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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Hi "Brian Munn, Kettering, UK" - please write to the store manager and their head office. They are most certainly NOT within their rights. Proof of purchase is not neccesary where goods can be shown to be faulty and all you need to prove is that they sell goods of a similar description. As the iron is branded then this is easily done. I would also make a point of reporting the member of staff that served (?) you.
Ivan Routledge, Cheadle, Staffs,
As long as they don't increase the price of those goods on their shelves i don't care what they do to my Loyalty Card.. They would also find ways to increase their profits just like others.. Its natural.. Only thing is we just have to show some control.. then there would be no room to criticize what they do..
Shahudh, London,
I experienced Tesco's loyalty to its customers the other day. I returned a Tesco branded iron, which was 6 weeks old and leaking so badly the water ran down the cable into the electrical socket. As it was dangerous I returned it to the store.
They would not change it as I could not find my proof of purchase. Legally they may be within their rights I suppose, but it was Tesco branded, after all, and I spend £90 per week with them - the iron cost £15 so it would hardly bankrupt them if they had replaced it.
I was more concerned with safety aspect - they were not interested in even listening to me. Terrible PR.
The model of iron in question was still being sold in the store the following day.
Brian Munn, Kettering, UK
For Gordon, Canary islands.... Do they know any less about you than they would if you went to a quiet village shop and bought the same stuff?
Personally I couldn't care as long as they keep the prices of food down and have enough people on a till to serve me.
Jack Gough, Glasgow,
If people are stupid enough to fall for 'loyalty' cards they deserve what they get. Tesco (and others) view their customers as admass digits to be manipulated, tracked and motivated to buy more than they need. History will judge the era of Tesco as irrational consumerism driven by an illusion of plenty when the facts about food suggest the opposite.
Ray Cobbett, Emsworth, Hants,
We get what we deserve, junk food, junk supermarkets, junk surveillance, junk politicians. We've become a nation of junk people.
Gordon Alexander, Frome, UK
Haven't shopped in Tesco since they pulled some outrageous stunts to build an unwanted store in Gerrards Cross.
Stuff 'em.
James, Glasgow - ex Gerrards Cross,
I, for one, will not shop at tescos again, only with a cash sale.
Again, 'big brother' is watching
graham, Cardiff, UK
I have never yet agreed to have a loyalty card, whether from Tesco, Sainsbury or any other supermarket chain. There is something distinctly unsettling about allowing a supermarket chain to record which brand of condoms I prefer.
M. Korzeniowski, Morecambe, UK
An excellent reason for not having a Clubcard and for shopping at Tesco for the loss leading products only, in cash.
Paul, Coventry,
Being an ex-tesco employee I'm surprised by the naivete of anyone on the outside not aware of this type of information gathering?
It' pretty routine for major companies to do this, it's just that tesco are particularly effective and skilled at using it. Look at how many ways you can accumulate clubcard points (Buying in tesco, using their credit card, using it in other retailers. Where do people really think this information goes? Do they think it isn't us used?
All these giveaways generated by Tesco (Money off vouchers, money off coupons, days out at certain attractions etc) are paid for 10 times over and all that is done when you use them is Tesco gain even more data about you. It's not rocket science.
If people are concerned by this then shop in your local market with no electronic tills, no credit cards, no loyalty schemes. What you will probably find is the massive expanse of choice afforded to the general public outside the big retailers. Or do what I did, emigrate!
Gordon, Canary Islands, Spain
What has happened to data protection if our data is being sold on by Tesco?
This is Big Brother at it's worst. It seems that under Labour anything goes & our personal rights & liberty is being taken away every day.
Boycott Tesco is the answer & teach them that the consumer is the ultimate king.
Tesco are increasingly arrogant in their operations, but their business is creaking--all empires eventually decline, so lets speed it up.
Clive Kitchener, Pulborough, UK
And what about the "suspicious shopper" who wouldn't touch a loyalty card with a barge pole? Will Tesco use our credit card details instead?
Is collecting and using this data Tesco's "Gerald Ratner moment"?
How often do Tesco have to shoot themselves in the foot like this before their star starts to wane?
Lawrence, London, UK
An example :-
Go to Tesco on Thursday morning using your Tesco Credit card with combined Clubcard using any Tesco vouchers you have. Buy baby food, nappies, baby milk, baby wipes, rusks, a kids toy. Fresh rolls from the fresh bakery, some cooked meat from the deli counter and some finest mayonnaise, a decent bottle of Tesco finest wine.
What will Tesco gather from this :
Who you are.
How much you spend.
Where you spent it.
What time you shop.
What you spend your money on.
That you have children.
Your childrens sex.
There may be an occasion for the child coming up.
You're buying fresh as opposed to pre-pack products indicating a level of disposable income,
What other schemes you are in (Mother & Toddler, Tesco Wine club, Tesco Food Club.)
How much you spend over and above your voucher holding (generally another 80%, If you have £10 of vouchers, you'll spend £18).
That you use your vouchers,
That you came back, repeat custom.
Every Little Helps......someone!
Gordon, Canary Islands, Spain