Tesco plans expansion of e-commerce capacity

Wednesday, September 26, 2012 - 14:19 by Simon Crisp

The problems facing Tesco have been widely publicised in recent months, as this major UK supermarket chain has seen a fall in profits and a drop in its market share, after years of dominance.

In order to tackle this, it was announced earlier in 2012, that the company would be slowing down the rate at which it opens new high street outlets. However, this week the company has confirmed that it will be developing a UK-wide infrastructure of shops, which are exclusively aimed at improving its ability to cater to the new breed of consumer, who prefers safe shopping online.

By 2017, it is estimated that Tesco will be taking in 5 billion annually from its e-commerce arm, which is twice what it currently makes online. The only way it can achieve this is to make it easier and cheaper for its customers to buy their groceries online, rather than heading to the store each week.

The network of so-called 'dark stores' which handle e-commerce orders is already growing, with four based in the capital and more on the way. Cities such as Birmingham and Manchester are going to be the first to get their own dark stores for shopping online, although other areas will also be added to the list further down the line.

Tesco's renewed assault on the world of e-commerce could be a problem for its smaller rivals, with Occado in particular deemed to be at risk of being eclipsed by the increased pressure placed upon it.

Tesco CEO, Philip Clarke, explained to conference goers earlier this month, that the firm's website is delivering impressive growth that will help to drive the company forwards.

Tesco has also been spending large amounts of cash to revitalise its in-store experience, although it seems that more people will be interested in what advances it makes in the online marketplace.