Tesco sets sights on Ocado by offering its store pick technology to international grocery businesses

Transcend Retail Solutions, a Tesco subsidiary led by its Strategy Director Oliver Vogt, is providing the UK supermarket giant’s software and hardware to international grocers, leveraging its vast experience in this space to enable them to fulfil online orders from their own stores.

According to The Sunday Times, a first deal has been signed with New Zealand’s biggest grocery retailer, Foodstuffs North Island, and talks are being held with other companies.

Tesco currently handles more than a million online orders a week, 85% of which are picked from its supermarkets.

“Our solutions are tried and tested,” Vogt told The Sunday Times. “We set up Transcend because we truly believe we have something to offer the market.”

Foodstuffs is tapping Tesco’s cloud-based picking software, which receives online orders and then maps, on handheld devices, the most efficient route for staff to pick the items from supermarket shelves.

The technology is live in two stores, operating under the PAK’nSAVE and New World brands, and plans are afoot to expand the roll-out across 150 locations. Transcend will also be able to deploy micro fulfilment centres inside retailers’ stores.

Tesco’s new venture sees it square up to UK rival Ocado, whose Ocado Solutions spin off offers smart e-commerce technology to global retailers.

If there is one big lesson to learn from the rise and fall of quick commerce, with the likes of Getir struggling to stay afloat in 2024, it’s that offering a tiny range at a big premium, with varying levels of reliability is not a recipe for success.

So said Gregor Ulitzka, President Europe at Ocado Solutions, during June..

In a LinkedIn post, he said: “Great to be back in Germany and join colleagues from across the industry at K5 - Future Retail, where I discussed with Sven Rittau the key innovation levers that are needed to make e-grocery successful “

Ocado Group, he noted, is partnered with 13 grocers worldwide, covering the most mature markets for e-commerce.

Key here is convenience and reliability: “You’ve got to meet customers on their terms, not yours,” Ulitzka said.

“The goal is to generate positive, sustainable economics without forcing customers to compromise on the quality of service they want. This means getting orders when customers want (flexible lead times), how they want (no subs, on-time).”

Also, the wider the range, the more loyal the customer, and the bigger the basket. “While different countries (particularly in Europe) see quite a lot of variance in the typical supermarket range offline, the global learning for online is clear.”

Companies must also be competitive on price: “Online has to be a mass market offering in grocery, not a niche premium. This means pricing competitively with a store business, and keeping delivery charges low,” Ulitzka concluded.

2024 RTIH INNOVATION AWARDS

Grocery retail is a key focus area for the sixth edition of the RTIH Innovation Awards, which is now open for entries.

The awards, sponsored by CADS, 3D Cloud, Retail Technology Show 2025, and Business France, celebrate

global tech innovation in a fast moving omnichannel world.

It’s free to enter and you can do so across multiple categories.

Key 2024 dates

Friday, 25th October: Award entry deadline 

Tuesday, 29th October: 2024 shortlist revealed

30th October-6th November: Judging days

Thursday, 21st November: Winners announced at the 2024 RTIH Innovation Awards ceremony, to be held at RIBA’s 66 Portland Place HQ in Central London.