Tesco signs three-year AI deal centred on customer experience

For large retailers, the challenge with AI isn’t whether it can be useful, but how it fits into everyday work. A new three-year AI partnership by Tesco points to how one of the UK’s biggest supermarket groups is trying to achieve just that.

Tesco plans to work with Mistral to develop AI tools that can be used in its business, from internal workflows to customer-facing systems. The aim, according to the retailer, is to save staff time, improve how teams work, and strengthen customer service. Ruben Lara Hernandez, Tesco’s Data, analytics & AI director, said the partnership brings together Tesco’s retail experience with Mistral’s technology, with the hope that it will help colleagues work more efficiently and support customers more effectively.

Tesco moves AI into day-to-day retail operations

The company’s focus reflects a wider shift in how enterprises are using AI. Early retail experiments often centred on customer-facing tools that were easy to see but hard to scale. More recent efforts are aimed at internal use, where AI can reduce repetitive work, support planning, and help staff make decisions faster.

Over the past five years, the retailer has doubled the size of its technology team, signalling that software and data are now core to how the business operates. AI is already used in several parts of the organisation, in in-house development and partnerships.

In online grocery, AI helps find more efficient delivery routes, which can open up additional delivery slots for customers. In supply planning, AI supports demand forecasting, helping stores maintain product availability. The company also uses AI to personalise how it engages with customers through its Clubcard loyalty scheme, tailoring offers and communications based on shopping behaviour.

The partnership with Mistral is meant to build on this existing work. One factor behind the collaboration is Mistral’s approach to model deployment, which allows AI systems to run in more controlled environments. For a retailer handling large volumes of customer and operational data, that level of control matters.

Mistral’s chief revenue officer and US general manager, Marjorie Janiewicz, said the company’s Applied AI team will work closely with Tesco’s internal experts. She described the goal as building AI products that are customisable and controllable, with a focus on improving internal workflows and customer experience.

A long-term partnership, not a one-off project

The structure of the partnership also suggests a cautious approach to scale. Tesco plans to create an internal AI lab as part of the agreement, giving teams space to test and refine tools before wider deployment. For large organisations, this kind of setup can help prevent AI projects from remaining stuck in isolated pilots or specialist teams.

There is also a strategic angle to the choice of partner. Mistral AI is the only European company developing large language models, and Tesco is the first major UK retailer to form a partnership with the startup as part of its broader AI and technology plans. Founded in April 2023, Mistral has grown quickly and counts enterprises like HSBC, AXA, and Stellantis among its customers.

For Tesco, the harder work now lies in execution. Retail data is often fragmented in regions, systems, and channels, and AI systems depend on that data being accurate and consistent. Rolling tools out in a business of this size also requires training, oversight, and trust from staff who use them daily.

Whether the partnership succeeds will likely depend on how visible its impact becomes inside the organisation. If AI tools help store teams, planners, and analysts work more smoothly, the gains may be gradual rather than dramatic.

As retailers look to move beyond experimentation, Tesco’s approach offers a view of how enterprise AI is starting to settle into routine operations – not as a single solution, but as a steady process of change.

(Photo by Shashank Verma)

See also: Zara’s use of AI shows how retail workflows are quietly changing

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