UK roundup: latest loyalty and supply chain initiatives plus performance updates

In this instalment, our UK analysts offer their take on some of the market’s latest initiatives and results. Here’s what you need to know about:

• Tesco begins work on new multi-million pound distribution centre

• Morrisons creates supply chain ‘twin’ to accelerate operational innovation

• Morrisons brings AI product finder to More Card app

• Lidl to introduce self-scan functionality to Lidl Plus app

• AliExpress has introduced a new hourly delivery service in the UK

• B&M UK returns to growth

• Parfetts keeps up its record of growth

Tesco begins work on new multi-million pound distribution centre 

Tesco has announced plans for a new multi-million pound distribution centre to be located at the DP World London Gateway shipping terminal. Set to open in 2029, the retailer said the investment demonstrated its commitment to ensuring its distribution network remained “fit for the future”. The site is expected to achieve an outstanding Breeam certification (Building Research Establishment Environmental Assessment Method) demonstrating the retailer’s commitment to sustainable building practices.  

Head of Supply Chain, James Rothwell’s view: This announcement brings with it a bold move into new Port-centric facilities at London Gateway. This well connected hub offers rail, sea and road connectivity presenting opportunities for a modal shift of both the retailer’s and incoming supplier goods to be transported through the Tesco network nationwide. This will help unlock key environmental savings as the retailer targets Net-Zero by 2035. 

Morrisons creates supply chain ‘twin’ to accelerate operational innovation 

Morrisons has announced its partnership with Kallikor, an AI provider for warehousing and distribution network models. Using their "Adaption" platform, Morrisons will now be able to create digital simulations of network changes without impacting the physical operation. By having a digital twin of the supply chain network, Morrisons will be able to simulate multiple scenario changes at the same time while reducing the amount of time taken to trial and implement new initiatives. 

IGD Head of Supply Chain, James Rothwell’s view: This new development will allow Morrisons to scope, test and trial minor and major optimisations without impacting their network or customers. The data provided by such modelling exercises then gives data-based outcomes on what the financial and operational benefit could be from these changes, fast-tracking internal decision making. This shows strong building blocks of a modernisation within their supply chain network and paves the way for a wider industry trend of distribution optimisation which we are seeing across the next 18 months.   

Morrisons brings AI-powered product finder to More Card app 

Morrisons has added an AI-powered product finder to its More Card app. The search function uses Google’s generative AI tool Gemini to help shoppers locate items in its stores. The retailer said the tool has been designed to work with typos, brand references and vague phrases to provide the closest product match and its location in store. Morrisons said the tool has already passed 50,000 daily searches during peak periods. 

Senior Insight Analyst, Alex Rowberry’s view: Morrisons has been investing in technology to improve product availability, installing over 200,000 AI-powered stock monitoring cameras. The hope will be the feature enhances the shopping experience by enabling a quicker shopping trip, and potentially in the future, advising on stock levels and product swaps for out of stocks. 

Lidl to introduce self-scan functionality to Lidl Plus app 

Lidl is poised to begin a roll-out of a new self-scanning feature integrated directly into the retailer’s loyalty app Lidl Plus. From September, the new feature will be tested in a friends and family trial across four stores, ahead of a phased rollout in 2026. The new feature will allow customers to scan products as they shop, track their spending and savings in real time, and complete their purchases quickly at a self-checkout terminal - all through the existing Lidl Plus app.  

Ryan McDonnell, Chief Executive Officer at Lidl GB, said “This marks a significant leap forward in our digital evolution. Integrated into Lidl Plus, it’s designed to offer customers a smarter, faster, and more flexible way to shop. We’re investing heavily in technologies that simplify everyday life, while always offering our customers different options to suit their shopping preferences. Whether customers prefer the traditional checkout, self-service or self-scanning, at Lidl, they are always in control of how they shop.”

Retail Futures Senior Partner, Bryan Roberts’ view: The fact that Lidl is emphasising choice as a key attribute of checkout solutions is a heartening thing to see as some other retailers have adopted a more extreme approach in terms of removing or decommissioning checkouts. The use of the app is obviously more capital-light way of introducing self-scan as compared to handsets, but we’ve seen only limited uptake from shoppers when this has been introduced into other retailers. Nonetheless, a smart move.  

AliExpress has introduced a new hourly delivery service in the UK.  

AliExpress, the international online retail marketplace of Alibaba, is launching the service in Greater London and offers rapid delivery of household items, food, and beverages. Shoppers can order via the AliExpress app and receive same-day delivery, with plans to expand to other UK cities. AliExpress is also welcoming local suppliers with simplified onboarding and reduced commission fees.  

IGD Insight Analyst, Stephanie Leung’s view: AliExpress’s entry into fast delivery in the UK heightens competition for local retailers, particularly in categories like home goods and electronics. Retailers will need to enhance their own delivery capabilities and customer experience to stay competitive and stand out. In my view the impact on groceries may be more limited, as shoppers tend to be more discerning about the freshness and quality of the food they purchase. This sensitivity makes them less likely to shift away from trusted grocery providers, even with faster delivery options. 

B&M UK returns to Growth

B&M's UK chain has returned to growth, ending four consecutive quarters of declining sales. For the first quarter ending 28 June, the value retailer reported a 4.7% increase in B&M UK revenues to £1.1 billion, with like-for-like sales rising by 1.3%. This turnaround was partly attributed to favourable weather boosting demand for outdoor ranges. While the FMCG category saw a decline, operational improvements led to strong performance in Health & Beauty and Cleaning, alongside growth in General Merchandise, particularly in Garden, Toys, and DIY. The company also expanded its UK presence with 18 new store openings during the period.

IGD Insight Manager, Sneha Haria’s view: While B&M's return to growth is positive, the modest like-for-like figure and market reaction highlight ongoing challenges. Share price dips reflect concerns over margin pressures from deflation and costs, and the reliance on seasonal boosts. The focus for new CEO Tjeerd Jegen will be on ensuring sustainable growth, converting new customers, and addressing profitability, particularly as the crucial 'Golden Quarter' approaches. 

Parfetts keeps up its record of growth 

North-west based wholesaler, Parfetts has revealed latest annual sales of £733m for the year to June 2025, up 5.3% on 2024, continuing a run of strong growth both during and in the aftermath of the Covid pandemic.  As well as opening additional depots in new trading areas Parfetts has also been growing its customer reach with the roll out of delivery service alongside its traditional cash & carry.  This has been key to the development of its symbol group network with almost 2,000 independent retailers now trading under the Go Local fascia.

IGD Insight Partner, Patrick Mitchell-Fox’s view: At a time when many UK wholesalers in the retail are finding growth hard to come by, Parfetts is one bucking the trend, despite the current market headwinds.  Furthermore, Parfetts looks set to maintain its momentum with the upcoming opening of its ninth depot, which located in Southampton, will offer access to a wholly new trading area for the business. 

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