Tesco''s One-stop Strategy

Tesco''s One-stop Strategy

Copyright 2004, Traffic World, Inc.

A growing number of grocery chains pressing a one-stop shop for their customers are asking logistics providers to provide them the same thing.

The strategy of selling everything from afghans to zucchini has distribution specialists reevaluating supply chains and reconfiguring warehousing and delivery operations to handle goods that have widely varied handling needs except one - to get to a single point in time to reach the widest possible group of retail customers.

Britain''s Tibbett & Britten Group is handling the challenge for Tesco, the United Kingdom''s largest grocer and the latest advocate of a strategy popularized by Wal-Mart to bring a customers anything they want under a single roof.

Tesco is adding nonfood products to its stock - in particular, clothing - and is expanding its logistics and distribution operations, adding 630,000 square feet of specialized storage space through Tibbett & Britten, including a new 310,000 square foot "hard lines" distribution center that will handle items such as cookware, electrical products, stationery, photographic accessories and toys beginning in August.

The company revamped its supply chain to accommodate the growth, adding not only new distribution facilities but also new supplier relationships and dedicated staff in stores.

"Tesco has very aggressive growth plans, particularly in nonfood," said Doug Cook, operations director of Tibbett & Britten''s clothing division. Tesco entered the clothing market in 2002 and grew very quickly last year, which was "when they came to us," he said. Tibbett & Britten is the largest clothing distributor in the United Kingdom.

Late last July Tibbett & Britten opened its first clothing warehouse for Tesco near its "hard lines" distribution center. About five weeks ago Tesco added another 90,000 square feet of clothing space for boxed clothing and in July will add about 200,000 square feet of space for hanging clothing through Tibbett & Britten.

Tesco''s nonfood expansion plans are global. About 50 percent of the floor space in its Central European and Asian "hypermarkets" is dedicated to nonfood products, the company said.

"There''s a better return per square foot on selling nonfood products rather than selling another sliced ham," said Cook. "Tesco has its own jeans line at (approximately $7) a pair. They are changing shopping habits because they are so cheap." Plus, "the footfall, the number of people going through the store is enormous," he said.

Tesco''s profits were up by 22 percent for 2004 and group sales were up by 18.7 percent. Profits for the 53 weeks ended Feb. 28, 2004 were $1.97 billion, up from $1.7 billion a year ago. Net sales were $55.66 billion, up from $46.96 billion a year ago.