When a supermarket announces like for like sales growth down 2.3%, we know something isn’t quite right. The economy is in a mess, consumers are spending less and what they do spend is more carefully calculated.
But these are figures from Tesco. Tesco has been the UK’s powerhouse retailer for the last 20 years. This is a British success story. It’s also the home of the mighty Tesco Clubcard.
Since its launch in 1995, Clubcard has been held by many to be the driving force behind Tesco’s marketing. Thanks to Evans Hunt Scott and DunnHumby, the arrival of Clubcard shook UK marketing to its core. Rival retailer Sainsbury’s dismissed it as ‘electronic Green Shield stamps’.
They quickly had to eat their words and launch a rival. But it didn’t work because it didn’t understand the genius idea at the centre of the Clubcard – that if you understand customer behaviour, you can plan and build every aspect of your business using that knowledge.
It wasn’t just about reward, it was traditional retailing with a modern data twist. As Lord MacLaurin, then the Tesco chairman famously said when he was presented with the initial Clubcard trial findings: “You know more about my customers after three months than I do after 30 years.” So why isn’t this ‘essential customer genius’ (as dunnhumby used to style it) being applied ever more closely to providing a marketing solution in these tough times?
Now admittedly a lot of folk at Tesco and DunnHumby used to say that the Clubcard was ‘the froth on top of the cappuccino’. To be a great retailer you had to get every aspect of the business right, because without the basics the card wasn’t going to stand a chance of delivering results. But if everything else was equal, understanding your customers delivered an extra edge which could enable you to develop everything from pricing to store layout, all of which would leave your rivals chasing your coat tails.
The trouble is they are no longer chasing, they are catching up, and even overtaking (Sainsbury’s figures over the same period as Tesco are up 2.1%).
While that’s happening Tesco appears to be changing tack, to the extent that Clubcard driven marketing appears to be taking second place to ‘old fashioned’ price cuts. The card should be allowing the retailer to raise its game, shouldn’t it? So why is it looking a bit groggy? Surely it can’t be that Clubcard no longer works?
Its history, and that fact that it has gone global, suggests that’s not the case. So is it that the new brooms on the Tesco board no longer trust the marketing power of the Clubcard?
In which case I’d suggest marketers need to worry (and shareholders, too, as shares dropped 10 per cent on announcement of the like for like sales drop). Because if Tesco no longer trusts what their data (drawn from the grocery spending of 13 million customers) is telling them, that’s potentially bad news for anyone who has ever held the opinion that customer insight is a central component of successful marketing.
Nigel Lawrence is a director of LPPR