Tesco is a Software Company

You know how every company is a software company? You don’t? Well in that case you should know that every company is a software company. Tesco know this. Or at least I suspect they know this. Here’s how I know.

Around a month ago a mundane food shop with my mum turned into a  20 minute vision of the future  for yours truly, when upon entering a conspicuous red white and blue mega mart I was offered the chance to “Scan as you Shop”. With a wee bar-code scanner in hand (it felt like a ray-gun if I’m absolutely honest, and I proceeded to use it as such), clubcard members were invited to scan (read: zap) their purchases-to-be as they pulled them off the shelves. When you come to the end of your visit, you know better than to head to the antiquated checkouts manned by actual humans; you turn your enlightened nose up at the fools at the self service checkout. No no no. You are a Scan-as-you-shop citizen of the 21st century now. Instead you dock you trolleytron 3000 (ok I might be getting a tad carried away with the futuristic metaphors) at a  dedicated pay-point, dock your scanner and cough up. If you aren’t randomly selected for an item check to make sure you’re not trying to pull a fast one, this process is over in less than 20s. Not bad eh?

The ZX ScanHeld Zapper 3 – deadly in the wrong hands

Now I know what you may be thinking. “Josh” you’re saying, “this isn’t new at all”. And you’re right. As this really boring BBC article that’s basically copy-pasted Tesco’s PR release about the system into the BBC business blog rightly points out, Waitrose had a similar system a while back, and they’ve being doing this in Amsterdam for a while now.

So why the blog post? Why am I so impressed and so excited? Why is this post called “Tesco is a software company”?

At this point, if I wanted to be dramatic, I’d say something pretentious like:

THE ANSWER IS DATA!!!1!!1!

But that kind of is the reason. What follows is how I would run Tesco if I had free reign and £1bn to spend making it the smartest shop around:

1). Know Your Shop:

Buy a robot, build a robot, use a human with a clipboard, I don’t care. However you do it, the first thing you’ve got to do is know the precise layout of your shop floor and the location of all its contents. I’m talking  Google Aisle View to a resolution so fine I can read every price, every advert and every offer. This information would live in a database and require regular updates. (Big shops are notorious for frequently randomising their layouts to ensure customers never become familiar and instead dawdle and buy stuff they never intended to). That’s why I’d advocate robots for this task. I say that last sentence with stony face seriousness. Know your shop.

2). Track Your User:

That ray gun that I harped on about in the intro is the single most powerful tool to understand the exact shopping experience of your customer. To demonstrate why, let’s imagine for one minute you wanted to track my movement over the course of one day. Here’s how I’d recommend you do it. Scrape the geo-location data from all my tweets and do the same for my Instagram posts while you’re at it. You might want to scour foursquare to see if I’d checked-in that day, but that chances are low. That’s about the best you could do. You’d probably get 5 or 6  data points if you were lucky. In summary, you’d have no real idea of  the journies I’d taken that day to any precision.

Now imagine me, walking through Tesco, zapping a barcode every 30 seconds for 20 minutes. Each of those scanning events records the barcode and time of scan in the ray gun in your hand. That’s forty data points that you can run against your store plan database once I’ve docked the handset at the checkout. If you’ve built that database properly, you know where every barcode in your shop can be found to the nearest metre and, by extension, where I was at forty separate times in my shop. You know to an excruciating resolution the path I took, the offers I saw and the subsequent purchases I made. From this data you can infer knowledge about the offers that I responded to and the ones I passed over. You know a lot is what I’m getting at here.

Moreover, you have my clubcard data, so you know that I normally buy Heinz ketchup but today it was on the bottom shelf and Hellmann’s was two for one and in my eyeline and this caused a departure from my purchasing habits (this is purely hypothetical: you should only EVER buy Heinz  tomato ketchup, and it should be stored at room temperature in a cupboard and absolutely NOT in the fridge. Hellmann’s is of course the only choice for mayonnaise).

Can you now influence what condiments I buy…? Perhaps.

Regardless, Tesco, or any savvy retailer worth their salt, have the opportunity to understand how I as a customer respond to stimuli in a shopping environment. If you’re not already convinced that this puts them in a very strong position to provide me with what they will likely call the “most optimised shopping experience for you” (but what will actually be a shopping experience that maximises the likelihood I’ll spend a lot of money) then there is yet more news to hear.

It’s a picture of a clubcard is what it is

Tesco recently introduced face scanning technology into 450 petrol stations nationwide with the aim to tailor ads to the demographics in the immediate vicinity of advertising screens at any one time to “induce impulse buys”. Whatever you think of the privacy implications of this kind of technology, you’ve got to admire a big company taking bold steps to embrace and experiment with technology in this way.

So where’s all this going? Well one thing I don’t think is too far fetched to assume, given the leaps and bounds Tesco have made in the first half of this year, is that these two technologies will be combined. Tesco’s PR has gone to great lengths to differentiate face scanning from face recognition and ease customer concern, but regardless of wider public opinion, I don’t think that’s going to be here to stay. What will persist are the in store displays. Screens will become more and more ubiquitous on the shop floor, steadily replacing the flimsy pieces of cards pointing out 2-4-1 dog biscuits.

In its first iteration, I envision (and by envision I by no means mean predict but more ‘would be impressed to see’) an internal platform for Tesco to A/B test offer and advert placement within its stores. Do static ads impact shopping behaviour more positively than moving images? Does repeat product exposure translate into an eventual sale? These aren’t difficult questions to find the answer to all of a sudden.

With this kind of insight, both aggregated and at a customer by customer basis, iteration two could be far more ambitious. Think real-time customer tracking, displaying the ads that influence you strongest at every turn, down every aisle, in an order carefully choreographed by tapping into a data set which all stems from the ray gun you’re holding. Your weekly shop has become agile and dynamic. The environment is your personal product recommendation engine, the siri to you shop. And it gets smarter with every purchase.

Food for thought don’t you think? Leave a comment I dare you.

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