What Your Company Can Learn From Tesco And Peapod


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You know the relationships between your customers and your company are changing. Driven by digital disruption and radically increased expectations for easier and more enjoyable customer experiences on the part of ever-smarter customers, the importance of more intelligently doing business is growing daily for every firm–no matter what your industry or business model. So how does a company do this?

One example of how digital innovation and an understanding of smart customers can radically alter a market sprouted last summer in the South Korean grocery business. The No. 1 player, E-Mart, had a dramatic advantage over Tesco Home Plus: a massive advantage in scale and distribution, driven by significantly more stores. The challenge for Tesco was as simple as it seemed insurmountable: How do we become No. 1 without increasing the number of stores we have?

By researching its market and customers, Tesco learned what readers of our book already know. Like smart customers everywhere, time-starved workers in South Korea want what they want, when and where they want it. In fact, they dread carving out the hour or more it takes to shop for groceries. Combining a deep understanding of customer wants and needs with smart touchpoints, Tesco launched a radically simple innovation: bring the store to the people by setting up virtual grocery stores in subways and at metro stations, so people can literally shop for groceries while they’re waiting for the train, without ever visiting a brick-and-mortar store.

These “stores” feature larger-than-life photos of grocery shelves stocked with popular products and household staples organized much as in a traditional grocery store. Using smartphones, shoppers simply scan codes for the items they want, dropping them into a virtual shopping cart for delivery to their doors shortly after they arrive home. By turning traditionally “dumb” advertising touchpoints into smart, virtual stores, Tesco is saving customers valuable time, while also gathering the kinds of data that can make their company even smarter. The result? Online shopping increased 130 percent, propelling Tesco to No. 1 online, and dramatically closing the offline gap with E-Mart.

In May of this year, Peapod followed suit in the United States, opening an entire virtual store in Chicago’s highly traveled State and Lake Station Tunnel. Standing in the station or sitting on the train, commuters manage their shopping lists and delivery schedules, saving time, simplifying their lives–and taking business away from stores where they’ve been buying for years. The program has been such a success that Peapod has announced another 100 virtual stores launching soon–including 17 more in Chicago.

These lessons can apply to any industry. By examining the ways they looked at their customers and markets and leveraged digital innovation to connect in new ways, these companies changed the rules of the game–and did so while turning the traditional advantages of their competition (physical stores, lots of employees, etc.) into disadvantages.

No matter your business, touchpoints will keep getting smarter, just as they will keep expanding exponentially. Companies like Tesco and Peapod will continue to innovate, turning “dumb” touchpoints into smart “sense and respond” touchpoints, leaving their competitors saying, “Why didn’t we think of that?”

Companies that figure out how to leverage smarter touchpoints to knock down traditional barriers will create competitive advantage and dominate in the future. As for the others? Well, it’s not going to be much fun standing in your industry’s equivalent of an empty store, watching your former customers flock to the competition.

Republished with author's permission from original post.


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