How Retail Giant Tesco Handled The e-comm Onslaught - The Hindu BusinessLine
THOMAS NIELSEN, Chief Digital Officer, Tesco
Company views tech as a competitive advantage and offers customised services: Thomas Nielsen
Retail giant Tesco, which clocked revenues of €62 billion in 2015, is undergoing a transition, particularly since the onslaught of Amazon and other e-commerce ventures. Chief Digital Officer Thomas Nielsen spoke to Business Line about the company’s metamorphosis.
You joined Tesco about 15 months back. How is the transformation journey progressing in the almost 100-year-old organisation?
When I joined Tesco, my objective was to transform the business using technology. We are good at building and operating physical stores. In the last decade or so we have been making strides into the e-commerce side of things. When you look at Amazon, they have not had to carry legacy, like what we have to do. My mandate is to bring this all together — technology and the data that comes out of it — both inside the store and online.
Do the data point to anything significant beyond what is bandied as ‘Big Data’?
Data comes from all directions. Clickstream data comes from online sources and data that is generated during checking out from a store.
We have hundreds of varied data sets, which sit across many systems. Our drive is to consolidate those data sets, which would help in making meaningful sense of the data. This can result in more personalisation to our customers. For example, if you prefer gluten-free stuff or vegan, we can put it in your cart with personalised offerings, rather than blandly putting it on the shelves.
On the operations side, have you taken any new initiatives to streamline product availability across stores?
We have been doing fleet management for the past 10 years — it’s not something that Uber claims to have come up with. It has been around for a long time. We did not have an app for it back then. Things like how to get produce from a farmer — to a distribution centre, to a store. All this involves a lot of sophistication in using technology.
Change is often tough for large companies. How is Tesco managing the e-commerce onslaught?
I sit down with my counterparts in HSBC, Walmart…all of us have similar challenges. But one thing we believe is that change is in our DNA. We ask ourselves — are we a retail company that wants to use technology as a means to an end or do we see technology as a competitive advantage that will set us apart?
Our answer is the latter. A majority of my time is spent talking to employees on how tech can change the business. It is important for them to understand that the internal IT systems have to be in tune with the business. No point in having flashy apps if the product experience sucks.
Have you seen any successful examples of companies undergoing this kind of transition?
Fedex comes to mind instantly. A decade back it was a transport company. Today it is using tech for tracking. They opened their APIs (Application Program Interface) so that you and me can track our packages. This was met with a lot of resistance internally as employees felt they were giving away their secret sauce. But Fedex believed that this will benefit the customer. We are taking a page out of their book.
So, what technology innovations will set Tesco apart from competition?
We have a lot of customer data. So, if you are on a diet and you shop online or in the store, we have ways in which we can give the ingredient information (like calories, gluten or dairy intolerance) in real time. We are building websites that will have recipes and with one click you can populate the shopping basket.
How do you look at the kind of talent available here?
Most of the back- and front-end systems are developed here. The UK technology office is a satellite to the Bengaluru office.
Teams that are developing websites, mobile apps, data warehousing, business intelligence all sit here.
However, there is a need to raise the bar for technology talent. Because we have been mainly a retail company and not a technology company (as yet), we have been a bit behind the curve. But now we are looking at roles internally within the organisation on user experience designer, data scientist…all of which is new to us. My objective is to bring these kinds of functions, build them out on a global scale and integrate them.
However, one thing that I see around is that people get carried away with technology and do not focus adequately on in-store experience. In retail, people succeed only if the user experience is uniform across all communication channels.
Do you engage third party software service providers for any work?
We have a large dependence on vendors like Microsoft and Amazon. Ten or 15 years back, a lot of internal work was being done by external consultants. Now we have taken work it in-house as it involves a lot of customisation and IP.
We will continue to engage them (service providers) in packaged software implementation, mainframe migration work or when we need resources to handle spikes in our business. Our reliance on outsourcing vendors will be less as we want to have that knowledge in-house.