Tesco's 16,000 jobs drive to reward lockdown temps

Tesco will create 16,000 new permanent jobs after lockdown led to "exceptional growth" in its online business.

The new posts will include 10,000 staff to pick customer orders from shelves and 3,000 delivery drivers.

The recruitment drive reflects the shift to online shopping, which was accelerated by lockdown.

Tesco said it expected many of the roles to go to staff who joined them on a temporary basis at the start of the pandemic.

Supermarkets scrambled to meet a surge in demand for online deliveries while the UK was in lockdown.

Tesco said online customer numbers had risen from around 600,000 at the start of the pandemic, to nearly 1.5 million.

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Before the pandemic, around 9% of Tesco's sales were online. Now, online sales amount to 16% of sales, and are expected to be worth over £5.5bn this year, the company said.

Online grocery orders now make up 16% of Tesco's sales

"The crisis has seen a dramatic increase in the size of the online grocery market in the UK," said Clive Black, retail analyst at Shore Capital.

"It does not look like, and Tesco UK does not seem to think, it is going to revert back to the pre-coronavirus levels."

Tesco UK & Ireland's chief executive Jason Tarry said: "These new roles will help us continue to meet online demand for the long term."

Tesco's announcement may sound like welcome relief from the somewhat ominous drip-drip of job cut announcements from retailers, but its real significance is to underline the shift in shopping habits from bricks-and-mortar retailing to online.

That shift benefits those with a big online presence, at the cost of the old-fashioned shops that don't.

It was already underway before the coronavirus crisis, threatening the viability of small independent retailers and defacing High Streets with boarded up shopfronts and 'To Let' signs. With lockdown, the shift accelerated dramatically, as even the remaining users of the High Street were forced to go online.

At first, online retailers like Tesco hedged their bets to meet the surge in demand for online delivery, hiring thousands of workers on temporary contracts.

However, now they're offering them permanent jobs it's clear that Tesco's executives believe much of the shift to online during the pandemic will be permanent.

Growth in the online grocery market will have made the sector more profitable, points out Mr Black.

"As the market expands, economies of scale start to come into play," he said.

There is no need to offer money-off coupons or free delivery to attract new customers in the current climate, he added.

Mr Black emphasised that the efficiency of deliveries is improved because drivers can serve customers who are closer together, and supermarkets can make better use of systems, staff and equipment: "You put all those things together and the industry goes from marginally loss-making to marginally profitable."

Tesco has already created 4,000 new permanent roles since March. The new roles are permanent and a mixture of full and part-time.

The big supermarkets have added jobs in their warehouses during the pandemic

The expansion is in contrast to other parts of the retail sector, where High Street companies have been forced to make steep job cuts following lockdown.

Most recently, Marks & Spencer said it would axe 7,000 jobs over three months, while Debenhams said it plans to cut a further 2,500 roles.

Lockdown impact on groceries

Even across the grocery sector the impact of lockdown has varied - discount chains, such as Aldi and Lidl, which were putting pressure on the bigger chains through lower prices, don't offer online services.

"The players that already had an established foothold, Tesco, Sainsbury's, Asda, all reported incredibly high growth over last months," said Thomas Brereton retail analyst for Globaldata.

"They had vast hiring drives in April. So they could send them into stores and out as delivery drivers."

While Amazon has been trying to expand its fresh food delivery, it hadn't scaled up its services enough before the pandemic hit to make the most of increased demand, Mr Brereton added, and Ocado was limited by the capacity of its large automated warehouses.

"For Tesco as they rely on store picking rather than automated I think this is something they will keep for the foreseeable future."