Tesco PLC: Building Future Capabilities Through Innovation Report

This report provides an executive summary of Tesco's innovation strategies within the competitive retail market. It explores various innovations implemented by companies like Aldi and Nike, emphasizing the importance of continuous innovation for market survival. The report delves into Tesco's future innovation plans, including self-scanner technology, robot assistance, and click-and-collect lockers, highlighting their potential to enhance customer service and profitability. Furthermore, it discusses Tesco's innovation capabilities and the necessity of road mapping to identify legal requirements and costs associated with launching new innovations. The report concludes that Tesco needs to carefully consider these elements to build its future capabilities and maintain a strong market position.

CW 2

EXECUTIVE SUMMARY
This report summarises that innovation is very crucial to run a business in competitive
market environment. The report discusses about Tesco which is a retail organisation that deals in
general grocery and merchandise products across the globe. Apart from this, there are certain
factors that are been discussed. The first part of assignment talks about different innovations that
companies like Aldi, Nike, etc. have launched. This shows that it is important for all the
organisations to constantly launch new innovations in order to survive in the market.
Furthermore, the second part of the assignment talks about future innovations of Tesco
which the company is expecting to launch till 2020 such as virtual lockers, robot assistance and
self scanner technology. These innovation shows the technological approach of respective
organisation to provide premium services to the customer and increase the profitability in future.
Additionally, these innovations help in attaining large market share in coming future. Similarly,
in the third part innovation capabilities of Tesco is discussed which helps in understanding that
there is an important need of road mapping of the innovation scheme. With the help of road
mapping, Tesco can identify different aspects of launching an innovation such as legal
requirements, cost involved, etc. Thus, it can be summarised that Tesco Plc. Needs to consider
all the elements while launching new innovative products which can assist in building future
capabilities of the company.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION ..........................................................................................................................1
Future of industry 2020 and beyond................................................................................................1
Organisation’s innovation requirements 2020 and beyond ............................................................2
Building the Future Capabilities for the organisation 1500.............................................................4
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Innovation has changed the method of doing business in retail sector completely. It helps
in providing solutions for new tasks and other issues. Also, innovation is responsible for
changing the market trend by providing advanced solution to serve and influence the customer
which helps in increasing the profit share of company. This file will be discussing about Tesco
Plc. Which is a retail company that offers variety of different grocery products along with
different subsidiaries such as Tesco Bank, Tesco Mobile, Tesco F&F clothing, etc. (Biemans,
2018). Along with this, the respective report includes expected future of retail industry in 2020
and beyond. Furthermore, there will be a discussion about innovation that the respective
company needs to make till 2020 and beyond in order to survive in the competitive environment.
Similarly, this file will have a detailed description about the road mapping of Tesco where there
will be a deep study about an invention that the respective company needs to practise along with
its process of approval and changes which will help in building the future capabilities of Tesco.
Future of industry 2020 and beyond
Retail is a very vast industry. It is consist of selling good and services to the service users
through different modes or channel of distribution in order to earn maximum profit. Retail
industry includes products like clothing, home groceries, and many more products. Hence, this
sector is responsible for enhancing the lifestyle and providing products of basic needs to each
individual across the globe. Moreover, retail industry is one of the major source of employment
in different economies. Retail industry has changed with time and technology. There have been
various advancements in products, method of production, customer service and many more
factors. Some of the companies that majorly work in retail sector are Sainsbury's, Aldi, Asda,
Waitrose, Nike and many more.
Aldi is one of the biggest retail company of UK which became first organisation offered
services like contactless payment, Apple pay, etc. in 2016. This widen up the scope of sales for
the organisation and provided superior services to the customers (Laffy and Walters, 2016).
Similarly, Aldi came up with a policy of not advertising in Germany where the information about
latest deals and updates of special price were delivered though weekly newsletter which was
name as Aldi informs. The newsletter was distributed in the stores and direct mail. This helped
the organisation to provide personalised marketing strategy.

Similarly, Sainsbury's was the first retail organisation that offered products of its own
brand. The prime motive of the innovative strategy was to provide quality services which were
equally competitive as the branded products throughout the globe. Also, Sainsbury's was looking
forward to offer low rate which can help in attaining more customers and earn their brand
loyalty. The respective organisation introduced another innovative technology known as EPOS
which is a software that is used to make billing transactions. This helped in managing the
operations of Sainsburry (Pantano and et. al., 2017).
Net-A-Porter is a retail company that has its headquarters in United Kingdom. The
organisation has come up with unique innovation where robots will help in selecting clothes for
the customer according to their needs and plans i.e type and motive of trip, location and weather,
etc. This shows usage of smart intelligence in retail industry and the level of competition that
exist in this technical advanced market environment.
Nike has also proved its innovation proficiency by offering customised pair of training
shoes to customers in maximum of 90 minutes of time. By customising, manufacturing and
delivering products in such short notice, Nike is able to prove its service quality to the loyal
customers which has uplifted its brand value and positive reputation in the market.
Thus, from all the examples mentioned above, it can be clearly seen that retail sector is
evolving at a very high pace with new and unique inventions. Thus, it is very important for
organisations such as Tesco to constantly look for new ideas and inventions to have a strong hold
on market and have a positive growth rate of profit earning.
Organisation’s innovation requirements 2020 and beyond
Tesco Plc is one of the leading retail brands in United Kingdom. The respective
organisation operates internationally with its headquarters in England. Tesco have a very strong
strategies in accordance to deal with the latest demand of customers and market. In order to do
that, the organisation adapts various technical advancements in order to maintain a competitive
edge in market. Furthermore, there are few innovation strategies that Tesco is planning to
implement in coming time period. These innovation has influenced the customers very strongly
along with setting new trend and level of expectations (Biber, Häikiö and Koivumäki, 2016).
Thus, some of its future innovations are discussed below:
Self scanner tech- Tesco is planning to launch a self scanner which will be known as
Tap and Tag technology. This innovation will help in replacing paper receipts with digital

receipts which a customer can use by taping on the console at the time of checkout. Furthermore,
an online registration needs to be done which will send an instant digital receipt through email.
This technology will help in minimising the billing time and give a quality service to the
customer. Along with this, this innovative approach will help in increasing the sustainability of
Tesco. (Tesco trials digital receipts and self-scanner tech, 2018)
Robot Assistance: Tesco is looking forward for introducing robot assistance where
functioning robots will help the customers to shop. This gives the shoppers more efficiency,
flexibility to purchase their desired products. OSHbots will enhance the shopping experience of
customers by greeting and guiding them to their required products. Also, these robots will
provide information about the products or any other query. Similarly, RFSpot Pro robots are
responsible for managing inventory of Tesco. These are big robots which use RFID technology
to scan and provide a clearer picture of available inventory (The robots are coming...to your
mall, 2019). Hence, these softwares have helped the company to minimise the time taken to
operate certain actions and has provided more accuracy in the measurements. Additionally, these
innovations have helped to level up the competition among other rivals in the market.
Click and Collect Lockers: Tesco is planning another innovative approach by the name
click and collect lockers (Wieland, Handfield and Durach, 2016). This will enable the customers
Illustration 1: Tap and Tag Technology
Sources: Tesco trials digital receipts and self-scanner tech, 2018

to retrieve their orders rather than existing process. This will helps in providing services apart
from official staff timings. Furthermore, customer will have 14 days of time period to collect
their orders. Thus, the process includes placing and online order, receiving a security code and
open it for collecting order (Tesco Introduce Click & Collect Lockers. 2018). Furthermore, this
innovation will provide and enhanced customer service and increase the scope of sale for Tesco
which lead to increase the profitability in coming time period.
Gantt chart activities -
Illustration 2: Click & Collect Lockers
Sources: Tesco Introduce Click &
Collect Lockers. 2018

Building the Future Capabilities for the organisation
Tesco Plc has been increasingly capturing the market despite of changing environment
and other elements that have an impact on business. Technology has an impact on different
aspects of a company such as efficiency, culture, customer relation building, etc. Thus, it can be
said that technology helps in bringing out the capabilities of an organisation. There are two
elements which helps in developing innovation capabilities of Tesco. These are mentioned
below:
 Understanding Needs of Customers- It is important to understand needs and wants of
the customers of Tesco in order to build their future capabilities. As prime motto of an
organisation is to fulfil the demands of customer. Thus, it is important to understand the
taste, mindset and requirement of the customers with changing time (Acosta, Popa and
Palacios, 2016). This will help to alter the innovation and operations plans through which
Tesco can provide quality services to the customers in coming time. This will provide an
opportunity to retain the customers for long run and bring out future capabilities.
 Market Knowledge- In order to sell the product, it is important to have knowledge of the
market in which Tesco is functioning. Through adequate market knowledge, the
respective organisation can understand the market trends and behavioural pattern of the
customers. With the help of such information and data, Tesco can plan and alter its
innovation strategies which will help in bringing out building future capabilities of the
organisation.

In order to understand future capabilities in context to innovative approach of Tesco,
Road map is mentioned below:
 Suggest- The trend and technology that is adapted by retail sector in constantly updating.
Thus it is important for Tesco to introduce new innovative approaches in order to achieve
goals of the company (Gebauer, Haldimann and Saul, 2017). Hence, Tesco is looking
forward for introducing click and collect lockers in order to build their future capabilities.
Additionally, this will help in grabbing more market share for the company and earn
more profitability.
 Reason- There are various competitors of Tesco in the market. Due to this, it becomes
important to provide exceptional services to the customers. Thus, by launching click and
collect lockers, Tesco can grab an unexplored market which will enable the respective
company to provide services to customers without any time boundation. Similarly, it will
provide an enhanced digital service which is a future of retail market. Also, it will helps
in sorting out the operations of purchase process and provide ease to the customers which
will build a strong position of Tesco in the market.
 Impact of Changes: In order to implement these changes, there are certain factors that
need to be considered by Tesco in order to improve the innovation capabilities by 2020.
Some of the factors that needs to be asses and develop are given below:
◦ Research and development- This is one of the most important factor which is
required for implementing innovation. Research and development division helps in
collecting information about different elements which helps in identifying and
implementing the changes that are required to enhance innovation approach of Tesco.
Also, the respective team helps in understanding the current as well as future
requirements of the customers (Block and et. al., 2016). Along with this, R&D
division can help in understanding the customer behaviour towards a business scheme
and approach. Thus, with such information Tesco can plan certain strategies which
can help in promoting the products and attracting more customers in future
perspective.
◦ Required Resources- In order to launch new innovation of click and collect, it is
important for Tesco to manage its existing and new resources which will be required
while operating the respective function. Thus, initial investment will be required

along with appointing new staff that is well versed by managing digital tools. Also,
there will be a need of space in order to build these lockers along with an advanced
technology to assist security needs. Apart from this, there will be a requirement of
client relationship centre which will assist the customers for any issues and concerns
(Schaltegger, Freund and Hansen, 2016). Thus, by managing these resources Tesco
can implement click and collect technology which will ultimately increase the future
capabilities of respective organisation.
◦ Technical Skills required- In order to manage this innovation, Tesco will require a
technical support such as mechanical engineers, digital marketing manager, etc.
which can be attained by recruiting employees that have such capabilities. By
recruiting these skilled employees, Tesco can minimise the risk of failure and security
issues while putting this innovative plan in practise.
◦ Legal Aspects/ Compliance- While launching click and collect technology there are
various legal frameworks that needs to be taken in consideration. For example, Data
protection act is a law that states that it is important to secure personal information of
the customer such as credit card details, address and other information. By practising
these laws, Tesco can assure that new invention can be launch without any legal
concerns. Also, this helps in earning trust of the customers which is crucial for an
organisation.
◦ Cost of change- This element discuss cost that is involved in putting click and collect
technology in operation. Some of the major cost includes cost of investment, new
employees, advertisement, research and development and many more. By investing in
these elements, Tesco can easily introduce and promote these services which will
help in earning more profitability for the company.
Particular Amount
Initial investment 350000
Total costs:
Raw material
120000
New staff members 45000
Research and development 15000

Marketing 30000
Advertising 60000
Balance 80000
 Feasibility: After managing all the above factors, it is important for Tesco to understand
feasibility of innovative plan. This will provide a better understanding about the scope of
profit or loss that the respective company is going to earn through new inventions. This,
it is important to monitor and analyse market response and make further alterations in the
strategies and innovation plans which will help in attaining future growth in innovation
capabilities.
Addition to this, there are certain factors that needs to be taken in consideration by Tesco in
order to assure success of inventions and build future capabilities. These are discussed below:
◦ Economical Factor- This factor helps in understanding the impact of Tesco ion the
economy of country. By appointing new members for implementing innovation plan,
Tesco helps in creating new employment opportunities which helps in increasing the
growth of economy.
◦ Legal Factor- In order to assure smooth running of operations, it is crucial to follow
rules and regulations such as taxes, interest rate, etc. Thus, by regulating these legal
factors, Tesco can ascertain the success of invention in future and build future
capabilities of company.
◦ Operational Factor- This factor helps in assessing the operations of the new
technology which is Click and collect. As this service involves online order, due to
this there is a less requirement of hiring employees. Similarly, the process of its
operation is less complex which helps in managing operations of click and collect
services of Tesco.
◦ Technological Factor- In order to implement click and collect, there are various
technological resources required. Thus, by adapting these tools and techniques Tesco
can assure a successful launch of click and collect which will help in earning
competitive advancements for the company.

 Approval process: In order to implement these innovative plans and strategies, it is
important for management of Tesco to discuss about the plans and procedure following
with other related factors. Thus, in order to do this, board meeting can be organised. This
will help in discussing all the factors with senior management and board of directors
through which further actions can be taken.
 Apply the changes: After discussing and receiving approval from board of directors,
certain changes can be made in order to implement the innovative strategy of click and
collect technology. Thus, it is the duty of manager and leaders of Tesco to circulate the
strategy in staff members which can help in attaining the future goals of the company
(Schaltegger, Freund and Hansen, 2016). As these changes can affect the brand image of
Tesco, it is important to closely assess and guide the employees to launch the new
process which can help in building future capabilities of Tesco.
 Review the impact of Change: After implementing the strategy, the most important
stage of road map is to closely monitor the impact of changes that have been made in the
business process. Through this, the organisation will be able to assess the performance of
innovative plan. Also, reviewing the impact will help in understanding the factors that
need to be altered according to the needs and demands of the customers to attain
maximum profit from the innovative strategy of Tesco. As the organisation is launching
click and collect, it becomes important to understand the impact of strategy in market and
customer's perspective as it will help in measuring true feasibility of the innovation.
Thus, by implementing road map on the innovation of Tesco which is click and collect,
the respective organisation can understand the impact of new changes that can help in examining
the future growth and capabilities of innovation in Tesco.
CONCLUSION
From the above discussion, it can be concluded that innovation is very essential for the
growth and profit earning of the company. Thus, it is important for the organisation to have an
innovative approach in its operations which will help in survival of the business along with
competitive advantage in the retail market. It can also examined that there are various
innovations that have taken place in retail sector such as brand loyalty programs, customised
products, etc. To maintain a strong hold in the market, it is crucial to adapt changes that are
technical advanced. Thus, in order to do this, the respective company is launching new

innovations such as virtual lockers, self scanner techniques and assistance robots. By providing
virtual lockers, the organisation can assist the customers to avail the service without any time
boundation. Similarly, by launching assistance robots, the company can help the customers to
select products and avail accurate knowledge. Apart from this, these robots are also capable of
assisting international functions of the company which can improve the productivity of firm.
These inventions requires huge amount of investments, thus it is important to analyse all the
aspects while planning and implementing these innovative changes in the market. Similarly, it is
important for organisation to examine different factors of road mapping such as selecting an
innovation, analysing impacts of changes, feasibility, approvals and application of changes.
Furthermore, the last step of the company is analysing the impact of changes. However, it is
important for the managers and leaders to motivate and guide the employees throughout the
process which will minimise the errors and helps in providing more quality services to the
customers. Thus, by practising these elements, organisation can build innovation capabilities.

REFERENCES
Books and Journals
Biemans, W., 2018. Managing innovation within networks. Routledge.
Laffy, D. and Walters, D., 2016. Managing retail productivity and profitability. Springer.
Pantano, E., and et. al., 2017. Does innovation-orientation lead to retail industry growth?
Empirical evidence from patent analysis. Journal of Retailing and Consumer Services.
34. pp.88-94.
Biber, E., and et. al., 2017. Regulating business innovation as policy disruption: from the Model
T to Airbnb. Vand. L. Rev.. 70. p.1561.
Häikiö, J. and Koivumäki, T., 2016. Exploring digital service innovation process through value
creation. Journal of Innovation Management. 4(2). pp.96-124.
Wieland, A., Handfield, R.B. and Durach, C.F., 2016. Mapping the landscape of future research
themes in supply chain management. Journal of Business Logistics. 37(3). pp.205-212.
Soto-Acosta, P., Popa, S. and Palacios-Marqués, D., 2016. E-business, organizational innovation
and firm performance in manufacturing SMEs: an empirical study in Spain.
Technological and Economic Development of Economy. 22(6). pp.885-904.
Gebauer, H., Haldimann, M. and Saul, C.J., 2017. Business model innovations for overcoming
barriers in the base-of-the-pyramid market. Industry and Innovation. 24(5). pp.543-568.
Block, J.H., and et. al., 2016. Commercializing user innovations by vertical diversification: The
user–manufacturer innovator. Research Policy. 45(1). pp.244-259.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E.G., 2016. Business models for sustainability:
A co-evolutionary analysis of sustainable entrepreneurship, innovation, and
transformation. Organization & Environment. 29(3). pp.264-289.
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