In 2011, Tesco created a new type of retail experience by opening virtual grocery stores in Seoul, South Korea. Wall-length billboards designed to resemble supermarket shelves with products and pricing were installed on the platform and wall spaces of subway stations and bus stops. To shop, commuters only had to scan the barcodes or QR codes on the billboards with a mobile app to add products into their online shopping cart, and then pay in the app. Customers could make a purchase on their way to work and the groceries would be there when they get home.
The virtual stores in Seoul drove over 900,000 app downloads in less than a year, and the online sales saw a 130% increase since the introduction of the concept.
Following the success in South Korea, a UK-first interactive virtual grocery store was opened at Gatwick Airport’s departure lounge in 2012. Travelers could place their grocery order as they wait for their flight after checking in and have it delivered once they return from their trip.
What Tesco did…
Understanding the consumers and adapting to their lifestyle
A huge part of the success stemmed from understanding the demography and the consumers’ lifestyle.
- South Koreans have generally received higher levels of education and are tech-savvy. Around 96% of the population uses the internet, and the smartphone penetration rate is approximately 91%.
- South Koreans also have one of the longest average working hours in the world. Long hours and busy schedules create market demands built around conveniences.
- In Seoul, 65% of the population uses public transportation for their daily commute, with a majority using the metro system and bus system.
Turning pain points into opportunities
Many South Koreans may not even have the time to squeeze grocery shopping into their hectic schedules. The Tesco virtual stores allowed commuters to make better use of that little bit of waiting time for grocery shopping, saving time on making trips to the physical stores.
Similarly, in the case of Gatwick Airport, Tesco identified a common problem for holidaymakers and business travelers — coming home from a trip to an empty fridge with all the essentials like milk and bread either missing or expired. Tired from the long flight, grocery shopping just seems like a hassle. The virtual stores put that time waiting to board a flight to efficient use, allowing their customers to have one less thing to worry about when they return home.
What we can learn from it…
- The campaign is an excellent example of how to proactively catch on-the-go customers — simply by being where the customers are at.
- From a business perspective, this could imply reduced costs associated with running a physical store since they can either skip the physical storefront or only require a small store for pick-up only, much like the operating model of HKTVmall here in Hong Kong. Supermarkets no longer have to stock so much product on their shelves, meaning less wastage due to shelf life.
- However, consumers are unable to touch and feel the product itself despite the life-size billboard displays. Fresh produce such as meat, seafood and fruits, which consumers typically handpick themselves based on the produce’s freshness or ripeness, may not work so well with this virtual store model unless there is already an established brand trust.
- Great for driving brand presence and brand awareness
Can it still relate?
Undoubtedly, the concept made busy people’s lives easier and commuting more productive. But how relevant is such a campaign today? Can it still speak to consumers the same way as it did when it was first introduced?
When Tesco launched these virtual stores 10 years ago, m-commerce, or mobile commerce, was beginning to catch on. Since then, m-commerce has shown strong and steady growth. Consumer behaviors, catalyzed by the recent pandemic, have also changed drastically. This campaign would seem a little futile as consumers these days are constantly browsing and making purchases on e-commerce sites or shopping apps through their smartphones.
However, with working from home now a new norm and the isolation brought by the pandemic, what we also need to consider are the impacts of digital fatigue and the demand for real-world reconnection. This is a great time for marketers to rethink online experiences and O2O marketing. Perhaps this or similar virtual store concepts will be the connection brands and consumers are looking for as the world reopens?