Tesco closing 43 stores as part of value chain adjustment
Beleaguered UK supermarket chain Tesco has announced it will be closing 43 unprofitable stores as well as its head office in Cheshunt as part of a new value chain approach.
In a bid to turn the company’s fortunes around, Tesco senior management is hoping to save £250 million a year by restructuring overheads. This includes closing the salary pension scheme.
The large proportion of the sites shutting down will be the firm’s smaller convenience stores such as the ‘Tesco Metro’ shops, and plans to build 49 out-of-town hypermarkets have also been shelved. The company-wide shake-up comes off the back of the announcement that like-for-like sales for the 19 weeks to 3 January fell by 2.9 percent, though they were not as bad over the six-week period, with a fall of 0.3 percent, representing a better than expected Christmas.
Chief executive Dave Lewis said: “We have some very difficult changes to make. I am very conscious that the consequences of these changes are significant for all stakeholders in our business but we are facing the reality of the situation.
“Our recent performance gives us confidence that when we pull together and put the customer first we can deliver the right results.”
Tesco also confirmed that two of its businesses, Tesco Broadband and online entertainment service Blinkbox, will be sold to TalkTalk. It also announced that Matt Davies, the boss of Halfords Group, will take charge of Tesco's operations in the UK and Republic of Ireland from June.
The anticipated money saved will then go into funding the price war among the other Big Four supermarkets.
Interestingly, one of the four Tesco distribution centres in the London area has also been sold for a price of £21.1 million. As retailers continue to adopt an omni-channel approach, last mile distribution space is becoming an ever more important component of their logistics network.
It remains to be seen whether this financial and strategic restructuring will be a fruitful one for Tesco, as its market share continues to be threatened by German discounters Lidl and Aldi.
Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.