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Tesco is planning to vastly expand its application of artificial intelligence to customer data as the UK’s biggest supermarket seeks to attract more customers by personalising how they shop.
Chief executive Ken Murphy said that the grocer could harness AI alongside data from its Clubcard loyalty discount scheme to suggest shoppers make healthier choices and reduce waste.
“I can see it nudging you over time, saying: ‘I’ve noticed over time in your shopping basket that your sodium salt content is 250% of your daily recommended allowance. I would recommend you substitute this, this and this’,” said Murphy, speaking at the FT’s Future of Retail summit in London on Tuesday.
“It can help to bring your shopping bill down, reduce waste and improve the outcome and the power of that Clubcard,” he said, adding that AI “will completely revolutionise how customers interact with retailers”.
Tesco’s Clubcard is used by more than 22mn UK households. The scheme is central to the group’s strategy to attract and retain more customers to its stores.
Mark Adams, senior vice-president at retail software provider BigCommerce, said that tailoring shopping to individuals was increasingly popular among retailers.
“The broad strategy of most companies, retailers and brands in our space is to evolve personalisation. It’s the number-one thing you can do to improve loyalty, to improve profitability, to improve relevance. AI and technology helps to deliver that,” he said, speaking at the same conference.
Acknowledging concerns around data sharing, he added: “There are always going to be certain customers that don’t like it . . . but for me as a consumer, I don’t mind giving up that data if I get the right kind of experience back.”
Pets at Home chief executive Lyssa McGowan, also speaking at the FT event, said: “We’re already using machine learning to figure out what vouchers we should give them — we know what their dog has for breakfast,” she said. “AI will enable us to do that even better.”
Tesco already uses limited AI in its Clubcard offering, offering customers things such as personalised “Clubcard challenges” based on their shopping habits.
However, Murphy said that “to get down to that one-to-one level of relationship, where they feel like the Clubcard is literally doing the job for them, we need to be using generative AI extensively”.
Tesco has bolstered its technology division in recent years, as the company has pivoted towards building its own technology rather than buying it externally.
Murphy described a “massive improvement in our technology landscape” since the company hired Guus Dekkers as chief technology officer in 2018. Tesco now employs more than 5,000 people in technology, and continues to hire about 300 extra people each year.
He acknowledged that these plans involved holding significant personal data, which could raise privacy concerns for some users. “It sees how you buy and it deducts who you’re buying for. It probably knows the age of your kids, knows the gender of your kids.”
Murphy added that Tesco was still far smaller in comparison to retailers such as Amazon in terms of its AI capabilities. “We are absolute minnows. But we’re up for the fight.”
Additional reporting by Laura Onita and Claer Barrett
