TESCO Ireland is to consolidate its distribution system with an investment of up to £30 million, which it says will create 500 new jobs.
However, the move will mean a loss of business for many independent distributors which currently supply its stores.
The company is to open two new distribution centres which, along with its existing centre in Tallaght, Dublin, will supply all Tesco stores in the Republic.
At present the majority of Tesco's goods are brought to its stores by suppliers themselves or independent distributors.
The decision by Tesco to consolidate its system will have a serious impact on some independent distributors.
The company yesterday invited tenders from distributors throughout the Republic to operate the two new centres.
Both will be multi-million pound contracts and it will take several months before the two successful companies are selected.
A potential operator of one centre is Irish company Allegro, which has significant space available at a large warehouse in the Sandyford Industrial Estate, in south County Dublin.
Tesco's 200,000 sq ft warehouse in Tallaght will be expanded and modernised as part of the consolidation process.
An investment of £3 million will be made in it and the company envisages that, in a few years, some 80 per cent of its grocery products will be distributed from there.
It is likely to be served by a combination of Tesco's own truck fleet and some contracted hauliers.
The company will supplement the Tallaght operation with a second centre catering for non-food and "slow-moving" grocery products.
The third centre will be for chilled, frozen and fresh products and will not be operational until the middle of 2000. It will account for the majority of the new investment and jobs. It probably will involve acquiring a greenfield site.
Tesco has already centralised its fruit and vegetable supplies through a link-up with Irish company Keelings.
Alongside the changes in distribution, the company is to implement a new automated ordering system in all stores. It will mean that as goods pass through checkouts a computerised system will record this and new supplies can be ordered straight away.
Tesco in Britain consolidated its distribution system some years ago and the company has been implementing a similar system in Northern Ireland for some time.
Mr Michael Campbell, director-general of the independent grocers' group, RGDATA, last night attacked the move and said it meant that distributors involved with Tesco would lose 25 per cent of their business.
"This will mean job losses and it shows the company is importing the business methods it has used for so long in Britain."
He added that huge numbers of hauliers and independent operators would "now be cut out of the action".
The company has stated previously that moving to such a system would have an impact on employment among hauliers and distributors.
However, the company says the reduction in local store deliveries may be offset by the increased distances to the new centres.
The main advantage for Tesco in consolidating its distribution centre is a reduction in costs as fewer delivery staff will be needed and they can be diverted to other activities within the company. It also says there will be better availability of products in stores as a result of the new system.
