Digital Transformation in Retail: A Case Study of Tesco's Omnichannel Strategy

Thesis Abstract

Digital disruption and changing consumer expectations have intensified the need for integrated retail experiences, yet many traditional retailers struggle to align online and offline channels to deliver consistent value. This study investigates how Tesco’s omnichannel strategy coordinates digital transformation with in-store operations to enhance customer experience, drive sales, and improve operational efficiency. The problem addressed is the persistent fragmentation between e-commerce, mobile platforms, and physical stores that undermines customer satisfaction and loyalty in mature markets. The aim is to illuminate the mechanisms through which Tesco integrates channels, processes, and data to sustain competitive advantage, while identifying barriers and enablers of successful omnichannel execution. Specific objectives are (1) to map Tesco’s omnichannel capabilities across digital platforms and brick-and-mortar stores; (2) to examine the role of data-driven decision-making in personalisation, inventory management, and fulfilment; (3) to assess customer perceptions of omnichannel value and their influence on loyalty and advocacy; (4) to evaluate the organizational, technological, and operational constraints that moderate omnichannel performance; and (5) to propose a refined framework for omnichannel integration grounded in empirical evidence from Tesco’s practices. The study adopts a mixed-methods design anchored in the technology-organization-environment (TOE) framework and the SERVQUAL model to link technological capabilities with customer-perceived value. The population comprises Tesco’s UK-based customers, store managers, and corporate staff engaged in omnichannel activities. A stratified random sample of 1,200 customers will be surveyed, with 800 valid responses anticipated, complemented by 24 in-depth interviews with store managers (12) and senior omnichannel project leads (12). Data collection will employ structured customer questionnaires validated for reliability (Cronbach’s alpha >0.80) and semi-structured interview guides designed to capture operational insights and strategic priorities. The study will triangulate quantitative survey data with qualitative interview findings to achieve robust interpretation. Quantitative analysis will utilize descriptive statistics to profile customer segments and omnichannel usage, followed by multiple regression and structural equation modelling (SEM) to test hypothesized relationships among digital capabilities, fulfilment performance, and customer outcomes (loyalty, satisfaction, and advocacy). Mediation analysis will examine whether fulfilment speed and accuracy mediate the relationship between omnichannel integration and customer satisfaction. Qualitative data will be analyzed using thematic analysis to identify patterns related to governance, data integration, employee training, and change management. The study will also apply process mining on Tesco’s order fulfilment journey data to map bottlenecks and quantify cycle times across channels. Expected findings include evidence that integrated inventory visibility, seamless order fulfilment (buy-online-pickup-in-store and same-day delivery), and personalised marketing messages significantly predict customer satisfaction and repeat purchase intention. It is anticipated that data-driven decision-making quality moderates the relationship between channel integration and operational efficiency, while workforce capability and cross-functional governance mediate implementation success. The research expects to reveal specific organizational routines, such as cross-channel performance dashboards and centralized data governance, as critical enablers, and to identify barriers including legacy IT constraints, data silos, and change fatigue among staff. The study contributes to knowledge by extending the empirical understanding of omnichannel transformation in a leading European retailer, demonstrating how integrated digital platforms and physical assets create synergistic value. It advances theoretical development by integrating TOE and SERVQUAL in a contemporary omnichannel setting and by proposing a practical, evidence-based framework for omnichannel alignment that other retailers can adapt. Policymakers and practitioners will benefit from actionable insights on governance structures, data architecture, and workforce development necessary to sustain omnichannel competitiveness. The study concludes that Tesco’s omnichannel success hinges on coherent data governance, cross-functional collaboration, and agile fulfilment capabilities aligning with customer expectations of seamless, fast, and reliable service. Recommendations include investing in unified data platforms with real-time analytics, expanding micro-fulfilment in stores, enhancing staff training in digital tools and customer engagement, and establishing continuous measurement mechanisms to monitor channel performance and customer experience across touchpoints. Further research is suggested to test the proposed framework in other markets and retail formats to assess generalizability and to explore long-term effects on profitability and shareholder value.