We seek to do this by driving growth, maximising efficiency and utilising our proprietary knowledge.

Strategic objectives

Driving growth

Growing customer numbers

Growth this big needs lots of feeding. We use a wide range of marketing channels to broaden and deepen understanding of our proposition, building loyalty amongst our existing customers, and extending our reach to potential new ones. These convert in significant numbers into engaged, frequently-shopping customers; further adding to our active customer pool.

Growing spend

We improve our range and service to encourage customers to buy more of their weekly requirements from us. This, combined with increasing customer loyalty and shopping frequency, drives the size of customer basket.

Developing the proposition to customers

Our proposition to customers is to “make shopping easy”. We do this by continually improving their shopping experience in five key areas, in some of which we are the market leaders:

  • Impeccable service and unrivalled reliability
  • Good value
  • Widest range and freshest products

Maximising efficiency

Optimising current operations

Technology and automation

We focus on several key areas to drive efficiency in our fulfilment operation:

  • Receiving, putting away and managing stock
  • Picking and organising orders
  • Loading delivery vehicles
  • Efficiently routing and delivering customers’ orders

Amongst a range of benefits, these optimisations give us perfect stock control; high productivity; the lowest inventory and product waste levels in the industry, and a smaller van fleet than would be needed to serve a comparably-sized store or dark store.

Software

We develop our software in-house so we can rapidly develop and implement solutions that improve efficiency.

NB. Naturally our proprietary technology cannot be bought ‘off the shelf’ on the open market. This protects our business and makes it very difficult to replicate.

Fulfilment assets

We operate the world’s two largest, most sophisticated single-pick grocery stores: CFC Hatfield and CFC Dordon. The latter opened (on time and on budget) in February 2013, and is capable of handling over 180,000 orders per week (equivalent to c. £1 billion of sales). Both were designed and built to handle the unique challenges that exist in picking groceries with speed, accuracy and efficiency, including:

  • Picking a basket of 50+ items
  • Picking across three different temperature zones (ambient, chilled, frozen)
  • Coordinating multiple orders to go onto a delivery vehicle in a short time window

Enhance efficiency of future capacity and drive scale benefits

Future Customer Fulfilment Centres (CFCs) – improving capital efficiency

We shall commit to further CFC capacity at the appropriate time. While the existing CFCs represent the most efficient warehouse operations of their kind, our focus is on improving capital efficiency with the objective of a more saleable and modular approach in the future. Such developments will underpin future expansion in the UK and international markets.

Non-food and spokes

We constantly plan for growth, and invest in appropriate fulfilment assets, such as our delivery spokes, and our dedicated non-food warehouse opened in January 2013.

Leveraging scale

As we grow, we can allocate administration and fixed costs more efficiently; our gross margins improve, as does the efficiency of our delivery operations.

Utilising our knowledge

As a result, we’ve developed practically all of our own processes, systems and software in-house, including:

  • Our award-winning website
  • The UK’s first fully transactional grocery mobile app
  • ‘Best-in-class’ user interfaces and applications
  • Solutions for real-time delivery route optimisation, vehicle tracking, industrial automation, robotics and many more
  • Machine-learning techniques that drive our consumer demand forecasting
  • Real-time control systems that operate our vast fulfilment centres

This has given us a market-leading platform of intellectual property and operating knowledge, which we use to improve efficiency and operations.

As with any valuable platform, there is an opportunity to apply this intellectual property to other situations and markets. In May 2013, we announced the first commercialisation of our intellectual property, and we believe that further agreements will be a significant source of value in the future.