Friday, 11 June 2010

Tesco – driving growth through better data

This week Sir Terry Leahy of Tesco announced that he would be stepping down next March from the role of CEO. It prompted a number of articles in the press about Leahy’s achievements in building Tesco into the UK’s largest supermarket chain, and global brand (almost 30% of its revenue comes from overseas sales).

Leahy was responsible for launching the Tesco Clubcard, the loyalty scheme which uses data gathered at the tills and has been much copied in retail. By making good use of the enormous volume of purchasing information stored every day, Tesco are able to target promotions more accurately. In a world where direct mail often gets less than a 1% response, Tesco get up to a 95% take up of their offers. How? By carefully tailoring their offers to known customer preferences.

One of Tesco’s rivals recently enclosed a free sample when my shopping was delivered a month or so ago. It was for a new brand of baby food. How kind I mused, as I threw it away. No babies in my household. There are many, many more examples where that came from. Not only are such promotions wasteful but they also underline that the company isn’t interested in what their customers like. They are only interested in what they might get back from the promotion.

So whilst the meteoric rise of Tesco is not without its detractors, they have done a great deal to demonstrate how to use data to increase sales. Food for thought, huh?

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