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Tesco`s journey of integrating AI

Post Date: 13 - Nov - 2023


Emerging technologies are revolutionising the business world more than ever before. With the advent of new technologies and their integration into daily business activities, many operations have become seamlessly easy. In such a competitive environment, an organisation is required to keep itself up to date with the current trend of emerging technologies. This report is based on analysing emerging technologies, the chosen organisation is using, and what emerging technologies it needs to consider to gain a competitive edge in the market. For the purpose of this report, Tesco has been selected. Tesco is one of the leading UK-based retailers and has its operations worldwide. This report will also analyse the options it has available to adopt emerging technologies that can help the organisation to scale on demand, minimize infrastructure cost, improve resiliency, and deploy solutions securely and rapidly. The report will further analyse the cyber security trends Tesco needs to consider for better control, information strategy, and governance.

Task 1: Review of Emerging Business Technologies

Background of Tesco

Tesco is one of the leading multinational, UK-based grocery and general merchandise retailers. The company was founded in 1919 from a simple market stall in London. Jack Cohen was the founder and with his vision and hard work, the company became the world’s largest and famous retail store. Tesco over the years, has expanded rapidly through various strategic acquisitions and organic growth strategies. The company diversified its offerings over the years and has ventured into the international market. The company has become the market leader by adopting modern technologies, up-to-date strategies, and modern retail practices. Tesco conducts its operations all over the world with both brick-and-mortar stores (physical marketplace) and the digital market space. In the marketplace, Tesco has a vast network of convenience stores, hypermarkets, supermarkets, wholesale outlets, and flagship stores. These stores have a number of options for people to shop not only groceries and fresh produce but also electronics and household items under one roof (Tesco, 2023).

The company has strategically designed and conducted its operations well in the marketplace and market space. In the marketplace, Tesco provides many store formats to cater to the needs of different customer bases. The organisation offers one-stop-shopping solutions through the hypermarket, convenient solutions through supermarkets, and quick shopping trips from express stores (Cuthbertson et al, 2015). The company earns good margins on its privately labeled products which helps the company to retain its share in the market. The company has good reward programs such as Loyalty Programs for customers which encourage the customers to stay loyal to the company and to make repeated purchases. (ZXhang et al, 2023)

In terms of market space, Tesco operates through online shopping which allows the customer to choose from online delivery or to place the order and collect it from the online stores. The company provides digital services such as a mobile app for easier shopping experiences, meal planning, and online recipes for personalized and easier offers (Folarin, and Hassan., 2015)  

Key Innovative Technologies Tesco is Using for Data Collection, Storage, and Consumer Data Usage

Tesco gains the benefits of enhanced customer experience, improved operational efficiency, and personalized offerings through integrating innovative technologies. There are some of the key innovative technologies which the company has been using to transform the function of data collection and utilization include customer loyalty programs and data analytics, digital platforms, and mobile applications, In-store technologies, internet of things (sensors), Artificial technology and machine learning and personalized marketing (Nguyen., 2017)

With its club cards, Tesco gathers important information such as the shopping habits of the customers. This data helps the company to design Customer Loyalty programs as per the collected data and to execute personalized promotions. However, to keep this program running and effective, the company incurs huge costs to ensure robust data protection for ensuring privacy. The online shopping options that the company offers include digital platforms and mobile apps which enable the company to entertain the customers with personalized interactions and insights regarding preferences of the customers. The hind side of this program is that it does not always come with intentional customer consent. Therefore, to continue with this practice, the organisation is required to have transparent data practices (Aiello, 2020)

In-store technologies such as using RFID and electronic shelf labels enable the company to collect the data without any hassle. This data is then used to improve overall customer experience. The Internet of Things (Sensors) helps the company reduce waste and enhance quality. The company uses AI and ML algorithms and tools such as Chabot and CRM are used for increasing the overall efficiency of the system (Alexander., 2020) The use of these technologies increases the overall efficiency of the company however, due to the overemphasis on emerging technologies, the company faces a number of issues. For instance, algorithm bias, which often occurs, if not timely corrected leads to discriminatory outcomes. Further due to the collection of personalized customer data, data privacy concern is often raised for Tesco (Yawson, and Yamoah., 2022) 


Task 2: Make Use of Emerging Technologies  

The modern retail world has become challenging and with every passing hour, it has become difficult for businesses to retain their market position. In such scenarios, emerging technologies have become an essential tool that helps the business in improving overall operational efficiency. Integrating emerging technologies into the system enables the business to stay ahead of the competition and increase its market share. Tesco is a pioneer global retailer. The company is leveraging its operation by harnessing the power of Artificial Intelligence (AI), Augmented Reality (AR) Machine Learning (ML), and through Internet of Things (IoT).  These technologies enables the company to minimize their overall cost and also helps them to scale on demand (Loonam et al, 2018). Use of emerging technologies also increases the resilience throughout the organisation thus making it more prepared to adapt to the changes.

Artificial Intelligence (AI):

Artificial Intelligence (AI) has transformed the business world by force. Tesco being the giant retailer and pioneer has also employed AI to leverage its operations. AI is used in all areas of the operations especially in the area of customer support to give the customers the best customer support. Having operations throughout the world, Tesco has successfully managed its Supply chain by employing IBM Watson. This AI-based system enables the company to predict the pattern of demand and ensure maximum accuracy. Tesco, with the use of this AI-based system, has succeeded in reducing its inventory cost. Also, due to accuracy in prediction, the company saves costs that can otherwise be incurred through overstocking. SAS Analytics is another AI-based system that the company is currently using to increase the resilience of its supply chain. This system helps the company in detecting disruptions and is a significant contributor in increasing the overall efficiency of the system (Iftikhar et al., 2022)

Integrating UiPath into its system enables Tesco to achieve optimal output while minimizing the cost that is required to be utilized in its infrastructure. This has enabled the company to reduce its dependency on manual labor and automate and streamline the entire process. This has reduced the overall cost of the company and has also paved the way for smoother and more efficient operations. Furthermore, using AI-powered Chatbots by Microsoft Azure has enabled Tesco to revolutionize its customer service. During peak seasons such as Black Friday and sales, these chatbots attend well and timely to queries of the customers.  These AI-powered bots are capable of addressing customer queries in a swift and easy manner and also enhance the overall experience of the shoppers. However, using these AI-powered Chatbots and other AI-based advancements has raised the concern for the protection of data security. To address the said concerns, the company has to invest more robustly into AI-powered security solutions such as Darktrace for detecting and preventing cyber threats and securing the data of the customers. This can help the company to maintain the trust level of the customers (Rosnizam et al., 2020)

Machine Learning (ML):

Machine Learning (ML) is another emerging technology and is a subset of AI. ML has enabled the company to fine-tune its operations for better results. Tesco uses Oracle’s ML algorithms to predict with precision, the demand of the market. This has enabled the company to optimize the demand and increase its overall stock level by preventing shortfalls. It has also helped the company to reduce the cost of holding excess stock along with providing a seamless shopping experience to the customers. Additionally, to enhance its resilience, Tesco can employ Google Cloud’s AutoML for detecting vulnerable areas in its supply chain. This can ensure the company leverages potential disruptions and also allows it to proactively address the said issues and ensure seamless business operations (Kollias et al., 2022)

Augmented Reality (AR)

Tesco has employed PTC’s Vuforia AR platform for streamlining its training and onboarding process in the realm of Augmented Reality (AR). This has empowered the company to conduct scalable remote training for new employees to help them swiftly become part of the system. Also, Vuforia has enabled Tesco to adopt a robust and innovative employee training model which has helped its workforce to change themselves as per the changing demand of the market. In addition, Tesco can integrate Microsoft Hololens, AR-based remote maintenance. This can help the company minimize the need for physical presence during disruptive times and will also help the company maintain its operations during challenging times (Martínez-Ruiz et al., 2016)

Internet of Things (IoT)

In the area of the Internet of Things (IoT), Tesco has integrated Cisco Kinetic. This system allows the collection of real-time data on demand and inventory. This data-driven approach enables the company to make informed decisions and scale its operations. The company is now more efficient in responding to fluctuating market demands. IoT sensors of Microsoft Azure also enable the company to monitor closely the conditions of its supply chain and therefore provide the company with early warnings of potential disruptions. This monitoring system provides the company with timely warnings to take proactive measures for mitigating risks and enhancing its resilience. Ensuring data security while delving into IoT has become paramount for Tesco. Tesco can take the help of security platforms like Arm Mbed which can fortify Tesco from potential threats and ensure confidentiality and integrity of critical data (Kollias et al., 2022).

Task 3: Planning for the Future

Tesco has been leveraging AI in its operations to secure optimization. Considering the wide data of the business and its information strategy, control strategy, and governance, it is necessary for Tesco to keep itself updated with the cyber security trends.

  • Zero Trust Architecture:

Tesco has a large database and therefore, it needs optimal protection. To make its data secure Tesco can inherit Zero Trust Architecture. This trend denies the traditional belief that internal networks are relatively safe and that external networks pose threats. This architect advocates for always verifying and never trusting models. Thus, the idea is that no device or user can be trusted and every device and user has to go through a rigorous verification process. This boosts continuous monitoring and strict access control. To evaluate its importance, the case of Twitter can be considered where the company fell victim to massive cyber-attacks from high-profile accounts. To prevent such cases, implementing Zero Trust Architect can prevent the company from such losses (Stafford, 2020)

The zero-trust approach is critical for retail giants like Tesco. With the expansion of its online retail operation, the digital footprint of the company has widened. The exposure to cyber threats has also increased and therefore, implementing this approach ensures that the data is protected and secured. This system is potentially beneficial for giant retailed like Tesco that have an ecosystem that has abundant customer data, supply chain interaction, and supplier information (Puthal et al, 2016)

  • AI-Driven Cybersecurity:

AI-driven cyber security relies on machine learning algorithms. They identify the patterns and identify the threats in real time. This enables the organisation to have quick detection of threats and responses. These systems make use of a huge amount of data for enhancing the identification of threats and product automated responses. Thus, such systems provide security teams with the time leverage to focus on more strategic tasks. One of the real-time examples of a severe data breach is Equifax data breach in 2017 where personal and sensitive data was exposed by millions of customers. This breach highlights the need to keep in place more robust and advanced threat detection and control mechanisms (Demirkan et al., 2020)  

Tesco has extensive digital operations. For such giant retailers, AI-driven cyber security is a valuable asset. Such systems can help the company to identify patterns and threats. It can enable the company to secure its customer center data network and maintain its integrity. Tesco should take into consideration the use of AI-driven cyber security solutions for better data governance and for devising a better control strategy.  This can provide the organisation with an additional layer of defense against cyber threats that might go unnoticed under traditional systems (Taeihagh, and Lim., 2019)  

Tesco has large data of customers which the company needs to control, manage, and protect. By taking into consideration enterprise-wide data, governance and control strategy, and information strategy, the company is required to incorporate cyber security trends such as AI-driven cyber security and Zero Trust Architecture. These trends can ensure robust data protection and can help the company to focus on other strategic issues (Kollias et al., 2022)


Tesco`s journey is the epitome of its commitment to emerging technologies. The company harnesses AI, ML, AR, and IoT to leverage its customer`s experience, optimize its operations, and ensure data safety and security. However, with the adoption of these emerging technologies, the inherent risks that these technologies offer cannot be undermined. Thus, it is clear that this route is not only about the adoption of new technologies but also about reshaping the retail world itself. The adoption of these technologies is a signal that Tesco is ready to embrace change. Further, it also reflects the company’s commitment to enhancing the satisfaction of their customers and their vigilance in maintaining the highest level of standards and data security. 

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