Data: every little helps at Tesco

Tesco's IT and marketing chiefs tell Peter Gothard how the retail giant's new tablet device fits in with its data-gathering strategy

Tesco CIO Mike McNamara says his close working relationship with the retail giant's marketing chief, Matt Atkinson, is key to the customer-focused IT revolution that's sweeping the supermarket chain.

"We spend a lot of time together, to be honest," says McNamara.

"If you go back a few years in terms of IT investment into marketing, we've doubled or trebled it in the last two or three years. This year we spent $750m, and focused on websites, mobile apps, digital signage, personalisation, and shopping in our digital stores," he adds.

In terms of budget, Atkinson says that McNamara still "has a large majority" of the funding under his control, but that his own job is to work out how to spend it on "customer innovation", insisting that the CIO "doesn't stand in the way of creating what we want to bring".

A new element to this "customer innovation" is the Hudl, an Android tablet that is available for just £60 when bought with Clubcard vouchers.

Atkinson says the Hudl has a "two-fold purpose".

"One is to make something affordable and accessible for customers, and to do that at a relatively high specification, at an affordable price," he says.

The other is to "put some of [Tesco's] services and greatest assets on it to enable customers to do things they want to do".

McNamara (left) describes how clicking on the small "T" in the corner of the screen opens a "native launcher" filled with widgets to serve up "useful content" - for example, the firm's "Click and Collect" scheme, or the user's Clubcard status.

While McNamara says that "you can remove all of it", it's not difficult to see what Tesco is aiming for here. It wouldn't be unfair to describe the device as a Trojan Horse of data collection, infiltrating a user's everyday life in a way that even the data-munching Clubcard never could.

Asked if the Hudl is just the start of a big push into the mobile computing market, McNamara replies, "Well let's see how this one goes first. It's a first step - let's not get the chief executive too excited. We'll see how we go at Christmas and go on from there."

But both men are inspired by the possibilities of tablet technology. "The reality is, Steve Jobs did us all a huge favour," says McNamara. "I think interfaces now are so easy. My mum's 70-something and she does all her shopping and travel online."

The Tesco Clubcard was introduced back in 1995 - a remarkably forward-looking idea given that at the time businesses had barely discovered the internet, let alone big data and social data mining.

McNamara says Tesco has been analysing customer data for "donkey's years", keeping every scrap of purchase data collected via the Clubcard, amounting to "billions of lines of code".

Data: every little helps at Tesco

Tesco's IT and marketing chiefs tell Peter Gothard how the retail giant's new tablet device fits in with its data-gathering strategy

He says there are a staggering 56 million Clubcards circulating in the UK - that's almost one for every person in the country.

All this information is processed by data analytics firm Dunnhumby, which helped to create the Clubcard and is 84 per cent owned by Tesco.

As well as working for Tesco, Dunnhumby has sold Clubcard data to consumer giants such as Coca-Cola and Procter & Gamble, to name just two.

In "crunching data" for Tesco, Dunnhumby is making increasing use of Oracle's Exadata server technology.

McNamara says Tesco has the capacity for individualised activity for "millions of different cells" of data, meaning personalised contact can be made to "make a rapid difference" to a customer.

Big data

"Our focus has been very much on purchase history, but that's just one track," says McNamara.

"The thing with big data is there's an awful lot of noise and very little signal, and the cleverness comes in sorting the two out. I don't think we've really exploited and mined [purchase history data] to the best advantage yet - for our customers," he hastily adds.

Social media is another area where Tesco is making swift progress, both in procuring fast and easy data about its customers, and building good relationships with shoppers. Social media strategy, says Atkinson (left), is very much in the CMO's "world".

"Our policies have been very straightforward; it really is as simple as ‘don't tweet things we'd be embarrassed by'," he says.

Atkinson sees social media as providing yet another potentially valuable pool of customer data.

"We've been very good at... community building. Two years ago we didn't have anything, whereas now we have effective Twitter and Facebook communities. We process 15,000 to 20,000 responses per hour, per week," he says.

Free Wi-Fi

The company's recent decision to offer free Wi-Fi connections across many of its larger stores is, says Atkinson, perfectly innocuous. Several companies, Telefonica among them, are experimenting with "zoned" Wi-Fi connections as a means of tracking handsets in order to learn more about users' shopping habits, but Tesco's CMO insists that its Wi-Fi is just there "to help" customers.

"Smart shopping lists, or checking into shops to see what's there, getting the right coupons rather than delving through the wallet. It's just about making those things easy and relevant," says Anderson, "it adds that extra layer of meaning."

McNamara adds that another reason for the rollout is that a number of Tesco's larger stores are badly served by phone signals, and that Tesco "put in a bit of infrastructure that we knew would be important to customers".

"But how that evolves and the usage increases, I don't think we've even dreamt of yet," he adds.

Wearable tech

However, McNamara is dreaming ahead in other areas, envisaging a time when every single shop floor operative is connected to Tesco's information cloud.

"I think you'll see Hudl a lot in store - certainly on store managers," says McNamara.
"But when you're working on the shop floor, too much technology gets in the way. I think the way forward for store colleagues is wearable technology, and we're just at the beginning of that journey," he continues.

McNamara reveals that Tesco has been collaborating with Motorola on "name badges, with a wee network card and a microphone inside".

"So as speech recognition and speech command becomes more prevalent, and has better battery life, it will become more useful," McNamara concludes.

@PeterGothard