A truly innovative concept: virtual shopping through QR codes while waiting in the underground or train stations. The case is from Tesco Home Plus Korea, a subsidiary of the wordwode retailer with presence in 14 countries. Normally, a key driver of retail revenues is the total real estate area of the chain stores, but Tesco has challenged this conventional wisdom through the Home Plus offer. Indeed, the retailer needed to increase the number of customers against the local market leader, which has many more stores, but without incurring in the heavy capital investments needed to increase the real estate space in the densely populated Korea.
- Brand: Tesco Home Plus – Retail Food
- Concept: Virtual shopping with mobile phone in subway stations
- Goals: Increase retail customers, innovating the purchasing process, without investing in new stores
- Value prop: Convenience, saving time and effort for commuters
- Channel: QR codes in subway station billboards
Tesco solution is a radical innovation of the conventional shopping journey: rather than bring customers in the store, bring the store down where customers where have time to spend. Simple but truly disruptive.
Tesco thought that thousands of commuters are waiting daily in Korean subway station waiting for trains. The new retail experience is conveien: Tesco placed in the the station halls ligthed hires photographic panels that truly mimic shelves normally used in its stores. Same shelves, same order, same Tesco experience. Each product is a perfect replica of the original plus has a visible QR code (see: Mobile Marketing: what QR codes are). People waiting for transportation use a mobile shopping application on their smartphones to scan all the virtual product QRs, fill a virtual cart and complete their daily or weekly shooping thorugh wlking along the large panels. At the end, they can check out and pay with their own credit card using the regular e-commerce portal which Tasco had for broadband customer. In fact, Tesco leverage the same e-commerce fullfillment and its logistic to guarantee the delivery directly to shoppers home during the evening hours. As such, this new channel just fills and give more efficiency to Tesco supply chain for delivery, extending the effectiveness of the online operations but getting the customer segment which you usually find in the stores.
The concept is innovative for two reasons: it is very convenient for customers, who use their waiting time for daily shopping, thus saving more of their limited personal free time . Moreover, the buying process mimics exactly the physical experience they are used to: virtual shelves are hi-res and bright to simulate the buying process of wandering and selecting products through real shelves. No training needed, lower costs for launch and better customer acceptance than conventional online shopping. This is quite different than going through painful catalogues over a PC in the regular e-commerce portal. It is also a fun experience. Secondly, Tesco gains a significant increase of its retail space without building or buying new real estate and all the associated operating expenses (conditioning, crew, light, … etc), thus getting a strong positive impact on margins and cash flow from operations. Renting billboard across all stations is far cheaper, but more important is much faster to catch up the incumbent retailer floorspace compared to build and furnish a brand new physical store. QR codes are perfect for this: they easily integrate the physical experience with the huge potential of online e-commerce.
The results were remarkable: e-commerce sales grew by 136%, and Tesco has become the new online shopping leader in Korea. Obviously, we could debate if this model could easily be copied in a different culture like the European one, but this does not change the innovative and disruptive thinking behind. An excellent example of blue ocean strategy: innovate a business model to do something radically different then your competitors.
Published by Carlo Arioli