Innovation & timing – Tesco’s virtual stores

South Koreans are known to have the longest working hours in the world, with executives often too busy to go shopping for grocery at a traditional store.

Tesco, the UK giant, introduced “virtual stores” in response to this. These ‘stores’ are essentially a display of products on the walls of metro stations and bus stops. Commuters, especially those who are tech-savvy and time poor could scan the QR codes of products on display with their smartphones, and place orders while waiting for their trains or buses.

This initiative was so successful, they decided to launch this in the UK too.

Shopper in Korea buying groceries at Tesco’s virtual store

The UK launch

They decided to trial the first store at Gatwick. 

On 6 Aug, they launched UK first virtual store for passengers who were leaving on holidays holidays. This gave holiday makers leaving from Gatwick North terminal the opportunity to order milk, groceries and other essentials that they needed when they got back from holiday. No one likes coming back home to an empty fridge!

Shopper buying groceries at Gatwick North Terminal, departures

Passengers/shoppers were able to browse basic necessities ranging from milk and bread to toilet paper displayed on vending machine sized screens. Through the app, they could scan bar codes/QR codes underneath those products, buy the products and arrange for these to be delivered on their day of return. 

According to The Drum, Tesco’s internet retailing director Ken Towle, said that the virtual store “blends clicks and bricks” as it brings together the “love of browsing with the convenience of shopping online.”

Right product, Wrong time

While this was a great initiative that should have succeeded, Tesco were ahead of times with this launch. Especially for the UK market. While shoppers in Korea were all tech savvy and used to e-commerce, shoppers in the UK were more inclined to want to go to stores and shop in person. 

So the roll out of any further virtual stores were shelved, unfortunately! 

2020 lockdowns accelerated the adoption of e-commerce and technology (scan & go) in retail in the UK. Had Tesco launched their virtual stores now, they may have seen very different results. 

Heinz & consumer centricity

The iconic glass Heinz ketchup bottle was a staple in family kitchens around the world. But did you know that H J Heinz pioneered glass bottles in the Ketchup sector? This was primarily to show consumers that there were no nasties in his bottles of Ketchup. Nasties in Ketchup bottles? Really?

Yes, at one point Ketchup did not contain even one tomato. It has its origins in the East and was a fermented mix of Yellow Fish, Shark & Mullet. For more info on this, check out the article here.

Cookbook author, Pierre Blot, used the words “Filthy, decomposed and putrid.”, in 1866 to describe ketchup brands that were available the.

At a time when no one cared about what went into ketchup, H J Heinz was obsessed with purity in his product. He put his ketchup in glass bottles so consumers and shoppers could see how pure the product was.

57 Varieties labelling

You maybe surprised to know that 57 Varieties of Heinz is a work of pure fiction. That is not to say that there aren’t/weren’t 57 Varieties of Heinz. At a time when there were more than 60 varieties of Heinz, HJ Heinz went with 57. There are several sources that claim different reasons one. One claims 57 was H J Heinz’s favourite number. Another claims, 5 was H J Heinz’s favourite and 7 was his wife’s favourite. Yet another source claims that H J Heinz simply liked the look of the number.

But what all these sources agree on is the reason behind placing this at the neck of the bottle. This label was a signpost. Instead of whacking the ketchup bottle on the back of the bottle as many did, which usually did not result in much ketchup, consumers were meant to whack the bottle where the label was placed to get ketchup out.

As you can see, probably not the best solution, but better than whacking the bottle on top.

EZ Squirt launch

Malcolm Gladwell, in his book, What the Dog Saw, described the trigger for the research that went into launching squeeze bottles. Heinz had commissioned several studies into how Ketchup was consumed and the consumer persona that consumed the most ketchup. So it was well known that children were their biggest consumer group and one of these user group sessions was a turning point for Casey Keller, a former manager with Heinz.

He was at one of the household observing how people consumed Ketchup. “I remember sitting in one of those households,” Casey Keller, who was until recently the chief growth officer for Heinz, says. “There was a three-year-old and a six-year-old, and what happened was that the kids asked for ketchup and Mom brought it out. It was a forty-ounce bottle. And the three-year-old went to grab it himself, and Mom intercepted the bottle and said, ‘No, you’re not going to do that.’ She physically took the bottle away and doled out a little dollop. You could see that the whole thing was a bummer.” 

Heinz

According to Keller, this was the moment of truth. The average 5 year old consumed 60% more ketchup than the average adult does. And the problem was that the products biggest consumers did not have access to Heinz Ketchup whenever they wanted to consume it. Parents decided how much ketchup their children consumed.

Heinz launched the EZ Squirt bottle as a result. In homes where Heinz in EZ Squirt was used, sales of ketchup increased by 12%.

According to Keller, the innovations in the ketchup space by Heinz “have driven category growth while increasing Heinz’s ketchup sales (by) approximately 7% annually over the past two years, giving the brand a record 60% market share.

“It’s obvious that innovation is the name of the game in this category.”

Launch of the upside down squeeze bottle

However, the Heinz team identified that people were still finding it difficult to get ketchup out of the EZ Squirt plastic bottle.

They often got too little ketchup, but they would just make do with what they had instead of continuing to squeeze to get more. Also, residual bits of ketchup would gather around the nozzle clogging the nozzle toward the end. The Heinz team noticed that consumers often stored their Heinz bottles upside down.

Heinz & consumer centricity

So Heinz launched the upside down squeezable bottles with a valve fitted inside to get the most of the ketchup inside the bottle.

“The upside-down bottle has it all,” said Heinz brand manager Melissa Hill. “It gives an instant flow of ketchup, with no more shaking, complete controllability, and no messy residues on the cap. Squeezing is believing. The valve literally sucks ketchup back up the very instant that squeezing stops.”

As a result, according to CNN, sales of Heinz ketchup in that year rose by 6% when the category itself grew only by 2%.

Heinz continues innovating to meet changing consumer preferences

In November 2021, Heinz announced that they were collaborating with Aptar Food & Beverage to incorporate a new recyclable valve system in their range. As recently as in May 2022, Heinz announced that they were launching their ketchup in a paper bottle made entirely of sustainably sourced wood pulp.

Heinz & consumer centricity

The next 12-18 months will tell how well these changes have been received by Heinz consumers.

If you’d like to read more about how other FMCG companies have approached customer/consumer centricity, check out our blog on this topic.

Nestle – Innovation & Employee engagement

Challenge

In November 2013, Nestlé asked themselves whether innovation can be fuelled by their employees. Inspired by initiatives like Apple’s Intrapreneurs, Nestlé wanted to apply this model internally, the first of its kind in the FMCG sector.

After all, employees are consumers too!

But what Nestlé realised is that the employees behind the ideas were just as important as the ideas themselves. So they aimed to develop their employees as intrapreneurs and not just focus on ideation. This gave their employees skin in the game and gave Nestle the opportunity to embed a value that they wanted to see more of, in Nestle – Agility.

Solution

The InGenius program was created. Employees submit their ideas to innovation challenges that Nestle posted through the program. A shortlist of ideas was then created and employees behind the idea were given the chance pitch their idea to senior management. The InGenius team invests heavily in employees who reach this stage by coaching them, helping them develop their concepts, and validating their idea/product prototype.

As a result these employees learn how to research, ideate, prototype, test, and pitch, with the aim of highlighting the business potential of their ideas. The ideas that are backed by senior management are then accelerated to pilot testing.

InGenius’s goal was to encourage ideas and to ensure there was a process in place to nurture the entrepreneurial employees who emerged from the process. And they succeeded. The program has been around for 6 years now!

They maintained momentum through the stories and videos created as a result of successful idea submissions. Employees and potential employees could see that Nestle not inly encourages employee led innovation, but also developed the employees who came up with these ideas to be better ‘intrapreneurs’. The InGenius microsite created a community of internal entrepreneurial talent.

Results

To date, 4,800 ideas have been shared, and 67 projects have been funded across the world.

Nestle’s real benefit was that of people development. Not only did a whopping 63,000 employees engage with this initiative, those who were involved as ‘intrapreneurs’ now bring a start-up mindset to the business. Others learned that collaboration and support for ideas is just as important as the ideas themselves.

InGenius’ success is evident in the stories and innovations that have evolved from the initiative and the increased employee engagement. Further, it is estimated that some of the problems that were solved and implemented through this initiative saved Nestle millions of dollars.

Today, companies need a way of engaging and retaining their top talent. Not only this, but companies also need to find a way to develop talent in a way that is in keeping with the culture the company wants to embed. Agility in the FMCG sector has long been a topic of discussion. While most other companies are struggling with this, Nestle has found a way to inspire their team to be agile and catalyse them to solving problems that Nestle faces – key for the coming months!