Tesco's Clubcard Z. As the UK's number 1 supermatwhere were the people who should ket chain, Tesco is "the one to have been trading up froon \pm 5.99 to beat." Tescos managernent team E7.99? They were at ispecialty wine faces the constant challenge of storel Oddbins becaure Resco didn't. staying ahead of fast-growing have a full-enough range competitors. These inchude local chains such as Sainsbury as well Dunnhumby groups lesco rustomers as Agda, which is owned by retail into various clusters based on the simigiant Walmart. larity of the contents of their shopping One of the keys to Tesco's carth. For example, aralysts have dubbed success is a loyalty program tied to its Clubcard. Signing up for one segment "Finer foods", it is comprised of time-deprived, affluent the program is easy: Shoppers fill out applications iether at the customers who choose upscale peoducts. When the data indicated store or online) that include questions regarding family demo- that these shoppers weren't buying fine wine or cheese at Tesco, the graphics and dietary preferences. The 15milion households conpany upgraded its offerings and introduced a house brand bearwith Clubcards represent 80 percent of Tesco's customer base. ing the "Tesco's Finest" label. By contrast, sraditional shoppers are Shoppers present their cards at checkout and are awarded two "Makers" who buy ingredients to prepare home-cooied meals. They points for every f1 spent (see Exhibit 6-2), grautate toward Tescos lower-priced "Tesco value" products such as for every 100 points accumulated, shoppers receive a 11 bee, baked beans, canned tomatoes, and noodles: (4) woucher that can be redeemed for future grocery purchases or By combining household intormation with weekly purchase behavused with airline frequent-flyer progans. Tesco partners with ior data, Tesco io able to tailor promotions to specific customer segothee retailers such as Prea Express, where vouches are worth ments. Did a shopper buy diapers for the first time? Tesco sends that four times their face yalue. Needess to say, the Clubcard is a household coupors for baby wipes and beer. Why beer? New dads hit with university students! Tesco abo offers difierent incen- who are stayng home with the baby can't get out to the local pub as tives to different segrsents; for example, high spenders are often as they ance did. 50 , they stock up on beer to concume at hoene. offered wouchers that are worth triple points when redeemed Clubcard also gives Tesco a tactical advantage over Walmarts on certain categonies of merchandise. Asda stores. Walmarts value proposition is very clear: tow prices But the Clubcard program does more than alow lesco to feward To pervent the morit-valse-conscous shoppers from defecting, lesco its custoeners it also provides Tesco's II team with a clear picture of mined its database to identify Clubcard users who bought the lowest What is seling, what isn't seling. and where the gaps are in its pred- priced grocery itens Managers identified several hundred iteens that uct assortment. The Clubcard program 6 managed by Dunnhumby, the value hanters bought regularly, prices on those inems were then an independent consultancy located near London. Each product lowered. The result: The shoppers stayed with Tesco instead of switchin the database is scored on price and dozens of other dimensions. ing to Asda. Tesco currently leads Avda in share of uk grocery sales by As an coample of the value of the Clubcard program, Dunnhumby a margin of two to one. colounder Clise Humby points to wine sales Sources: flizabeth higbs "Fresh waritons Uneasily Scantied. finencial Tomes In the wine department, we could see that people were trading up to stuff Tesco didn't stock. At Christmas, people wanted Soles" financul Teres armary 12. 2010. Andes feisted, "lesee Experments with to buy 'posh' wine; thase who usually bought cheap wine Clutcard," Financial Rines ISeptember ik. 2010i, Cecile Rotintodes. "Stoes of Krosiedge: No. 1 metake in Oncein Uzen 'Clecead' to Trears wac Mart, The wor went from spending f2.99 a bottle to f5.99 a bottle-but Street doumal (Aune 6. 2006., pp, A., A.16. Exhibit 6-2. Tescos Clubcard is a baity program that the U K baced grocery store chain ines to reward cutomers; shoppes reove points baied an purchwe amounts. Points are conerted to vojcher that can be redeerned for merchandise. Fecco ako unes Clubcand to colect data on shopping preferences and patlerns Clubcard has been voleded out in many of Tescos interfatianal locationt, induding poland Source: AFPKietty inags 1. What information can Tesco get with Clubcard? 2. What can they do based on such information
