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The McKinsey Quarterly, in a profile of Tesco Plc and an interview with the company’s deputy chairman, David Reid, provides analysis of the qualities that have made the retailer successful in its e-commerce operations, and projections about where it may be going:

  • In general, the company is characterized by “excellent management and an obsession with operational efficiency and productivity gains, which the company uses to keep prices low or to improve service rather than to increase its operating margins.”

  • In e-commerce, the company got in early and started small, which allowed it to take the time and make the effort to get the systems and processes right.

  • The company continues to have faith in its store-pick model, though Reid concedes that as volume builds, it is inevitable that the comp[any eventually will move to a warehouse pick system.

The magazine says notes that the company hopes to communicate its philosophy to Safeway as they work together on the e-commerce site.
KC's View:
We’ve spoken to a couple of people who have expressed skepticism about the Tesco-Safeway connection, saying that they believe that what happened to Genuardi’s when Safeway bought it could well happen to their joint online venture.

We’re not sure about that. The Tesco-Safeway business is collaboration, not an acquisition, and we suspect that Tesco wouldn’t waste its time if it felt that its contributions weren’t being respected, or its money wasted.