How Tesco is bringing the online food retail experience back in-store

Food retailers in the UK have for years spent millions of pounds on going digital and cultivating a web presence, which includes the digitisation of product catalogues and all of the other necessary tools on the backend to support online shopping, customer service and food delivery. But Tomas Kadlec, group infrastructure IT director at Tesco tells BCN more emphasis is now being place on bringing the online experience back into physical stores, which is forcing the company to completely rethink how it structures and handles data.

Kadlec, who is responsible for Tesco’s IT infrastructure strategy globally, has spent the better part of the past few years building a private cloud deployment model the company could easily drop into regional datacentres that power its European operations and beyond. This has largely been to improve the services it can provide to clients and colleagues within the company’s brick and mortar shops, and support a growing range of internal applications.

“If you look at what food retailers have been doing for the past few years it was all about building out an online extension to the store. But that trend is reversing, and there’s now a kind of ‘back to store’ movement brewing,” Kadlec says.

“If we have 30,000 to 50,000 SKUs in one store at any given time, how do you handle all of that data in a way that can contribute digital feature-rich services for customers? And how do you offer digital services to customers in Tesco stores that cater to the nuances in how people act in both environments?  For instance, people like to browse more in-store, sometimes calling a friend or colleague to ask for advice on what to get or recipes; in a digital environment people are usually just in a rush to head for the checkout. These are all fairly big, critical questions.”

Some of the digital services envisioned are fairly ambitious and include being able to queue up tons of product information – recipes, related products and so forth – on mobile devices by scanning items with built-in cameras, and even, down the line, paying for items on those devices. But the food retail sector is one of the most competitive in the world, and it’s possible these kinds of services could be a competitive differentiator for the firm.

“You should be able to create a shopping list on your phone and reach all of those items in-store easily,” he says. “When you’re online you have plenty of information about those products at your fingertips, but far less when you’re in a physical store. So for instance, if you have special dietary requirement we should be able to illuminate and guide the store experience on these mobile platforms with this in mind.”
“The problem is that in food retail the app economy doesn’t really exist yet. It exists everywhere else, and in food retail the app economy will come – it’s just that we as an industry have failed to make the data accessible so applications aren’t being developed.”

To achieve this vision, Tesco had to drastically change its approach to data and how it’s deployed across the organisation. The company originally started down the path of building its own API and offering internal users a platform-as-a-service to enable more agile app development, but Kadlec says the project quickly morphed into something much larger.

“It’s one thing to provide an elastic compute environment and a platform for development and APIs – something we can solve in a fairly straightforward way. It’s another thing entirely to expose the information you need for these services to work effectively in such a scalable system.”

Tesco’s systems handle and structure data the way many traditional enterprises within and outside food retail do – segmenting it by department, by function, and in alignment with the specific questions the data needs to answer. But the company is trying to move closer to a ‘store and stream now, ask questions later’ type of data model, which isn’t particularly straightforward.

“Data used to be purpose-built; it had a clearly defined consumer, like ERP data for example. But now the services we want to develop require us to mash up Tesco data and open data in more compelling ways, which forces us to completely re-think the way we store, categorise and stream data,” he explains. “It’s simply not appropriate to just drag and drop our databases into a cloud platform – which is why we’re dropping some of our data systems vendors and starting from scratch.”

Kadlec says the debate now centres on how the company can effectively democratise data while keeping critical kinds of information – like consumers’ personal information – secure and private: “There should only be two types of data. Data that should be open, and we should make sure we make that accessible, and then there’s the type of data that’s so private people get fired for having made it accessible – and setting up very specific architectural guidelines along with this.”

The company hasn’t yet had the security discussion with its customers yet, which is why Kadlec says the systems Tesco puts in place initially will likely focus on improving internal efficiency and productivity – “so we don’t have to get into the privacy data nightmare”.

The company also wants to improve connectivity to its stores to better service both employees and customers. Over the next 18 months the company will implement a complete overhaul of store connectivity and infrastructure, which will centre on delivering low latency bandwidth for in-store wifi and quadrupling the amount of access points. It also plans to install 4G signal booster cells in its stores to improve GSM-based connectivity. Making sure that infrastructure will be secure so that customer data isn’t leaked is top priority, he says.

Tesco is among a number of retailers to make headlines as of late – though not because of datacentre security or customer data loss, but because the company, having significantly inflated its profits by roughly £250m, is in serious financial trouble. But Kadlec says what many may see as a challenge is in fact an opportunity for the company.

One of the things the company is doing is piloting OmniTrail’s indoor location awareness technology to improve how Tesco employees are deployed in stores and optimise how they respond to changes in demand.

“If anything this is an opportunity for IT. If you look at the costs within the store today, there are great opportunities to automate stuff in-store and make colleagues within our stores more focused on customer services. If for instance we’re looking at using location-based services in the store, why do you expect people to clock in and clock out? We still use paper ledgers for holidays – why can’t we move this to the cloud? The opportunities we have in Tesco to optimise efficiency are immense.”

“This will inevitably come back to profits and margins, and the way we do this is to look at how we run operations and save using automation,” he says.

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