Tesco boss Ken Murphy: ‘The AI revolution is upon us’

Tesco boss Ken Murphy has said that personalised grocery offers like Tesco Clubcard could “nudge” consumers towards making healthier decisions and that the AI “revolution is upon us” in retail.

The Tesco chief executive said that, for example, an AI programme could note someone’s high sodium intake and encourage them to buy lower-sodium and healthier foods.

“The ambition of Clubcard is that it works for the owner of the club card – the customer uses it to get the most convenient option for them,” he said at the FT’s Future of Retail event. “It can start nudging you to say if you wait another week to buy this, this is coming on deal.”

Murphy said that businesses must adapt to the new way of selling products or be left behind by those who have superior communications with customers, and referred to Tesco as “minnows” compared to online shopping giant Amazon but said they were “up for the fight”.

Privacy campaigners have raised concerns about the CEO’s comments. Jake Hurfurt from Big Brother Watch told The Telegraph: “It is astounding that Tesco’s CEO wants to use this data to tell us how to live our lives.”

“Mr Murphy’s comments should alarm everyone and serve as evidence that loyalty card schemes are based on mass-scale surveillance of customers. Tesco has no right to make judgements about what’s in our baskets or nudge us on what we should and should not be buying.”

Personalised offers aren’t going anywhere

Despite the privacy concerns, it’s likely that this is only the start of real-time, personalised consumer discounts aimed to encourage spending at a particular store or for particular products.

Take Eagle Eye, for example, the AI company behind many of the UK’s biggest supermarket loyalty schemes – including a partnership with Tesco in the form of Clubcard Challenges.

Eagle Eye provides location-based offers, behaviour-triggered promotions and event-driven incentives. Each of these represent real-time, personalised push offers to consumers, with the latter aiming to harness “real-time issuance” by sending notifications to customers during events to “create urgency by delivering immediate offers that prompt customers to act quickly”, according to its website.

The company, which offers upward of 850m personalised offers every week, has predicted that AI will become centrally important to the retail sector within a few years.

It is used by Tesco, Asda, Virgin, Pret A Manger, Staples and JD sports, amongst others.

On Wednesday, the London-listed group reported profit for the year ended June 2024 of £5.4m, a six-fold increase on the previous year off the back of an 11 per cent revenue surge to £47.7m.

Katie Cousins, Equity Analyst at Shore Capital, said on Eagle Eye: “We note an acceleration of new business wins at the end of the period [and] healthy demand from the industry.”

When the firm partnered with Tesco for Clubcard Challenges, CEO of Eagle Eye Tim Mason said: “It’s a privilege to be working with Tesco… This win underlines the power of the EagleAI solution, capable of creating and delivering millions of hyper personalised marketing messages, and our position at the forefront of personalised marketing.”