Innovation Management at Tesco: Strategies, Performance, and Future

This report provides an in-depth analysis of innovation management at Tesco Plc, a multinational retail giant. It begins with an executive summary highlighting the importance of innovation for organizational success, followed by an introduction that defines innovation and its relevance to Tesco. The main body of the report explores Tesco's history of innovation, including the introduction of self-service supermarkets, the Clubcard reward scheme, online shopping, and the use of robots for product delivery. The report examines Tesco's current innovation performance and capabilities, focusing on future projects like interactive screens, photo shopping lists, and micro-home delivery, aiming to enhance customer shopping experiences. A SWOT analysis is conducted to assess Tesco's strengths, weaknesses, opportunities, and threats related to innovation. Finally, the report discusses the broader retail industry in 2020, emphasizing the role of technological advancements and innovation in driving sector growth. The report concludes by summarizing the key findings and implications of Tesco's innovation strategies.

Managing Innovation in
Business

EXECUTIVE SUMMARY
With the help of this report, it can be summarised that innovation plays a crucial role in
making an organisation successful. It is important for the organisation to manage innovation
effectively so that they can improve their productivity, efficiency and profitability. In this report,
Tesco is taken into consideration. On the basis of the history of innovation of Tesco, it can be
analysed that there focus on innovation is since they came into existence. Due to this, they have
the capabilities of introducing new innovation in the future effectively coping up with
competition and improving customer satisfaction. In this report, various factors determine that
leads to Innovation and has an impact on innovation. Such factors can be analysed with the help
of SWOT analysis.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Overview of the organisation and history of innovation........................................................4
Performance of existing innovation and capabilities of Tesco Plc.........................................6
Industry in 2020......................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Innovation is the practice with the help of which creative and unique ideas are developed by
the organisation for improving the customer’s experience (Dewick and Foster, 2018). It provides
various better solutions to the problems so faced by the individuals or the unmet need of the
customers. Innovation can be introduced by the organisations in the products and services so
offered by them, technologies that businesses uses, processes that are undertaken by the
companies etc. This report is prepared with the aim of developing an understanding of the
concept of innovation and the ways of managing it. For this report the company that is taken into
consideration is Tesco Plc. which is a supermarket chain. In this report the innovations history of
the company is discussed along with analysis of their capabilities. Apart from this the innovation
that can be adopted by the company in future are taken into consideration.
MAIN BODY
Overview of the organisation and history of innovation
Tesco is a multinational general merchandise retailer whose headquarters are in Welwyn
Garden City, Hertfordshire, England, United Kingdom. It was founded in the year 1919 as a
group of stalls in a market. They are operating in various countries across Asia and Europe.
Tesco has adopted various innovations in their operations from time to time so that they can
make their customers happy. The two most crucial drivers of the introducing innovation in Tesco
are the need of the customers and various market forces (Tesco Plc, 2018).
Tesco has always into the list of the companies who adopts innovation consistently since
they have come into existence. The history of innovation in Tesco is discussed below:
 In the year 1956, a self services supermarket was established with the name Tesco with
the help of which the customers can pick products as per their need. Also this reduced the
cost of employees as self service supermarket reduces the requirement of the employees
(Nenonen and Storbacka, 2018).
 In the year 1995, a clubcard customer reward scheme was launched by the company
which was as innovative at that time as it engaged the customers with the supermarket.
This gradually increased their sales and thus the profitability of the company.
 In the year 2000, the company went online. This innovative move of entering into the
digital market facilitated them in taking competitive advantage. With the help of this

website the customers could make online purchases of the products so offered by the
Tesco.
 In the year 2015, the significant market research was conducted by Tesco in which they
identified those products which has least demand. They stopped the production and
distribution of such goods in order to reduce the overall cost of the company.
 In 2017, the most innovation action was taken by the company in which they launched
robots for the delivery of the products. In addition to this adopted various innovative
systems such as code scanner, voice control, digital and online payments etc.
Such innovation of the company can be understood effectively with the help of 4P’s of
innovation. With the help of this model of innovation it can be understood that which change is
radical and which change is incremental for the organisation. The 4P’s of innovation are:
 Product: This reflects the changes directly to the customer which an organisation has
introduced by way of innovation. The self service supermarket was an innovation that
could be put into this category. With this innovation Tesco could increase their sales as
this was a radical change that was launched first time in this industry.
 Process: With the help of this, the ways that facilitate the company in making their
offering available to the customers are analysed and innovated. Tesco went online due to
which the customers can shop online. This was an incremental change as with which they
enhanced their sales and their presence in the in the market.
 Paradigm: This reflects the changes in the underlying mental modes that enable them to
determine what the organisation can do. The managers of Tesco realised the need of
going hand-in-hand with the changing technology and due to this they introduced robot
and other innovative system such as digital payments, code scanner etc. which became
must for satisfying the customers. Due to this they shifted their paradigm accordingly
towards this incremental innovation.
 Position: With this the company can innovate their product and services in such a manner
that they can directly hit the target market. Such as Tesco with the help of market
research reduces production of all those goods which are not demanded by the customer.
This will position them as a supermarket which take into consideration the needs and
wants of the customers.

It is important for the organisation to understand the impact of various micro and macro
factors as they have direct influence on the innovation (Taylor, 2018). The impact of various
macro factors on innovation of Tesco is that in UK the political situations are stable which has
positive impact on Tesco while the risk of economic recession in UK has adverse impact on the
innovation strategies of the company. But the people are becoming more prone to innovation due
to which Tesco need to innovate their services. Along with this, technology has direct impact on
the innovation so launched by the company. Innovation is supported by the technology such as
Tesco had to launched self payment system, robotic delivery etc. so that they can serve the
customers better (Most innovative companies, 2018).
Performance of existing innovation and capabilities of Tesco Plc.
With the innovation the organisation take competitive advantage over others by improving
their efficiency, productivity and profitability. Tesco is a supermarket that has been operating in
various countries due to which they have to adopt significant innovation so that they can cope up
with the changing needs. Introduction of innovation within the organisation depends upon their
internal capabilities and their performance in the past innovation so introduced. The person
responsible for innovation in Tesco states that all the innovations which are to be taken by the
company depend upon technology (Zouaghi, Sánchez and Martínez, 2018). All the organisations
consistently focus upon innovation by upgrading their technology. Innovation that can be
introduced by Tesco in future related with interactive screens, micro home delivery photo
shopping lists. All this will lead to improved customers shopping experience is there shopping
trip will become short, quick and convenient.
The first project of innovation on which the Tesco focuses upon is interactive screens.
This innovation will fill the gap between online and offline shopping. With the help of this the
customer who visits to the store can order those products which are exclusively available on the
website of the company or any other online platform. For this R&D department of Tesco is
developing such an interactive screen that can enable them to adopt this innovation. This
innovation will enable the company in making innovation performance better than all the other
players in the industry as they introduce such innovation before any other player plans to do so
(Most innovative companies, 2018).
Another innovation on which Tesco is focusing is the photo shopping list. This innovation
will enable the customers to upload their shopping list on the website of the company. The

website handler will provide such a list to the store manager so that the products can be delivered
to the customers. Such innovation will make shopping so very convenient for the customers that
it can make them loyal to the company for a longer period of time. With the help of this plan of
innovation, it can be analyzed that Tesco is capable enough of introducing various advancements
for improving the satisfaction level of the customers. It will lead to the performance of Tesco in
comparison to its competitors just by adding a small feature on their website (Edgeman, 2019).
Another project of innovation on which the company focuses is a micro-home delivery
which states that even the products of micro value will be delivered to the customers. This will
lead to the eradication of the limit which has been set by the company as a minimum amount for
getting the product delivered home. Such innovation in the organization reflects its better
performance.
It is important for the organisation to understand its internal capabilities so that they can
formulate their strategies in combination with the opportunities and threats present in the
business environment. The capabilities of Tesco can be analyzed with the help of SWOT
analysis which is given below:
Strengths: Tesco is considered to be one of the most innovative organisation which aims
to serve the customers in an effective manner. As they are operating in different countries they
have advantages of globalisation. They offer a wide range of products with significant
diversification among them becomes the strength of the company. They have the capability of
launching new products by way of innovation frequently. This enables them to maximize your
market share by enhancing their profitability and productivity. Also, the loyalty of the customer
is there strength as the prime focus of the company is the satisfaction of the customer.
Weaknesses: The performance of the company depends upon the economic condition in
which they are operating. UK has been facing various issues related to the trade agreements due
to BREXIT which has an impact on their cost of procuring inventory from other countries. Due
to increased cost, they have to reallocate their budget that has an impact on funds allocated to the
R&D department for conducting research that can facilitate innovation. Limitation of the budget
has a direct impact on innovation that the company wants to introduce (Hänninen and Paavola,
2018).
Opportunities: Tesco has been offering a wide range of groceries and General
Merchandise. Due to this, they have an opportunity to expand their offering and to enter into a

new market. The customer loyalty towards Tesco is high which will make it easier for them to
make their customers accept their new offerings which can be clothing, footwear, accessories,
etc.
Threats: The emerging level of competition has a direct influence on Tesco. The merger
of ASDA and Sainsbury may have an impact on the market share of Tesco as by this merger both
of these companies can easily take over the customers.
Industry in 2020
In every country, the retail sector contributes to the GDP to a greater extent. Due to this
consistent innovation is supported in the industry so that their better performance can be insured.
With the speed increasing need for technological advancement, the growth of the sector is also
improving. Some of the highly technological innovation has been adopted by this sector which
includes the use of robots so making the delivery (Cheah, Ho and Li, 2018). With the use of
artificial intelligence, the research and development department of Tesco has developed robots
that facilitate customers in resolving various issues faced by them within the supermarket. This
leads to improving the satisfaction of the customers. Various projects of innovation of Tesco are
in process that will facilitate them in accomplishing their goal in 2020. Some of such innovation
includes establishing interactive screens, customer-friendly stores and many more. The
increasing competition pushes the company to adopt some or the other innovation to ensure its
survival. The players of the retail industry are using information technology for dealing with
such competition as this will facilitate them to improve their processes and products. The trend
that has been identified within the industry includes:
 All the organisations are adopting sustainable paradigm shift as customers are demanding
more options.
 The re-invention of the services because the customers seeks uniqueness in the services
both online and in-store.
 Due to increasing digital era the retailers are pressurised to adopt new commercial
models for improving the delivery of the services and requirements of the customers.
 The retailers for improving the experience of the customers need to adopt more
personalisation and experiential shopping models.

CONCLUSION
It is concluded from the above report that it is important for an organisation to introduce
innovation so that they can ensure their survival improve satisfaction level of the customer. For
determining the need of innovation analysis of internal and external environment is to be done
with the help of SWOT and PESTLE analysis. Along with this the performance of the company
on the existing innovation is to be analysed so that their capabilities of adopting innovation in
future can be identified.

REFERENCES
Books & Journal
Cheah, S., Ho, Y .P. and Li, S., 2018. Business Model Innovation for Sustainable Performance in
Retail and Hospitality Industries. Sustainability, 10(11), p.3952.
Dewick, P. and Foster, C., 2018. Focal organisations and eco–innovation in consumption and
production systems. Ecological Economics. 143. pp.161-169.
Edgeman, R., 2019. Performance Management and Enterprise Excellence Through Sustainable
Business Models. In Sustainable Business Models (pp. 317-359). Palgrave Macmillan,
Cham.
Flanding, J .P., Grabman, G. M. and Cox, S. Q., 2018. The Technology Takers: Leading Change
in the Digital Era.
Hänninen, M. and Paavola, L., 2018. Digital Platform Led Industry Transformation: A Case
Study from the UK Grocery Retail Industry. Academy of Management Global
Proceedings, (2018). p.115.
Nenonen, S. and Storbacka, K., 2018. Smash: using market shaping to design new strategies for
innovation, value creation, and growth. Emerald Publishing Limited.
Taylor, T., 2018. Strategies to Improve Business Performance with Information from Social
Media.
Zouaghi, F., Sánchez, M. and Martínez, M. G., 2018. Did the global financial crisis impact firms'
innovation performance? The role of internal and external knowledge capabilities in high
and low tech industries. Technological Forecasting and Social Change. 132. pp.92-104.
Online
Most innovative companies. 2018. [Online]. Available through:
<https://www.fastcompany.com/company/tesco>
Tesco Plc. 2018. [Online]. Available through: <https://www.tescoplc.com/about-us/core-
purpose-ands-values/>