Jon Rudoe, Digital & Technology Director, Sainsbury’s, spoke to Emma Herrod about transformation, digital and technology, and why IT is now about people.
Over the next few months, Sainsbury’s plans to launch its online clothing offering UK wide, install WiFi in its supermarkets, continue the test and rollout of a mobile app which will take store customers from compiling a shopping list to paying for their shopping on their mobile phone, and expanding its Digital Team – which works across the business – from 100 to 400.
This is all part of Sainsbury’s evolving strategy to enable its customers to shop whenever and wherever they want.CLOTHING
The retailer has been engaging online with customers of its Tu clothing range since launching a standalone regional pilot site in August 2014. Operating in the Midlands only, the pilot has been “very successful,” says Jon Rudoe, Digital & Technology Director, Sainsbury’s . He adds that the company is building on sales of its men’s, women’s and children’s clothing ranges in store which have made it the seventh biggest clothing line in the UK by volume and eleventh by value. More than 7.5 million customers buy the range and, in the 2013/14 financial year, it generated annual sales of approximately £750m. “It’s been growing at more than double the rate of grocery retailing,” adds Rudoe.
“Clothing is a different mission online than in store,” he says. Consequently, the company has been moving customers on from regarding clothing as a complementary purchase while they are doing their grocery shop in store to seeing it as a dedicated clothing purchase online.
The standalone clothing site is being rolled out, store by store, across the country during the first half of 2015. This is so each one is ready to accept click and collect orders as the site goes live in their area. Customers can also choose to have their order delivered to their home. All orders are fulfilled from Sainsbury’s central clothing depot in Bedford, which also handles replenishment for the 400 stores stocking the clothing range.MOBILE SCAN & GO
Following a more iterative process with roll-out later this year is the Mobile Shopping App. This takes store customers all the way from compiling their shopping list through to paying and checking out in-store. Another version simply gave customers a running total of what they were putting into their basket or trolley in the supermarket, explains Rudoe, while Mobile Scan & Go, tested since 2012, took customers from scanning items as they shopped through to paying at a dedicated area in-store. This has been trialled at supermarkets in Tadley in Hampshire, London Colney Superstore in Hertfordshire and Leicester North.
The latest version of the mobile shopping app is being tested by staff at a store in south London and Rudoe says that with the app changing almost weekly, roll-out will be happening throughout 2015. “When it’s ready we’ll start to do it,” he says.
The app enables customers to build a virtual basket of their favourite products from anywhere, before they shop. It then helps them to navigate around the store and find the items they want faster, allowing them to scan items at the shelf and then pay via their mobile without going to a physical till.
“95% of Sainsbury’s customers shop in-store and over 60% of them write a shopping list before visiting, so Scan & Go is digitising a real customer need,” says Rudoe.
Developing the app has been challenging. The Digital Team has had to make sure that it’s ready for colleagues and customers and that the technology and processes are robust, since the items that customers are looking for have to be in the correct location in-store as indicated by the map on the app. The checkout and payments method also has to be secure, and Sainsbury’s has already announced that it will work with mobile payments facilitator Zapp. Rudoe says the company will “probably build that into our shopping app” as well.
It is also about to launch another version of its on-demand film, television and music Entertainment site on the unified platform. The grocery site continues to evolve with small changes since the company’s migration to IBM WebSphere. The Delivery Pass and green delivery times, which show online customers when a van will be in their area, are two recent innovations.CULTURE & CAPABILITY
Combining digital with technology in one role, rather than having a ‘traditional’ IT director, is how Sainsbury’s is keeping everything it does with IT customer-centric. In the same way that systems have evolved from simple product to warehouse to store to customer, so digital now pervades every part of the business, enabling customers to buy what they want via whichever channels they prefer, explains Rudoe. Product is moving around the business from warehouse to store or direct to customers. Product information is needed by many different parts of the business from the web and mobile sites to the product size information being used for delivery.
“Complexity has grown out of all proportions,” says Rudoe. If you go back 15 – 20 years, technology was present but not in the hands of customers. Systems were large and supply chain and IT were outsourced to Accenture. “Unless systems broke, the CEO didn’t want to talk to you.”The company has been thinking very hard about architecture and services, and how it reuses components and platforms and makes data available across the business. In 2012, it purchased a Teradata Data Warehouse Appliance to accommodate its rapidly expanding requirements.
IT is now about reusability and scalability of architecture and not silos, explains Rudoe. It comes back to iterative processes. If you want rapid releases, you can’t go back and test and change lots of core systems. They have to be able to evolve along with the businesses. “That gives us an interesting set of puzzles,” he says.
Digital has moved from self-service checkouts in-store, to a device that staff or the customer carries with them, so Sainsbury’s drive is to be customer-centric in the technology that’s used as well as the developments. “It’s a multi-year journey,” says Rudoe, so the company is working on the most important things first that differentiate it, hence the Mobile Scan & Go app.
“The big thing for us is development iteration,” explains Rudoe. The company has to think carefully about what it’s developing; what drives competitive advantage and how it can be built in-house rather than using an off-the-shelf product – although “the back-end is plug in,” he says.
“We want to be able to experiment, to change,” adds Rudoe, which is why the company is now doing development in-house and expanding its digital team through a new Digital Lab space at its offices in Holborn, London. He’s keen to point out that the Digital Lab has not been created for people to experiment and play with technology, although there will be an element of that. The focus of the team’s development effort will be on things which will differentiate the retailer and make a difference to its customers – such as the mobile app which is digitising a customer problem. “That’s a key point,” he says, since the Digital Lab – which he is “recruiting heavily” for at the moment – will be run around modern, iterative approaches to development.
Sainsbury’s purchase of the Entertainment business was the beginning of its shift towards in-house development as it provided a seed capability for innovation. The Digital Lab comprises a team of around 100 with plans to recruit a further 300.CUSTOMER AT THE HEART
Uptime is no longer the key measure for digital, says Rudoe, as the drivers have changed to how something works, whether customers can use it, their experience, and whether it is cost effective and scalable.
As an omnichannel business there are products that each customer buys regularly and there are multiple ways that they can buy them from the company. Sainsbury’s aim is to show customers what they have bought, when they need to buy more and for them to buy those items in any channel. Past purchases in-store are already shown online. Seeing customers in another touchpoint shows more about them so there’s also a big CRM issue, he explains.
“We know our customers better than anyone else,” Rudoe says. Twelve million of its customers have a Nectar card and the company processes 24 million transactions per week with customers increasingly purchasing little and often from convenience stores. Over £1bn is spent online through the grocery business – a figure which the new ecommerce platform has the capacity to double.
“So, not only do we know them personally – through store staff having conversations with them – but we also know them through the data of the longstanding Nectar loyalty scheme,” he explains. “We have a long-term agreement with Nectar to do more.” There is also a Sainsbury’s-wide project not only to improve the single view of the customer across the business but also to join up each customer’s identifications with the different parts of the brand, as it isn’t just a grocery and clothing business. Rudoe’s remit encompasses the digital component of the products the company sells such as the ebooks, films, videos and music sold by the Entertainment business, as well as banking and general merchandise.
Sainsbury’s wants to be there for its customers wherever and whenever they want to shop, be that at a physical store or increasingly “where they are” using a device such as a mobile, Rudoe explains. “We’re being there on devices as that’s where customers are.” Sainsbury’s is also ‘being where’ its customers are away from its stores, too, as shown by the expansion of Click & Collect to London Underground stations.
Of course, technology is not just for customers and customer-facing
operations; a key part of the business is getting the right technology into the hands of colleagues such as store managers. For example, information which in the past would have been printed out on paper can now be delivered digitally. Technology change is affecting staff in other ways, too. Those working in customer-facing roles are used to being asked by customers where something is in-store, but now they could be asked about how the mobile app works or how to access the store WiFi.
So, part of the transformation at Sainsbury’s is about getting staff more comfortable with technology and “used to kit”. Colleagues can talk digitally to each other via Microsoft’s Yammer enterprise social-networking platform. They have also been partnered with a digital mentor as part of a two-way system. These digital mentors additionally act as a focus group for the business.
The retailer is operating in difficult times with the industry going through a “once in a generation change”. It is evolving its strategy to address the continuing shifts in shopping patterns, something which CEO Mike Coupe believes will lead to a greater emphasis on product quality and ease of shopping, and an increase in multichannel shopping.
“The key word for our strategy is evolving,” says Rudoe, explaining that most of what the company is doing is a continuation of what it has done in the past – with a change of emphasis. The digital experience is at the heart of what his team does and it is “getting going on technology inside the organisation and with customers”.
With a new grocery platform, clothing soon to go live and internal data projects to link up customers across the brand running alongside looking at ways to differentiate through mobile, the plans for digital in 2015 are already looking busy – fortunately, the digital team is also about to get much bigger.
Additional Information:Strategy Box:
In November 2014, Sainsbury’s set out how it plans to evolve to win in a ”once in a generation” time of change for the industry. Customers, it said, are turning online and to convenience stores and away from out-of-town stores as they shop more often, and supermarkets must adapt.
It concluded from a six-month review of the business that supermarket sales will continue to fall in coming years. It said it would prioritise investment in online and multichannel as well as convenience stores. That investment includes opening its first dark store in 2016 at Bromley-by-Bow, as well as focusing expansion plans on convenience stores, which will make up more than half of its new openings in the years to come.