Tesco creates 16,000 jobs in battle to win online customers

Supermarket is creating thousands of roles in addition to 4,000 permanent jobs added since the start of the coronavirus crisis

Tesco is to create 16,000 jobs in an ambitious bid to conquer online grocery shopping as supermarkets saddle up for a new retail gold rush.

The UK’s biggest grocer will hire 3,000 delivery drivers and 10,000 pickers to put together customer orders in its stores, following a huge boom in demand after lockdown forced shoppers to buy their goods online.  The remaining jobs will be in a variety of roles at shops and distribution centres.

It opens up a major new front in the battle for the nation's food spending and will force a response from competitors seeking to cash in on what looks like a long-term change in shopping habits.

Jason Tarry, Tesco's UK boss, said: “These new roles will help us continue to meet online demand for the long term and will create permanent employment opportunities.”

British customers long resisted a move into internet grocery shopping, with most holding out even as demand for clothes and other products surged online. Many retail chiefs and analysts believed that nothing would change this attitude, but then Covid struck.

Online sales rocketed as customers stayed at home to avoid getting ill, with a host of major players running out of delivery slots weeks in advance. Internet sales now account for around 14pc of the UK grocery market, double pre-pandemic levels.

This surging demand has sparked fresh interest from the biggest grocers, which had previously been heavily focused on a battle to prevent German bricks and mortar discounters Aldi and Lidl from luring customers away with lower prices.

The race to beat rivals online has already triggered a flurry of activity, with Marks & Spencer due to launch a major tie-up with delivery firm Ocado within weeks and Amazon announcing that users of its Prime service can get their groceries shipped for free.

About 9pc of Tesco’s sales were online before the crisis, a figure that now stands at more than 16pc. The firm expects online sales to be worth more than £5.5bn this year – up from £3.3bn in 2019.

Thomas Davies, an analyst at Berenberg, said the changes wrought by coronavirus are likely to be permanent. 

He said: “Particularly as a new demographic of consumers who have done their grocery shopping online for the first time during the pandemic stay in the channel."

Tesco said the 16,000 new jobs are in addition to 4,000 permanent roles it has already created since the start of the crisis. It may hire even more staff in coming months as the online business continues to expand.

The FTSE 100-listed grocer is also considering a free delivery service of its own, as part of its Clubcard Plus loyalty scheme.

Tesco now serves around 1.5m online customers a week, up from around 600,000 at the start of the year, and is racing to keep up with demand.

Its announcement is a rare piece of good news for the retail industry, which has been plagued by tens of thousands of job losses since the crisis hit.

Tesco took on more than 45,000 temporary workers at the height of the crisis, many of whom have since left or been laid off. It expects to fill the majority of the new roles with existing temporary staff, who will be given first refusal. Remaining vacancies will then be recruited for externally.

Thomas Brereton, an analyst at GlobalData, said it was a “big move” from Tesco in shifting its workforce towards the home delivery market. 

Clive Black, an analyst at Shore Capital, added: “Within the context of a UK economy that is rebounding from the depths of the Government-enforced coronavirus lockdown, where concern about job prospects and potential unemployment remains understandably high, we deem such news to be wonderful.”

Visits to all types of shop increased by more than 4pc last week compared with the previous seven days, according to industry data from Springboard, but retail footfall is still down by 30.7pc compared with the same week in 2019.

Tesco shares rose 0.3pc to 228.3p. They were trading at 255p at the start of the year.