tesco fulfilment centre packing orders

Tesco has scaled back its plans for a network of urban fulfilment centres in the UK, despite its latest results showing online grocery sales returning to growth.

The retailer opened its sixth UFC at its Bar Hill Extra store in Cambridgeshire last week, using excess space in the store for a dedicated online picking hub that will serve 22 dotcom vans as well as click & collect.

The opening is part of a strategy launched by former CEO Dave Lewis in 2019, when he set out plans to double Tesco’s online capacity with the launch of 25 UFCs by the end of 2023.

However, whilst the Bar Hill store joins West Bromwich, Lakeside, Horwich, Bradford and Rutherglen in the line-up, Tesco said it had dropped the target in favour of a “test and learn approach”.

The Grocer understands the slowdown of online growth post-pandemic and the cost of living crisis have both been factors in the decision. 

The centres use automated technology in a separate part of large stores to enable faster picking of groceries and reduce congestion on the shop floor.

The latest launch comes after new Tesco CEO Ken Murphy last week revealed online sales were returning to growth in Q3, with sales 59% higher than pre-pandemic levels and participation among shoppers in online stabilising at around 13%.

“Our online orders remain more than 50% higher than pre-pandemic levels, and we are committed to making online shopping as easy and convenient as possible for our customers,” said Tesco online operations and fulfilment development director Rob Graham.

“We are delighted to open our sixth urban fulfilment centre at Bar Hill, which will allow us to pick orders from a dedicated space within the store and improve efficiency, giving customers a more convenient store shopping experience overall.”