Tesco AI Deal marks a significant step in how one of the UK’s largest retailers plans to embed artificial intelligence into its everyday operations. The three-year partnership with European AI startup Mistral is designed to move AI beyond experiments and into practical use cases that directly improve how staff work and how customers experience the brand.
For large retailers like Tesco, the question around AI is no longer about potential. Instead, it is about integration. The company has been clear that this partnership is focused on real business value, from saving staff time to improving customer service across both physical and digital channels.
Under the agreement, Tesco will work closely with Mistral to develop AI tools that support internal workflows as well as customer-facing systems. Ruben Lara Hernandez, Tesco’s Data, Analytics & AI Director, said the collaboration combines Tesco’s deep retail knowledge with Mistral’s technology expertise. The goal is to help colleagues work more efficiently while delivering better outcomes for customers.
This approach reflects a broader shift in enterprise AI adoption. Early retail AI projects often focused on visible customer tools, such as chatbots or recommendation engines. While useful, many of these solutions struggled to scale. Tesco’s current strategy prioritises internal operations, where AI can reduce repetitive tasks, improve planning, and support faster decision-making.
Over the last five years, Tesco has doubled the size of its technology team, highlighting how central software and data have become to its business model. AI is already embedded in several areas of the organisation, both through in-house development and partnerships with external providers.
In online grocery operations, AI helps optimise delivery routes, allowing Tesco to create more delivery slots and improve reliability for customers. In supply planning, AI-driven demand forecasting supports better stock availability, reducing gaps on shelves. The retailer also uses AI within its Clubcard loyalty programme to personalise offers and communications based on customer shopping behaviour.
The new Tesco AI deal is intended to build on these foundations rather than replace them. One of the key reasons for choosing Mistral is its flexible deployment model, which allows AI systems to operate in more controlled environments. For a retailer managing vast amounts of customer and operational data, this level of control is critical.
Mistral’s Chief Revenue Officer and US General Manager, Marjorie Janiewicz, said the company’s Applied AI team will work directly with Tesco’s internal experts. The focus will be on building AI products that are customisable, controllable, and aligned with real operational needs, particularly around internal workflows and customer experience.
Importantly, the partnership is structured as a long-term collaboration rather than a one-off project. Tesco plans to establish an internal AI lab as part of the agreement. This will allow teams to test, refine, and validate AI tools before rolling them out more broadly across the business.
For large enterprises, this kind of setup is often essential. Many AI initiatives fail to move beyond pilot stages because they lack the organisational support needed for scale. By creating a dedicated space for experimentation and learning, Tesco aims to ensure AI adoption is gradual, practical, and sustainable.
There is also a strategic dimension to Tesco’s choice of partner. Mistral AI is currently the only European company developing large language models at scale. Tesco is the first major UK retailer to partner with the startup, which was founded in April 2023 and has already attracted customers such as HSBC, AXA, and Stellantis.
Despite the promise, execution will be the real test. Retail data is often fragmented across regions, systems, and channels. AI tools rely on consistent, high-quality data, and rolling them out across an organisation of Tesco’s size requires training, governance, and trust from employees who use the tools daily.
The impact of the Tesco AI deal may not be dramatic overnight. Instead, success is likely to be measured through incremental improvements in how smoothly teams work, how accurately plans are made, and how consistently customers are served.
As retailers look to move beyond AI experimentation, Tesco’s approach offers a clear signal of where the industry is heading. AI is becoming part of routine operations, not as a single solution, but as an ongoing process of refinement and change.
For more insights on how AI is reshaping retail, enterprise operations, and customer experience, visit ainewstoday.org for the latest AI news and updates.
