Tesco needs to focus on using its huge wealth of technological innovation to engage customers and avoid focusing on gimmicks.

Tesco needs to focus on using its huge wealth of technological innovation to engage customers and avoid focusing on gimmicks.

Back in 1994, when Tesco began trials with Dunnhumby, it was second in the market to Sainsbury’s; almost difficult to imagine now. But over the last 18 years, Tesco has lead with strong technological innovation, being one of the first to offer online shopping, and since then their technical focus has not relented.

And yet the City is having a “downer” on Tesco stock. The analysts aren’t talking about the technology, they’re talking about cash and international investments. The general public’s eyes are also wandering, no longer satisfied with austerity and promotions. So, when looking at the last 18 years of technological investment and innovation, with clear links to success, why does it not appear to be delivering the results it once was?

Tesco’s focus has always been on the transaction, whether through technology, in-store activity or marketing. Since Dunnhumby, Tesco has become highly proficient in transaction measurement, knowing what product to sell, when, where and for whom. This cannot be criticised; it is key to retailing. Yet today, Tesco seems almost a soulless machine, and the customer is one of a million little widgets being flowed through it efficiently. When compared to a Waitrose store, a Tesco shop seems sparse, cold and functional. It could be argued the store is simply built to flow the customer optimally to the check out to be measured post transaction. Even the website has a similarly sparse feel.

I believe the UK has changed in a fairly short space of time. As a nation, we buy far more BMW 3 series than we do Ford Mondeos. We have designer outlet villages. We have the X-Factor. In short, the UK has gone crazy for perceived luxury and indulgence, but without the price tag. There isn’t any more money or lines of credit, but we demand it anyway.

With this as a backdrop, Tesco may need to think more about the ‘theatre’ of shopping, and by shopping I mean browsing or pre-purchase activity. How are the public reacting to the in-store experience and the promotions and the signage and store fit? How does this impact what the customer takes to the check out? After all, despite Tesco’s huge analytical abilities, they can’t measure anything if the basket is empty.

All of the innovations of click and collect, shop and drop, personal checkouts, proposed micro delivery and interactive screens are great, and will no doubt make Tesco shoppers happy, if it saves them time and money. However, if the moves are simply PR gimmicks then shoppers clearly do not truly benefit.

But what if the shopper doesn’t get that far; they decide to shop somewhere else? That would be a genuine shame, for Tesco has been a genuine innovator in the UK for many years now, but perhaps the innovation needs to now move more to analysis of pre-customer engagement.

  • Tristan Rogers, chief executive of ConcretePlatform, advises large retailers including Tesco, Wal-Mart, Marks & Spencer, Clarks, Mamas & Papas and Jaeger on international expansion.