Friday 24 February 2012

Tesco Dark Stores – a boost to their reality-store business?

With 48% share of the UK online grocery market, Tesco’s critical mass allows it to increase efficiencies via a pivotal distribution centre just opened in North London.   
The 115,000 square foot facility in Enfield is not only Tesco's fourth so-called customer-free "dark store", but is also its most automated to date, which enables staff to pick twice as many products an hour as the existing three virtual stores.
The latest site in Enfield provides a much higher level of automation, with conveyor belts dispatching trays to pickers, who have handheld devices strapped to their arms, to fulfil orders from 178 stations. In the other dark stores, pickers move around with a trolley.
Full assortment
Another difference is that the Enfield facility delivers all of Tesco's 26,000 groceries, as well as a full range of prepared foods, such as sliced cheese and meat, from its deli counters.
Less well-known is that the dark stores, such as the one at Enfield, also help to increase sales in the big stores in surrounding areas, as customers prefer less staff picking in the aisles.
Issues for suppliers?
However the new 'dark stores' raise a couple of issues for suppliers:
1. POS (Tesco spokesman: '…not the same point-of-sale advertising…' This means there could be some other form of product-prompts in the aisle, (in cases of Out-Of-Stocks?) and how might it differ from normal store POS? One idea might be to colour code shelf-edge price labels to reflect (darkness permitting!) gross margin or favoured suppliers…?
2. Role of Brand: if the brand is meant to attract the customer into the store, there to be confronted by the private label equivalent (better/cheaper than brand) and the possibility of a switch-sale, the supplier's use of shopper-marketing in the aisle can help to reduce the odds on losing a sale to a private label. The dark-store environment removes that facility…
This suggests that suppliers need to find a way of opening a 'dark-store dialogue' with Tesco in order to attempt to maintain the status quo as the business shifts online... 
This means gathering evidence via store visits.
One way might be to sneak into the store under cover of darkness?

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