Big Four Grocers Under The Microscope: Six ways Tesco is deploying retail technology

Tesco highlighted its future direction with two particular actions mid-way through 2018, which comprised the decision to close down its Tesco Direct business (bringing non-food onto its core eCommerce site) and to open a cashless store that included a trial of a ‘Scan and Go’ type proposition.

The first move shows it is bringing together its separate channels into one that helps it fulfil an integrated vision of the future. Meanwhile, the second demonstrates it is clearly taking note of the moves by innovators like Amazon and pro-actively reacting.

These moves indicate that this major UK grocer is undertaking its digital transformation as a combination of addressing the legacy issues in its back-end while also delivering ongoing innovations at the front-end that can plug into a more agile underlying IT infrastructure.

1. Automating online shopping

One of the more exciting areas in retail right now, according to Paul Wilkinson, former head of technology research at Tesco Labs now head of product for space, range and display, is the connected home – that links people’s consumption with their buying actions – whereby it can help the individual to make the actual purchases.

To date at Tesco this type of connectivity has manifested itself in a simple way with the initiative it has undertaken with the voice assistant Google Home and the If This Then That (IFTTT) platform. This enables shoppers to automate their online grocery shopping by adding specific items into their basket following the triggering of certain conditions, such as if the price of a certain product reaches a certain level.

By connecting physical devices to these platforms there is also the opportunity for shoppers to have say, washing capsules added to their basket when their machine has undertaken a certain number of wash cycles. “It lets customers add products to their basket in lots of different ways including using their voice on Google Home,” says Wilkinson.

Since its launch IFTTT has attracted a growing number of users and it is highly likely that there will be more use cases in the future for the platform and various connected devices around the home.

2. Mobile payments

Tesco advanced its mobile payment capabilities with the launch of Pay+ that represents an advance on its earlier PayQwiq solution. One of the major advantages is that it links directly to the Clubcard loyalty programme.

Such a move highlights the effort being made to bring the various components of the Tesco business together in order to provide a seamless experience for the customer. Customers can link multiple payment cards on the app.

Increasing numbers of customers are choosing to pay with Pay+ in Tesco stores, says Mark Loch, digital wallet and group payments strategy director at Tesco: “It delivers a simple and fast checkout experience, a transaction limit up to £250, and automatic collection of Clubcard points in a single scan at the checkout.”

3. Cashless store

Such is the level of shoppers paying for goods by card that Tesco felt compelled to trial its first cashless store – albeit in a purpose-built Express convenience at its headquarters in Welwyn Garden City.

Rolling-out this model to stores would have clear efficiency and cost benefits to Tesco but CEO, Dave Lewis, knows the risks, and potential backlash, of making such moves before all customers are ready for the leap.

Of more interest from a technology perspective at the same Welwyn store is the trial among 100 Tesco employees of a ‘Scan Pay Go’ app that enables a frictionless shopping experience. It enables them to scan their items and pay on their mobile phone thereby avoiding the need to go through a checkout process. They can simply walk out the store in the same way as do shoppers at the Amazon Go stores in the US.

Wilkinson says the move towards frictionless shopping in physical stores is an area of great excitement and opportunity.

4. Automated responses on Facebook

Customers asking the same simple queries are an extremely regular occurrence for Tesco. So much so in fact that it has automated the way it deals with such questions on its Facebook page.

Shoppers with the more frequently asked questions such as store opening times, the facilities available at specific outlets, and requests for information about product availability will find the responses they receive will have been generated automatically.

5. Spoon Guru

Tesco recognised it was hard for people with specific dietary needs to search on its website for products, according to Simon Mayhew, online retail insight manager at IGD, who says: “The Tesco website was not sophisticated enough so Tesco partnered with Spoon Guru which uses artificial intelligence and expert nutritional expertise to surface many more [relevant] products.”

Working with Spoon Guru, and its in-depth product knowledge, has involved reclassifying Tesco’s whole product range and introducing 180 proprietary dietary tags. This has provided the grocer with a much greater understanding of its range, which has enabled it to respond to customer searches much more effectively.

6. Upsides of robust Wi-Fi

Although the availability of Wi-Fi is arguably a hygiene factor, for any business today the quality of that available in the stores of the major grocers is variable.

Andrew Mann, former director of Clubcard at Tesco, says the most robust Wi-Fi among the supermarket groups is Tesco, which provides it with a number of benefits: “They use it to run their in-store systems including replenishment and since every store is modelled differently the in-store pickers need to have solid connectivity as their devices guide them around the stores.”

In addition, there is also the customer benefits too as they can check prices and log into the loyalty programme. Hi quality Wi-Fi will become even more important as Scan and Go-type solutions become more prevalent in the supermarkets.

For more insight on the grocers' approach to retail technology, read the rest in our series 'Big Four under the microscope':