Clubcard data in driving seat for Tesco growth strategy

Tesco’s Clubcard scheme – which not that long ago was being sidelined for price cuts – is once again at the forefront of the retailer’s future strategy, amid plans to ramp up personalisation for customers as well as boost targeted advertising opportunities for suppliers across its website and direct to consumers.

The strategy has been set out in Tesco’s interim H1 results for 2021/22, which also show a total adjusted retail operating profit of £1.386bn, up 16.6% compared to the same period last year, with online like-for-like sales up 2.3%, rocketing 74.1% compared to the pre-Covid figures of two years ago.

The retailer credits the expansion of the Aldi Price Match scheme, the roll-out of Clubcard Prices in Express stores, the relaunch of Low Everyday Prices on 1,600 products and its burgeoning digital operation as major driving forces.

Tesco said: “We have created one of the leading digital retail platforms in the UK. The combination of Clubcard – used by more than 20 million households in the UK alone – with our online grocery business, our nearly 7 million regular app users and DunnHumby’s analytical expertise creates a powerful digital capability.

“It gives us the ability to manage vast amounts of data, gain unique insights and respond quickly and effectively. When this is brought together with our unrivalled physical network, it gives us a competitive advantage that is hard to replicate.”

As part of the overhaul, Tesco said customers will be able to choose how, when and where they shop, across its full range of products and services, and how they earn and use the rewards they accumulate.

It added: “Clubcard, and our digital platform more broadly, will also be at the heart of a reinvention of our supplier strategy. It gives us the ability to access incremental income streams by providing suppliers with the opportunity to market their products in more targeted ways such as advertising on our grocery home shopping website or offering a tailored range of additional products direct to specific customers.”

The retailer has also identified potential savings of more than £1bn “through simplification across areas such as goods not for resale, improved productivity, optimisation of our delivery network and central overheads” .

It expects to deliver these savings over the next three years, predominantly through incremental changes to existing operations.

Tesco chief executive Ken Murphy commented: “Against a backdrop of profound change, Tesco has many unique advantages. The scale and reach of our store estate and online operations are unmatched in the UK. Our ability to reward loyalty through Clubcard enhances our relationship with customers. Our world-class food retail expertise combined with our strong supplier partnerships ensures we can offer our customers great value and quality, removing reasons to shop elsewhere.

“Together, these strengths mean that Tesco can anticipate and respond to changes in the market, meeting customers’ needs better than anyone.

“(Our new) strategic priorities will enable us to build on these advantages to stay competitive, accelerate growth and generate between £1.4bn and £1.8bn retail free cash flow per year. These priorities will ensure we do the basics brilliantly, operate as efficiently as possible and grow our business by building unbeatable digital, convenience and loyalty platforms.”