How Tesco HSC is changing the face of retail

With core functions like IT and others being managed out of India by Tesco HSC for Tesco's global footprint, the Indian operations are no longer a cost/labour arbitrage option, but a path-breaking and innovative platforms that help Tesco maintain its competitive advantage in markets around the world.

By moving over 700 jobs from Europe to India in the past one year, Tesco HSC has made it clear that India is a strong base for its business.

In an interaction with Mysore Sharath of CIOL, Sandep Dhar, CEO, Tesco HSC, the man considered to be a major force behind India's success model shares the major innovations rolled-out by Tesco HSC and the role IT would play in the cutting-edge retail stores of tomorrow.

CIOL: What's the secret behind Tesco HSC's transformation from order taker to a full-fledged IT development center?

Sandep Dhar: In the last few years we have achieved a greater breadth, particularly in areas around commercial and supply chain. Then the depth increase has also happened in terms of going higher in the value-chain and becoming decision makers from being just order takers.

 

Even though we started our operations in India when we didn't have a big organized retail, our people have built the competencies over the years.

Tesco Bangalore campus is now a full-fledged operations and IT hub. About 70-odd percent of Tesco's IT headcount sits out of Bangalore center. Apart from accounts, analytics, commercial and supply chain, we also have a team of architects and civil engineers who design stores for Tesco. All this started a few years back but now it's a true center of excellence. Today, we also have close to 300 architects and civil engineers do cutting edge store design.

CIOL: Do you still see Tesco HSC as a back-end work company for Tesco global?

Sandep Dhar: Though Tesco HSC is based out of Bangalore, we have people well-versed in retailing than anywhere else.

In fact, we no longer look at Tesco as our customer but we are the Tesco. It's a very important change. If I develop an IT application for Tesco, the CIO of Tesco is not my customer but a colleague of mine.

The only customer we service in real sense is the one walking into our stores. This powerful shift in the mindset gives people here a strong ownership sense on what they are doing.

CIOL: Can you take us through some of the major milestones of Tesco HSC...

Sandep Dhar: A few years ago our successful initiative was to move Tesco from manual invoicing system to electronic and voicing system. That entire project was driven from here. Then identifying the solutions i.e which product which vendor will go with was done out of here. Then we worked from here to customize their solution for Tesco and then we sent people to UK who helped with the change which included training suppliers to move to our new electronic environment. So it is a classic case of how something is done in UK is being done out of here.

Similarly, some of the next-gen systems for Tesco have been developed from here. We changed our buying system in commercial- buying in one of the core activity for a retailer. We went in for a new application for the buying which was developed, tested and deployed from here.

A few months back we developed and launched Tesco's next generation e-commerce platform (www.tescodirect.com) which is a market place. It is a not just a platform for Tesco to sell, but other suppliers can also sell from our platform. So it is electronic equivalent of a mall. It is one of the largest e-commerce projects delivered in the industry.

CIOL: Is Tesco looking at geographies beyond UK or Europe?

Sandep Dhar:  Previously, it used to be largely UK, Ireland and the US. But last year we moved about 700 jobs from Europe to India.

We are now starting to look at geographies beyond UK too. The Bangalore center is looking after IT Application development, application support and infrastructure support for all Tesco countries.

Last year we put in a lot of effort to move finance, commercial supply chain from central European countries to Bangalore. So the number of geographies we are servicing is now beyond English only speaking countries.

CIOL: How is IT going to make the next changes in the retail?

Sandep Dhar: We believe that the future of retail lies in multi-channel commerce. All these years we had a physical world and Internet world. Now for the first time, the number of worlds are

increasing, there is a smartphone world and there is going to an interactive TV world. But more importantly the consumer buying experience has to cut across these channels. You cannot relay on a single isolated channel anymore.

Internet shopping should be convenient too. So we gave the customers two slots of time to choose a delivery but still customers expected accurate time delivery. Then we came up with an option to enable customers track our delivery van through a smartphone application.

So the world is headed towards exploiting multiple channels for one seamless experience and technology is going to play a pivotal role in integrating these channels.

Some countries are faster in adoption of multi-channels and others slower. But the world is headed this way.

CIOL: What are the major innovations that are happening for the shop floor area?

Sandep Dhar: We are moving towards electronic shelf edge-labels. Traditional paper stickers need to be replaced during every price fluctuation result in labour time. We are systematically putting shelf edge labels that display new prices as and when it changes. These labels are connected through Wi-Fi network in the store so when the price change happens it is broadcast instantly.

Earlier we had difficulties in implementing the electronic shelf edge labels as it was dependent on LCD technology which needed better replacement. The emerges of e-inc has now been made electronic shelf edge labels viable with closer to paper look and marginal on battery consumption. We are progressively moving into this technology.

Hand-held scanners:

Another noticeable development is the handheld scanners which enable customers to scan product prices as they pick up a product at Tesco retails.

The customers have to just make a payment and move on from the counter thereby saving a lot of time. This project is already implemented in a few stores around the world.