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. 

Commerce media – What is it & how is it different from retail media?

According to McKinsey, commerce media is using transaction data to gain audience insights to make advertising more effective by improving targeting, deliver relevant shopper/consumer experiences and connect impressions to sale, both online and in ‘physical’ stores.

It is about leveraging large-scale purchase and intent data to draw insights that add value to consumer experiences

Sounds vague and confusing? Read on.

Commerce media covers all possible uses of retail data

Commerce media includes the use of insights generated by (online & otherwise) retail data in the online & on-site retail universe. This covers not only the retailer or the brands sold by the retailer, but also third party service providers who want to increase their ROI on marketing spend. They do this by targeting shoppers in a way that they previously could not do before.

Amazon was an early pioneer in this space and now other retailers are catching up fast.

However, supermarkets and other retailers are fast developing retail media networks of their own (Source: McKinsey).

Commerce media also gives retailers in low margin industries (like grocery & FMCG retail) the opportunity to increase margins by selling these insights along with online/on-site advertising space. We all know that consumers already want personalized experiences and only relevant ads. By leveraging retail media, companies will soon be able to deliver targeted ads and experiences through which shoppers can buy within the context of a TV show or the Metaverse.

Insights generated by retail media networks can help companies deliver the targeted experience that consumers want. This in turn will result in higher ROIs that companies currently generate on their ad spend. Why?

Linking ad-impressions with customers and their purchases at a SKU level

According to McKinsey, it is the the ability to match unique customer IDs and ad impressions to stock-keeping-unit (SKU) sales which is disrupting the entire advertising ecosystem. 

This is evidenced by data on effectiveness as collected by McKinsey below.

Salesbeat has also released a recent podcast on this topic and an interview of the Commercial director of a retail media start-up, here


Other commerce media

While McKinsey, BCG, Accenture and Bain have all written extensively about how retail data can be leveraged for advertisements and marketing, a relatively less explored territory is using this data to optimise promotions and availability in stores.

To learn more about how this can be done, email me on veena@salesbeat.co.