Technology helps Tesco beat crunch

IT systems have played a key role in helping Tesco deliver strong profits.

The Tesco website, in which it has invested heavily in during recent years, saw profits leap by 21 per cent to £48 million, on the back of an almost equal percentage sales rise. Online grocery orders lifted by 10 per cent to £7.5 million.

Praising the success of its web sales operation, Tesco said it will open a second “dot.com only” store next month, in Kent, which will solely exist to pick online orders. This follows the success of its Croydon online store, which serves much of south-east London and is now trading at over £1 million per week.

Tesco overall operating profits grew 9 per cent to £1.4 billion in the six months to 23 August, on the back of £28.1 billion revenues. It said its broad base of items on sale, as well as its extensive geographic reach, had kept profits strong.

Advanced in-store queuing systems had improved shopping for 26 million of its customers by reducing checkout lines, Tesco said. The supermarket chain is using heat-sensing technology to monitor lines at tills.

It also said improved scanners, better self service tills, and checkout cameras were helping it reduce queues. Self-service checkouts now account for a fifth of all of Tesco transactions.

Having invested heavily in its supply chain, Tesco said on-shelf availability, measured through the in-store picking of tesco.com orders, had also been strengthened.

Tesco has an ongoing efficiency programme, known as Step Change and involving IT improvements as well as general process efficiencies. The programme is on course to deliver savings of £450 million this year, Tesco said.

The supermarket has already taken steps to ready its technology for the Christmas sales peak, implementing ExpeTune performance management software from Macro 4 to manage its mainframe servers.

The supermarket giant has 3,000 staff working at its offshore site in India, providing IT and administrative support around the world, including the recently launched US operation Fresh n’ Easy. The Indian site provides software development, as well as accounting and payroll services.

Tesco also has a long running application development deal with Steria-owned outsourcer Xansa, targeted at ensuring its systems are up to date and in line with business needs.

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