Has the botched sale of dunnhumby cost Tesco shareholders $1 billion ? Normally if you choose not to sell an income producing asset at least you get the consolation of keeping the income stream. A potential cash windfall is offset by continued and hopefully growing earnings. But that won't be the case for Tesco who, according to observer estimates,  have given away income of about £50m per year to their former JV partner Kroger. They did this because Kroger had a change of ownership clause which was triggerable if dunnhumby came under new ownership. By negotiating an exit from the Jv and keeping all of the necessary people and technology they require, Kroger are able to continue to benefit from the services that dunnhumby were providing them but without having to pay fees to the UK organisation. As a quid pro quo,Kroger enabled dunnhumby to continue with a small US operation, search for another USA grocery partner and to be sold to a 3rd party. The agreement has cost T...

The Power of Personalisation Most retailers would say that if they could deliver a more personalised service sales would grow. Unfortunately this is easier to say than to do. There are three key reasons for this :   Most retailers, other than at an aggregated level, don’t know who their customers are, their relative importance, the degree to which they are committed to the retailer’s products or services and the extent to which they are favourably or unfavourably disposed towards the brand Even if retailers do know this, changing something in order to improve things, is difficult because employees tend to be organised around stores, channels or products and services rather than customers Even if the retailer has the necessary insight and organisation skills, it typically lacks the required technology or fails to implement it optimally These three constraints can be overcome as follows : 1. Building the necessary customer insight. This requir...

According to the Tribune-Review GNC, the USA retailer of vitamins and healthcare products, is growing LFL sales following their partnership with dunnhumby.  GNC has been sending individualized mailings to 1 million of its 7 million Gold Card members a month since September. The company's eight-page mySource catalogs are customized to each member, based on previous buying habits and any demographic data they've collected on the person, including age and gender. “My standard is that it drove incremental profitability, not just sales, but profitable sales,” CEO Michael Archbold said in a presentation to analysts last month with dunnhumby's Pete Miles-Prouten. “Because the goal here is profitable growth.” “It was like a snowflake. No one got the same communication,” said Peter Miles-Prouten, senior vice president of consumer markets at dunnhumby. The company declined to provide specific sales and profit numbers related to the campaign. But in February, GNC reported fou...

If I had £1 for every time someone added the word "relevant" in front of the word "offer", I'd be very rich. The usage of the word seems to be in inverse proportion to any understanding of what it might mean. I often ask people what they mean by "relevant" when I hear them say it in conjunction with the word "offer". More often than not they can give no meaningful answer. We are being overrun with apps and offer programmes from banks, mobile phone companies and employee benefits providers. All say that their offers are relevant. None of them have defined what they mean by it and engagement in their programmes is very low. At dunnhumby when working with Tesco we defined a relevant offer as an offer on a product that a customer had previously bought. If you bought Ariel soap powder then an Ariel offer was relevant but one from Persil was not. So you would only receive the Ariel offer. This was consistent with Tesco's view that the the...

Dave Lewis, Tesco's new CEO,starts on Monday and amongst the many questions he needs to consider, one will be "What to do with Clubcard and dunnhumby ? " Clubcard launched in 1995 was a key factor in Tesco's rapid growth through the late 1990's and 2000's. It immediately added lfl sales growth of around 4%-5%, attracted £100's of millions of incremental marketing support from major brands and enabled Tesco to improve site location planning, store ranging, pricing and promotions effectiveness.   Their long term partnership and subsequent acquisition of dunnhumby, who provide analytics and marketing service support to Tesco, but also their suppliers and other retailers around the world, has created an asset worth £1.5bn Nevertheless Clubcard is highly expensive. The key cost is the points. Tesco give away c.1% of sales -  c25% of total company profits. In addition there the 100's of million of bits of paper that have to be printed, posted, co...

Austin Lally recently left P&G after more than 25 years to take up a new position as Group CEO of Verisure Holdings / Securitas Direct AB.  Prior to leaving P&G, he was President of Braun and Appliances and a member of the Global Leadership Council.   He started his career in the UK and also had assignments in France, Greater China, Germany, Switzerland and the US.  When he  left he sent a letter to his P&G colleagues that tells us a lot about Austin’s character, achievements and many passions including family, work, music, travel, literature & sport.  Austin's letter to P&G colleagues announcing his retirement  Dear Friends, Today, we are announcing my retirement from the Procter & Gamble Company.  I wanted to take this opportunity to thank you for all of your help and support through the years we worked together. Looking back, it has been a tremendous experience.  More than 25 fulfilling years. It began in ...

According to Retail Week, Pets at Home has reported like-for-like growth of 4.1% in its first quarter after building on momentum created by its VIP Club loyalty programme. Total revenues grew by 10.4% during the 16 weeks to July 17 to £210.8m with growth driven by new store openings and improving revenues across its food, accessories and services offers. Nick Wood, chief executive officer, said: “Our differentiated offering in the pet retail market, an increasingly seamless approach to omni-channel, and growing customer participation and engagement in our VIP loyalty programme continues to drive strong returns.” Membership of its VIP Club loyalty programme grew by 400,000 for the 16 weeks to July 17 to take membership to 2.4m members. The card is now used during transactions involving 57% of store revenues, up from 52% during the final quarter of its last financial year. SG-retail were part of the team that helped to design the loyalty programme.  Services rev...