Tesco is exploring the use of generative AI within its Clubcard loyalty scheme, and how the next generation of the technology could be used to improve a customer’s shopping experience.
This included potentially “nudging” customers to make specific health choices, identify better value, or help them reduce food waste, Tesco CEO Ken Murphy told the FT Live Future of Retail conference on Tuesday.
Over the past couple of years, Tesco had already “radically improved” its supply chain efficiency, ability to forecast and how its stores picked on dotcom orders through the use of AI, Murphy said.
Now the “fifth wave” of generative AI would “revolutionise” how supermarkets serve their customers, by improving personalisation and removing mundane tasks in store, therefore making it easier for staff to serve customers, he predicted.
A potential major benefit could be its integration within supermarket loyalty schemes, to transform elements customers “don’t really give a lot of thought to”, Murphy said.
For example, AI could help bring a shopper’s bill down by analysing their past shopping habits to inform them when specific items could be coming on to promotion at a cheaper price. It could also help them reduce waste by substituting specific lines, or telling them to buy less if they have not been using everything they’ve previously bought, Murphy suggested.
“I can also see it nudging you over time: saying ‘I’ve noticed over time from your shopping basket that your sodium salt content is 250% of your daily recommend allowance. I would recommend that you substitute this, this and this for lower sodium products to improve your heart health’.
“Very simple stuff, but stuff that we would never do independently that could really improve people’s daily lives,” Murphy said.
Tesco focused on building its own tech
Tesco had seen an “extraordinary” improvement in its technology capabilities in the years since the appointment of Guus Dekkers as chief technology officer in 2018, Murphy said.
The former Airbus IT chief was promoted to the supermarket’s board in 2021, which Murphy told staff at the time “reiterates the growing importance we assign to technology and digitalisation”.
As a result of the investment, Tesco’s cost of computing is “pretty reasonable” relative to its competitors, Murphy said.
Over recent years, Tesco had taken the approach of being a “build-house rather than a buy-house” in technology and had been investing heavily in growing its in house tech team, which now spans 5,000 colleagues.
While developing its own solutions was slower than buying them in, it had helped Tesco integrate new upgrades and systems “more seamlessly”.
That being said, Tesco would take a more “balanced approach” to building its tech infrastructure in order to keep up with the pace with which artificial intelligence was growing, Murphy said.
While “the revolution is upon us”, Murphy insisted that retail basics will remain the most important reason behind a customer’s decision to shop with Tesco in the future.
“Great prices, great product quality and great shopping experience will be the constants, no matter what technology disruption comes,” Murphy said.
“We don’t see AI as a replacement for people, we see AI as an enhancer of what people do for the business and what people do for the customers,” Murphy said.
“We want to make everything that they do that bit more powerful, and that bit more valuable.”
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