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Tesco HSC: A Case Study


HSC is the global services arm for Tesco worldwide, providing key business services for Tesco operations globally. Sanjeev Nagwekar, Director, Property Services, Tesco HSC, spoke about the inception of the centre.

The Hindustan Service Centre (HSC) is the global services arm for Tesco worldwide, providing key business services for Tesco operations globally. Tesco HSC is involved in creating and executing strategic initiatives covering IT, financial, commercial and property, among others. An interview with Sanjeev Nagwekar, Director – Property Services, Tesco HSC, reveals about the inception of the centre and explains why the centre is one of the most important arms of Tesco Worldwide.

What does Tesco HSC bring to India

Established in 2004, Tesco Hindustan Service Centre (HSC) is the operations and technology centre for Tesco Worldwide, employing over 6,500 employees including engineers, analysts, architects, finance professionals, chartered accountants, and more. As an integral part of the company, it drives value across IT, business operations, finance, property and commercial services.
The operations in India include sourcing the service centre, as well as a franchise arrangement with Tata Group. Operations in India are crucial to ensure that business here runs smoothly and that their stores around the world are well stocked with products from Indian suppliers. They also source over EUR 300 million worth of products from Indian suppliers every year, representing around 7 percent of their international sourcing, and keeping the sourcing offi ces in Bengaluru and Delhi very busy.

On the global footing, what makes Tesco different is the end-to-end ownership and support throughout the life cycle of a retail store, acclimatisation to different operating conditions across continents like Europe and Asia, meeting customer expectations and better governance. But the idea behind setting up property support in India is:
To enable process consistency across different parts of Tesco World to drive efficiency and synergy.

Building house capability (global skill sets) to build and develop intellectual property.

To implement constant process improvement–a ‘fix and move’ approach.

To simplify business through integration.
Tesco is the only retailer globally that involves the property services team from its shared service centre–Tesco HSC–through the complete store lifecycle, across 12 markets. The team typically works in four phases–research and acquire, design, build, and maintain. Unlike other players who have a localised approach, the property services team supports Tesco by conducting a gamut of activities encompassing initial research for all markets prior to setting up a store; assessment of the cost benefits of a location; creation and implementation of standardised design principles to help understand customer preferences; the design of all four categories of stores (New Stores, Refresh, Retrofit and Rightsizing); space range merchandising; and overall maintenance.

Also, from an engineering, architectural, structural, electrical and mechanical design perspective, the property services workforce has started to offer a detailed layout for each store, in addition to ensuring maintenance and vigilance for all existing stores, controlling and monitoring remote store equipment, and improving cost efficiencies for store upkeep.

Marking its presence in India

We have now been in group operations and technology centre in Bengaluru for a decade. “It is too early to speculate on expansion plans at this stage as we need to allow political and new retail policies to settle in India before we can begin planning the next phase,” says Nagwekar. He further adds that Tesco HSC’s contribution to the global value chain has brought about automated and simplified processes, cost deductions and increased sales through constant innovation and unique solutions; this contributes significantly to the global value chain.

Building domain capability

The team has developed the capability to first understand and learn the unique construction or design standards of each country and, subsequently, it brings to the table intelligent drawings in line with individual market requirements. Other players outsource this function since it is extensively time consuming.
On a global footprint, Tesco needs candidates with essential soft skills like collaboration, empathy, responsiveness, resilience and innovation. It also looks for retail domain knowledge in a candidate as a part of hard skills. Designers and architects must have an eye for detail, understand local architecture and must be well acquainted with a country’s culture, weather conditions, customer needs and the availability of resources. They must also develop and provide solutions that will help build stores faster and enable the business to be quicker to market, alongside extending a consistent brand experience to the customers.
Some of their capability building activities include:

Developing a wide and varied talent pool of architects, engineers, interior designers, analysts, etc.

Continuous and robust training and knowledge acquisition; exposure to skills is not acquired during academic careers

Building functional capability through presence of domain experts from Tesco Group countries

Going digital (the 3-dimensional approach as opposed to the traditional 2-dimensional approach).

Nagwekar emphasises that at present their focus is around understanding:

The right format that will work well in India (Daily / Extra / Market)

The market segment they want to focus on (Urban / Rural / Metro)

Finding and retaining a well-trained workforce

An optimised supply chain module that will benefit the end user as well as the producer and supplier
Technological innovations 

According to Nagwekar: “HSC has been a front-runner in driving innovations that offer convenient options for consumers across their shopping experience, in accordance with the company’s multi-channel strategy. From offering options like mobile payments to online shopping, mobility is at the forefront of our innovation.” The team has been contributing to the global business significantly by creating user-friendly smart phone-based applications, which allow customers to ‘Shop on the Go’, search for products, create a shopping basket and determine when they would like to collect it – or have it delivered. They have pioneered world-class products, platforms and services that have added immense value to customers across the globe. Some examples of innovation that have helped them enhance the value and capacity of Tesco globally are detailed below:
Online shopping app (international grocery home shopping)
After successfully running as the UK’s top e-commerce site and the most profitable grocery home shopping site in the world for more than a decade, Tesco decided to offer grocery home shopping in other countries it operates in. Tesco launched its online grocery shopping service for customers in Czech Republic, Poland, Hungary, Slovakia in Eastern Europe, and Thailand and Malaysia in Asia. The new service offers over 20,000 lines of fresh and frozen food and groceries, as well as non-food items such as toys, stationery and accessories. The launch followed a successful trial with customers and staff in November and is part of Tesco Group’s strategy to be an outstanding international retailer in-store and online. This kind of app and online store is yet to be developed for Indian markets.
Launch of IGHS 

The dotcom team from Tesco HSC was instrumental in evolving the architecture and implementing a new platform to enable launch of IGHS in multiple countries.
Key challenges included core code base to support multiple (25) countries; the ability for the platform to serve more than one country from a single deployed instance; allow the customers to browse the site in multiple languages; allow the site to be hosted across multiple data centres; be flexible enough to support variations in business processes; and product data and legal or compliance requirements of each country. The IGHS also needed to allow engineering teams to upgrade parts of the system while the site is live.
The engineering teams at Tesco HSC adopted an agile development methodology to build this gradually. Best practices such as continuous deployment allowed the team to have a working end-to-end e-commerce site for the non-engineering teams to provide feedback and train themselves well before the feature was moved to production.
Mobile applications (‘Shop on the Go with Tesco’)

To enable the customer to shop using mobile, Tesco launched mobile grocery applications on both Android and iOS. A couple of really interesting and user-friendly features provided by this app are barcode scanning support and recipe share. Now, when a user sees an interesting product, whether at friend’s place or even on the train, they can scan the barcode and add the product to their basket. Voice search is another concept that the team is working on. It can really help save time when searching for products on a smartphone. The app allows you to complete most of the tasks that you can on the Tesco grocery website. These include:
Searching for products and adding them to your basket.

Booking, viewing and changing delivery slots.

Viewing favourites (anything bought from a particular store earlier) and adding them to the basket.
Viewing pending orders.

Amending orders.

An additional feature that makes the app especially handy is a very useful shopping list feature where you can keep jotting down things that you want to buy later. The shopping list is directly integrated with the search feature. The Tesco mobile application developed out of HSC for the UK has seen over 1.7 million downloads on iOS and over 800,000 downloads for Android. Tesco mobile shopping is currently available in the UK, Republic of Ireland, Thailand and South Korea. There is also a recipe finder on the iPad that allows customers to browse ways to make their favourite dishes.
Learnings across 12 different markets

Customer expectations and cultures are different and this difference impacts product offerings and store design.

Operating conditions and local architecture are different; this affects store development cost.

Infrastructure development is at a different maturity level, which has an impact on the distribution channel.

Real estate cost varies dramatically and this affects return on investment.

Availability of trained workforce as well as the cost is a constraint and has a direct impact on sales.

Building global sourcing capability is key to optimising the sourcing costs.

Therefore, our approach to global expansion needs to be substantiated by thorough research.

Newer platforms

Tesco’s new platform ensures that all applications–online, in-store tills, self-service machines, or mobile–will run on the same system and in the same way.

Tesco’s cross-channel activity is now much easier to handle, and paves the way for services like order online and pay in store.

A store is no longer an island. The architecture connects stores with the outside world and helps the retailer act as more of a single entity instead of in separate channels, which is ultimately the aim of multichannel retailing.

Technology is becoming more central to how retailers do business; it will drive sales on the Internet in addition to enabling constant store improvement.

“It is too early to speculate on expansion plans at this stage as we need to allow political and new retail policies to settle in India before we can begin planning the next phase,” says Nagwekar.