Tesco dunnhumby sale will create opportunity for brands to engage with customers, says former data company director

Chris Newbery, director at Shopitize and a former director at dunnhumby, considers the implications of Tesco’s potential sale of the data company

“Tesco’s rise in share price has been partly due to speculation over a £2bn sale of their data company, dunnhumby. The potential sale reflects a desire to sell assets in order to re-invest to compete against increasing competition. In particular, competition between traditional retailers, as well as those with growing market shares such as Aldi and Lidl.

“Tesco, like many others, is focusing more on in-store and fuel price cut promotions as part of the ‘race to the bottom’, with the sale of dunnhumby who help manage their Clubcard scheme a reflection of this trend. The possible sale reflects an evolving strategy, leaving an opportunity for brands to greater engage with their customers directly. Until recently, through schemes like Clubcard, it has been the retailers that have held most of the power when it comes to loyalty. However, with growing price competition altering retailer focus, and new technologies becoming available, space is now opening up for brands to encourage purchases across multiple retailers and increase their direct engagement with their customers.

“Loyalty scheme usage, according to current Shopitize insights, show that despite five of the ‘big six’ retailers (the exception being Asda) now having loyalty cards, only 40% of shopping is currently done using them.”