Steve Hawkes
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Tesco is to monitor and record the shopping habits of more than 60 million customers around the world in an unprecedented deal with the “Big Brother” company behind its Clubcard loyalty card scheme.
The supermarket chain’s partnership with Dunnhumby, the market research specialist, is being rolled out to nine countries where Tesco operates, including Thailand, South Korea and China but not, as yet, the United States.
Dunnhumby has worked with Tesco in the UK since Clubcard was introduced in 1995. Analysts claim that its vast database of shopping preferences has been one of the supermarket’s biggest competitive advantages over the past decade.
Every day Dunnhumby crunches data taken from Tesco’s tills to generate a picture of what its 13.5 million Clubcard holders are buying and why they may be switching products.
Discount coupons and promotions are targeted at individuals based on extensive records of their past purchases.
The new agreement is almost certain to spark yet more controversy over Tesco’s power. It already claims nearly £1 of every £7 spent on the high street and is set to report pretax profits of nearly £3 billion on Tuesday. It will now have the potential to map every tendency of a customer base equal in size to the population of the United Kingdom.
Dunnhumby, which is majority owned by Tesco, generates most of its revenue by selling on the data in an anonymous form to some of the world’s biggest companies, such as Coca-Cola and Unilever, to help them to devise marketing campaigns.
Phil Clarke, Tesco’s international director, told The Times: “We’ve never had this level of insight capability before, and this will help us to improve our ranges, make better price investments and run sharper promotions. Dunnhumby will now be working with us almost everywhere we operate.”
Dunnhumby works with 150 businesses, including Littlewoods in the UK and Kroger, the US supermarket chain, and Home Depot, the world’s biggest DIY group. It convinced Tesco to introduce Clubcard after showing how it had managed to generate sales increases of more than 10 per cent in stores where it pinpointed what managers needed to do to win customers and get them to spend more.
Lord MacLaurin of Knebworth, then Tesco’s chairman, famously said: “What scares me about this is that you know more about my customers after three months than I know after 30 years.”
Tesco runs versions of its Clubcard in South Korea, China and Malaysia, but has not used anywhere near the same analytical methods at work in the UK. Now it will also launch cards in Thailand, Hungary, Turkey, Slovakia, the Czech Republic and Poland.
Edwina Dunn, Dunnhumby’s chief executive, said: “This is a huge step towards a single way of working across the Tesco business. We will be able to gain a better insight into Tesco’s customers in these countries than it can. It’s a powerful way of working, as relevant to China and Korea as to the UK.” She added that her company typically generates a 3 per cent to 4 per cent increase in like-for-like sales in the first year after it is hired by a retailer.
She said: “One of the best examples of what we do, especially in the current climate, is see which products the most price-sensitive customers are buying. You can tell the products that are disproportionately important to price-conscious customers and target your promotions in those areas.”
Mrs Dunn insisted that there should be no controversy over Dunnhumby’s work or decision to sell the records to help companies to spot trends.
She said: “What we hold is akin to market research data. No one worries about multibillion-dollar businesses collecting views about iPods or Nike.”
The different species that prowl the aisles
Price-sensitive shopper
Uses reward vouchers
Buys a lot of meat but few other fresh products
More likely to buy value lager, mobile phone top-up cards and four-litre
ice-cream tubs
Traditional shopper
Oldest customer group; buys small number of items from a set shopping list
More likely to buy counter offal, leaf tea and women’s tights
Mainstream shopper
Likes easy-to-prepare family meals
Saves Clubcard points for deals
More likely to buy character pasta meals, long-life juice and children’s
clothing
Healthy shopper
Looks for wholesome food, plenty of roughage, counts calories and fat content,
all ages
More likely to buy healthy cheese, couscous and multi-grain bread
Convenience shopper
Wants quick meals, often for one
Enjoys wide range of cuisine
More likely to buy ready meals, prepared salads, DVDs
Finer foods shopper
Most affluent customer, cooks from scratch
Older adults who also visit specialist butchers and fishmongers
More likely to buy organic chicken, exotic fruit and ovenware
Source: Dunnhumby
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