Tesco Grocery online – our journey

September 2010

Tesco today

Tesco.com today

Online Grocery today

£2bn sales

Profitable

350,000 orders per week

20m items picked every week

Over 2000 vans

Over 1.2m active customers

Home delivery isn’t new

In 1994 customers were saying…

I’m a busy working Mum; I

have less time

I’m housebound but really

independent; how can I do my shopping?

Why can’t you do the

work for me?

Why can’t the shopping

come to us?

Customer led, not technology led

…our Technology platform in 1994

The internet to the rescue

So how does it work for the customer?

Who is our shopper?

0%

5%

10%15%

20%

25%

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Total

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amily

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amily

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Family

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Dep

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Empt

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ters

Retire

d

2008 2009 2010

What do they buy?Dotcom participation

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roze

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Listening to our customers

…the sum of hundreds of small innovations

Telematics

Scan item scan tray

Would I buy it?

Dynamic scheduling

Variable service charge

Suggested substitutes

Big battery

Electric vans

Hybrid vans

Shopper hours

Flexi contracts

Pre-picking

Space saving trolley

Picker BRAG Bagless deliveryCubiscan

Picker routing

Structures

Site stability

FavouritesRecipes

Green slotsCall me

VBV

Premium service

Bag recyclingVan step change

Driver training

Healthy alternatives

Dispatch process

Snake loading

Picking algorithms

Van scheduling

Driver assessments

Vehicle incident board

Hours forecasting

Pre-picking

Customer notes

Same day delivery

Hub stores

Weighing scales

Van turnaround process

Dispatcher

Earlier deliveries

e-coupons

Shapes and colours

Pick audit tool

Alternative locations Loyalty gifts

Goodwill gestures

TWIST

New customer pages

Mystery shoppers

Grocery images

TrolleysSubs on manifest

Ranging algorithms

Tray weights

Product separation

Van charging points

Green slots

Van refrigerationRight pay

Team leaders

Dotcom academy

Know your stuff

Inside out bags

Van GPS

Product mappingReturn tray option

Pick across vans

Catchment road speeds

Live traffic updates

To perfect the shopping trip…

To deliver Every Little Helps

Shorter than we’d like

Price match substitutions

Satisfaction with Subs – % very/fairly satisfied

20%

30%

40%

50%

60%

70%

P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12Target TY LY Very/quite dissatisfied TY

Launched Price Match

Subs

Mobile phone apps

Click and collect

Routing and drop density

Dotcom only stores

What have we learnt?

The Obstacles• Sales cannibalisation

• Pricing and trading decisions

• Its too small to worry about

• Parochial anti-customer behaviour

• “It’s too difficult!”

• “This will never make money!”

Our Response• Separate business unit

• Same prices

• The right accounting…

• …own P&L

• ….with shared KPIs...

• Customer obsession

• Operational efficiency

• Shared infrastructure

• Constructive tension

The future

It [the kitchen] has become a real social area now, because we keep the laptop

there one of the boys will always be on it and I’ll be cooking over there and talking

to them

I use everything in combination, chatting to my mates about the programme I'm watching on my phone, looking up stuff about it on my laptop if it’s boring...you just keep everything open something is

always active

I just cook with my laptop on the kitchen counter!

Thank you