Tesco - Scoring Points using IT ?

Retailing is a volume game. Shave off a fraction of the cost here, target marketing better there, and it all adds up. Tesco anyone? 'Every little helps', indeed.

In the beginning, Tesco was playing catch-up with M&S. Then, Tesco launched the Clubcard, a loyalty card that entitled customers swiped to earn points at the time of purchase, and could redeem to get discounts later. Sainsbury's dismissed this as just a glorified, electronic version of Tesco's Green shield stamps. They went wrong, big time!

Sainsbury's considered IT as a cost. Nothing more. Tesco went further, used IT as a game-changer, and became the #1 retailer in UK just a year after the launch. Guess who did they oust from the numero-uno position? Sainsburys!

So just how did this IT/marketing project give Tesco an edge over Sainsbury, M&S and the others?

Until now, it wasn't possible for retailers to know which goods were being purchased by which customer segment. Sure, they knew how fast goods were sold, the volumes, the individual bills/invoices etc., but it was all anonymous.

Now, Tesco could analyse the purchasing patterns of different categories of individuals. They could identify the stuff that students bought, as against the stuff that working wives bought. What did they do with this information?
* Cut down on TV advertising. They slotted customers into various segments, and then started focused campaigns at these segments.
* Align their promotion strategy specifically to the items that regular customers bought. This ensured that promotions benefited their regular customers more than customers who only shopped at Tesco during a promotion.
* Cut the number of items on which promotions were offered.

This huge amount of data, and all the analysis that offered them a competitive advantage over others was possible only because of some smart thinking (to come up with the idea), and excellent IT (for a robust implementation).
Just as Tesco had copied ideas in the beginning, others tried to copy this idea. However, Tesco's IT expertise in the implementation of the Clubcard idea was superior.

So yes, Tesco had an edge over their competitors because of IT!!

NewsFlash: Early this year, Sainsbury's Nectar loyalty program overtook Tesco's Clubcard. However, Tesco continues to remain the largest UK retailer.

PS: Scoring Points - pun intended, for once !