What Tesco sees in partnerships with Pinterest and Uber
Tesco has accepted that it’s never going to be the next big disruptor in retail and while it will hunt out the places where it can be “different” it is also eyeing opportunities for partnerships with businesses and people that can bring innovation into the fold. And it’s Uber and Pinterest in particular that are piquing the interest at Tesco, according to online managing director Adrian Letts.
Tesco on what Uber and Pinterest are doing to the market
“Business is, increasingly, an ecosystem; it’s about how your core competency fits into another,” he said at the Institute of Grocery Distribution’s (IDG) Online and Digital summit today (13 October).
“I am very clear in my own mind that coming up with the next big thing is not going to be Tesco.”
Keeping up with customer expectation is the major challenge of massive retailers like Tesco where sheer size (while a blessing) is a curse when it comes to driving innovation. Of course, it has divisions like Tesco Labs to try and keep abreast of new technologies but partnerships are an increasingly popular option for such oil tankers – as noted with Sainsbury’s takeover of Argos.
While Tesco – as far as we know – is not eyeing a merger of that scale, teaming up with those brands that are behind the shift in how consumers are behaving online is far more likely.
“Customer expectation is being driven by many things, [such as] Uber changing the perception of what a brilliant delivery experience looks like” said Letts.
At present, Tesco only offers a national same-day click and collect service but “expects to go further” in order to compete with the likes of Amazon and Sainsbury’s (where boss Mike Coupe said same-same delivery is the future).
“We have a Tesco in almost every postcode and in London you’re almost never more than five minutes from a Tesco,” he added.
As such, there is inevitably “lots of talk” around whether it should be partnering with the likes of recently launched UberEATS to harness the infrastructure is has – rather than investing in its own – to offer faster delivery slots.
What’s preventing that talk from materialising into a full-blown partnership is the fact it sees its own delivery drivers as a powerful marketing tool.
“Our home delivery is very unique and special. It’s the only time [customers] will let people from the stores into their homes. That person is a brand ambassador,” said Letts. “The engagement they have and the support they give is truly remarkable.”
Putting that power in the hands of an Uber driver, then, is not likely something that will sit well with Tesco bosses.
Talking up the influence of another tech firm, Letts said he finds Pinterest's proposition “fascinating” and something which is forcing “many of us to rethink what we do”.
“If you talk to Google and Facebook people are changing the way they discover. They’re using traditional search bars, typing a query and seeing a bunch of words. They’re using image search. And that, in terms of how that changes in terms of what grocery shopping can be and how exciting it can be, is really fascinating and a tremendous opportunity," he said.
On the "habits" that have been created by other social networks, Letts said the ‘swiping right and left’ functionality in apps like Tinder is now a basic expectation within a mobile experience for so many consumers that Tesco is looking at how it comes into play during a shopping trip.
However, as Letts summarised, there’s a huge number of things Tesco could, should and might do but ultimately they need to be right for the brand and its partners.
One noticeably absent topic of conversation during Letts’ time on stage was the furore surrounding the stand-off Tesco currently finds itself in with FMCG-giant Unilever.
Despite not addressing the controversy outright, he was quick to tell delegates that Tesco has been working hard on speaking to suppliers and is being “humble” in how it involves them with its online plans.