Tesco PLC is the United Kingdom's largest retailer and a major global player in both food and, increasingly, non-food retail sectors. With turnover reaching $54.8 billion, more than 2,300 stores, and a history of steadily rising profits, Tesco is one of the world's top three international retailers.

The company has come a long way in the 80 years since Jack Cohen first piled his barrow high with cut-price tea and coined the Tesco name. Tesco has 2,139 stores in Europe and 179 in Asia (Aug. 2004). In addition, Tesco.com is the world's largest online grocer. The company also has its own bank and financial services operation - Tesco Personal Finance, and its Clubcard loyalty operation has transformed the concept of targeted marketing.

Rapid international growth across 12 countries is never easy to manage, and Tesco has been working toward developing a standard IT infrastructure and solutions set for its global operations. The aim is to streamline start-up procedures and integration issues, as well as reduce total cost of ownership for its critical fourth-quarter holiday shopping season.

"Our international business has grown very quickly at Tesco, " said Philip Clarke, international and IT director for Tesco. "As a result, we have two enterprise-wide IT platforms: one in Europe and one in Asia, as well as complicated legacy systems in the United Kingdom. We decided three years ago that we wanted to converge all those countries and create a single, agile infrastructure. "

Tesco has chosen Oracle Retail (previously Retek) for its global systems. It is also an early adopter of the Oracle Retail application suite and is already predicting significant benefits.

The Customer
►Industry: Retail Food and general merchandise
►Headquarters: Cheshunt, U.K.
►Number of Stores: 2,318
►Annual Sales: $54.8 billion

Oracle Retail Products
►Oracle Retail Warehouse Management
►Oracle Retail Demand Forecasting
►Oracle Retail Merchandising System
►Oracle Retail Sales Audit
►Oracle Retail Category Management
►Oracle Active Retail Intelligence

"We chose Oracle [Retek] for three reasons. First, of all the companies we looked at, Oracle was the only one with a mature backbone covering retail management systems, merchandising, and supply chain. Second, it was the only player, we believed, that could follow our core principle of an open architecture that would allow easy interfacing to our various point solutions; and third, the Oracle team seemed to understand retail. "

International and IT Director, Tesco, PLC

What Did Oracle Retail Do?

A single solution for Tesco's extensive operations needs to be functionally rich and capable of multi-national support and operations. After a thorough review of potential providers Tesco chose to partner with Oracle (previously Retek).

"We chose Oracle for three reasons," said Clarke. "First, of all the companies we looked at, Oracle was the only one with a mature backbone covering retail management systems, merchandising, and supply chain. Second, it was the only player, we believed, that could follow our core principle of an open architecture that would allow easy interfacing to our various point solutions; and third, the Oracle team seemed to understand retail."

Tesco had already adopted Microsoft Biztalk and Ab Initio as its enterprise application integration tools, and Oracle Retail's support for this approach was another important factor in the decision process.

"It means that we can interface easily in the United Kingdom to our legacy systems, while outside the U.K. we have similar easy interfaces with our non-legacy systems," said Clarke. "This was particularly important as we have a mixture of mature footprints and need to simplify our systems across the enterprise."

Doug Rutledge, strategic development director for Tesco, also emphasized the need for both flexibility and commonality. "The relationship that we have with Oracle is very, very important to us," he said. "Oracle Retail is at the core of our strategy to have a common set of processes and systems that support very mature businesses, as well as developing markets that we might just have entered, such as Malaysia or Taiwan. It is that common agile infrastructure that is going to allow us to have a single set of systems and processes across areas, such as finance and the supply chain."
Like Clarke, Rutledge sees Oracle as a company that understands retail. "Oracle really understood our needs," he said. It was able to provide a complete end-to-end offer that could meet our needs for merchandise, range, and assortment planning through to demand forecasting in all the different areas of our business."

Moving Toward a Common Oracle Retail Infrastructure

Oracle Retail's merchandise planning system was an added attraction for Tesco as the company expands into non-foods. "Oracle Retail has a very mature backbone in this area, which we felt we could easily implement, said Clarke. "Its strength in non-food was especially important for us. Oracle Retail has a phrase, 'closed-loop planning and execution.' What this means to us is that we put the data in once, and the system does the rest."

Tesco also has practical experience with other Oracle systems. It has used Oracle Retail Warehouse Management (previously Retek Warehouse Management) in some of its operating countries for up to five years. Oracle Retail now provides all distribution center systems outside the United Kingdom, with solutions live in Hungary, Korea, Malaysia, and Thailand. Further deployments are planned across Eastern Europe and Southeast Asia over the next two years.

Having made the initial selection to commit more fully to Oracle Retail back in 2002, Tesco has been developing its "Tesco In A Box" concept and working on migrating a raft of application areas to the new platform. The concept incorporates products from Oracle Retail's supply chain management and merchandise operations management groups, and is designed to provide a scalable, integrated solution and a comprehensive platform from which to grow Tesco's business. In essence, it acts as a footprint for all new operations as Tesco expands globally. Tesco's first deployment was in Korea, its fast growing Far Eastern market and its largest market outside the United Kingdom and Ireland. Korea went live with "Tesco In A Box" in early 2004.

Moving Forward

System development at Tesco does not stand still, and Korea will migrate to Oracle Retail application suite in early 2006. Oracle Retail is built on the principle of customer centricity, incorporating four core capabilities: demand management, an agile supply chain, multi-channel retailing, and integrated best-of-breed solutions designed to connect every part of the retailer's business from customer to supplier.

"We've been delighted to be involved in the development of Oracle Retail [formerly Retek]," said Clarke. "We will begin implementing it shortly. Tesco has been a co-development partner for Oracle Retail, and the platform's customer-centric model fits well with Tesco's leading-edge customer segmentation strategy an approach that has helped develop the Clubcard loyalty operation into one of the most successful fidelity programs on the planet."

Oracle Retail's customer-centric approach puts demand management at the center of the retail model, which also matches Tesco's own approach. "With Oracle Retail, we will be able to link product demand with our needs from both a sales and range standpoint," said Rutledge. "We also will be able to introduce what our customers need, when they need it, and provide them with a satisfying shopping trip."

Tackling the U.K. Legacy

While Korea is live with Oracle Retail (previously Retek applications), and Turkey will soon follow, a priority is to update the legacy systems that still drive Tesco's successful U.K. operations a daunting task for any business.

"We've had the successful implementation in Korea, which has given us confidence," said Clarke, "so we're now putting together the team for the U.K. and planning to start pilots in late 2006, although the project here will probably not be completed until 2007."

The implementation will seek to combine Tesco's successful legacy applications with new technology rather than attempt to replace the entire model.

"We have a very complex environment in the U.K., and we need to take advantage of some of our best-of-class legacy systems and make them work seamlessly with Oracle Retail, "said Rutledge. "That is very important to us."

Alongside the U.K. implementation, Tesco will extend the rollout of Oracle Retail across Asia over the next three years. "As the countries grow and feel ready to jump, we'll be ready with Oracle Retail," said Clarke. "I'm certain that over time they will want more of the Oracle Retail footprint and it will be easy for the IT team to put it in. The business processes will not have to change too much, and therefore, we hope that we will achieve increased efficiency because of the increased capability provided by Oracle Retail."

Delivering Success in the Future

Tesco has built a successful business on its central philosophy of creating value for customers and earning their lifetime loyalty.

"Everything we do has to start with the customer and making sure that during their shopping trip they're getting what it is they want from us," said Clarke. "That means lots of ideas and lots of changes. With Oracle Retail, we're fairly certain that the changes we bring will be simpler for staff and better for customers.

"Within the next few years, Oracle Retail will be at the heart of our worldwide systems. It will be at the buyers' desktop. It will be the tool used for merchandise planning. It will be with the accountants as we look to understand profitability. It will be in the distribution centers, powering those big machines. It will be in the stock control departments of our stores making sure that the products are there at the right time for the right customers," said Clarke."

More About Products Used By Tesco PLC Oracle Retail Warehouse Management

A best-of-breed warehouse management system that plans, manages, and optimizes distribution center operations while extending execution capabilities across the supply chain to trading partners.

Oracle Retail Demand Forecasting

A cornerstone of the high-performing retailer is an accurate demand forecast. An accurate demand forecast drives your business plans and ensures strong, consistent execution throughout the supply chain.

Oracle Retail Merchandising System

A flexible, scalable, and proven foundation from which to execute a broad range of core merchandising activities, including inventory replenishment, purchasing, and vendor management.

Oracle Retail Sales Audit

Evaluates point-of-sale data for accuracy and completeness, providing "a single version of the truth" across downstream systems. The highly configurable solution allows retailers to tailor the auditing process to their particular business needs.

Oracle Retail Category Management

A fully configurable platform with proven scalability for developing multi-dimensional forecasting, planning, and optimization solutions.

Oracle Active Retail Intelligence

Provides exception management that immediately identifies opportunities, recommends courses of action, and automates routine tasks.

About Oracle Retail

Oracle simplifies your technology environment by providing a uniquely integrated platform for the retail industry. More than 1,900 companies rely on Oracle Retail solutions-which include the Oracle, Retek, ProfitLogic, PeopleSoft, and JD Edwards product lines-to create insight-driven enterprises that stay competitive by basing their decisions on accurate, timely customer demand information. Our solutions help retailers improve information integrity, manage your back office operations, and orchestrate all functions of your retail enterprise-from merchandising through the supply chain to your stores. Whether you implement one module at a time or an entire solution suite, Oracle can help you run a smarter, more profitable retail business.