Tesco Express

Tesco CEO Ken Murphy has announced it is launching the second phase of its Fit for Growth range review, which will use AI-driven technology to develop location-specific ranges for its Express stores.

Murphy, who today announced a big jump in profits and like-for-like sales, credited Tesco’s growing market share to the success of its sweeping range review, which has been carried out over the past year.

More than 40 categories across its larger stores have been reset since The Grocer revealed in May last year that Tesco was launching the biggest review since Dave Lewis’s Project Reset.

Next up are nearly 2,000 Tesco Express stores across the UK, with Murphy declaring Tesco wanted to “move the game” in areas like bakeries. 

He told The Grocer Tesco planned to use a new range optimisation tool that automatically produced a bespoke product selection for stores based on location and demographic – though he admitted this would be more complicated than the huge shake-up carried out to date.

“The last categories [of Phase 1] have been completed over the last couple of weeks so we have completed the range review, 41 categories in total,” said Murphy.

“It’s been a fantastic exercise and it’s really helped in terms of our customer proposition, so we’ve been really pleased with the outcome. Suppliers have been fantastic in the way that they’ve responded to it and in fact helped us to get it right.”

Murphy said Tesco’s success had been underpinned by what he called a “material improvement” in availability, which he said had been driven in large part by the range review.

“We’ve also seen an improvement in customer experience of the shopping trip and improving scores when it comes to customers being able to get what they want and of course the most pleasing sign of the success of the reset is the fact that we’ve seen market share growth.”

Growing its market share has seen Tesco bring volume growth back to life in the second half of the year, and profit margins return to levels last seen before the pandemic.

Murphy said it was now time to push ahead with the next phase of the programme.

“Importantly we’ve only carried the range review out in our large store format and so we are moving on next to our Express business,” he said.

“We’ve been able to really move the game on in our big stores in areas like the deli counter, the fish offering, some of our bakeries innovation and now are looking to say, so what is the Express version of that?

“Bakery is a big part of where we want to move the game in Express.

“But we’ve got to need even more sophisticated AI to be able to do the reset in Express with the level of sophistication we need, because what we really want to get to is a point where we can put the right products in an individual shop to suit the local community, but we’re not quite there yet.”

The Retail Mind founder Ged Futter said Tesco’s use of AI in its ranging would have implications for Tesco buyers, suppliers and customers.

“AI is going to mean that Tesco can go much further with bespoke ranges for its Express stores than it has done before. AI will be able to do things that would have been impossible for merchandising teams in the past .

“In some cases, it may mean more basic products in ranges, in other cases less.

“I think it could be a very significant move.”

AI technology has become an increasingly important feature for supermarkets.

Last week, The Grocer revealed Morrisons was to become the first retailer to roll out AI-driven availability cameras across its entire store network.

As well as the new AI ranging tool, Tesco has started construction of a fresh food distribution centre in Aylesford, Kent, incorporating robotic automation technology.