adds.
Lewis says the shortage has disappeared in all but a few categories, like flour, but the way people shop has changed dramatically.
The big weekend shopping trip has disappeared in favor of a steady stream of shoppers throughout the week. Instead of visiting an average of three or four different stores to recharge their refrigerator, shoppers rarely visit more than one and have returned to a large weekly inventory any day of the week.
The retailer hired an additional 47,000 employees in a matter of days to help cope with the lawsuit, though at least 7,000 of them have already been retired, in part because regular staff has returned.
There may be fewer visitors to stores, but sales are still strong, according to Lewis. “Last week’s transactions fell 48%, but the size of our basket more than doubled. People go back to buying once a week. “
But perhaps the most dramatic change has been in grocery shopping. Tesco has nearly doubled click-and-pick delivery and pick-up capacity in just six weeks as demand has skyrocketed, especially from vulnerable and ill buyers.
The retailer has reached its goal of offering 1.2 million slot machines per week, and Lewis says he now aims to offer 1.5 million for the foreseeable future.
Unlike online specialist Ocado, which uses robot-controlled warehouses to collect food, 90% of Tesco’s home deliveries are hand-picked in stores. That has given him the flexibility to expand into approximately two Ocado-sized businesses in just six weeks.
To meet that demand, the first big change was to change the opening hours of the 350 stores where you select purchase orders from home, from 24-hour trade to daylight hours, so that more orders can be picked up during the night.
The company hired 12,000 new collectors and 4,000 additional drivers. It added an additional 400 trucks, and the emergency changes to regulations allowed truck drivers to work longer shifts.
Refrigerated trucks were parked in Tesco parking lots so shoppers could order online and then pick up their purchases in their own vehicle.
Lewis says they are breaking records, but still not meeting demand: “Last week we collected more than 10 million items. [for online orders] in one day for the first time We don’t think there is a business anywhere in the world that places 1 million food orders a week like we do, but there are still people out there with no delivery space. “
The 1.5 million target will be met in part by expanding click & collect, with 15 more sites opening this week.
Improvements in computer algorithms, which drive sorting technology, and the growing experience of new hired collectors to cope with increasing demand will also help.
Tesco has another weapon in its arsenal. Before closing, the retailer was just three weeks away from completing the construction of its first robot-powered mini-distribution center in the back of a store, in association with robotic supermarket specialist Takeoff. Once construction is allowed to restart, that facility could quickly help deliver ordered food online more quickly and efficiently.
The coronavirus is expected to continue causing store disruptions until at least the end of the year, and no one knows if shoppers will continue to be so keen on buying from home once, hopefully Covid-19 becomes a distant memory.
“We don’t know,” says Lewis, but choosing in stores means they can “flex up and down” and “keep up with demand,” says Lewis.
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He says the ability to increase capacity has helped Tesco respond to the government’s call to bring food to the 400,000 people it had identified as extremely vulnerable to the virus, such as cancer patients and those without regular support.
But Lewis doesn’t have enough delivery slots, and there never will be. “There is more demand, but we cannot satisfy it.
“Even if capacity is tripled across the industry, which is a very difficult thing to do in no time, there will still be 80% of the market that needs to visit a store. That is why we need to make shopping environments as secure as possible. “
