Dunnhumby, the data specialist in which Tesco owns a majority stake, has bolstered its senior management team by hiring former Disney and Dyson marketer Peter Plumb as UK and Ireland managing director (MW last week). It also recently appointed veteran Shell marketer Andrew Blayze as group director of customer engagement, the service that uses data to help clients respond to consumer needs (MW May 25). The announcements have sparked speculation that Dunnhumby is set to make marketing services acquisitions.
Corporate Edge chairman Chris Wood says: “Blayze is thoughtful and intelligent, and will bring a genuinely strategic approach to Dunnhumby’s expansion.”
Tesco hired Dunnhumby to help launch Clubcard in 1995, and bought a 53% stake in 2001. The retailer this year reportedly paid &£15m to increase its shareholding to 84%. Tesco’s top UK marketer, Richard Brasher, and finance chief Andrew Higginson are also directors of Dunnhumby, which processes a remarkable 5 billion pieces of information every week for the grocer. Despite continuing to express its ability to service other retailers and packaged goods companies confidentially, observers are sceptical about how Dunnhumby can expand its client base with Tesco in such a dominant position as a shareholder.
Dunnhumby director of strategy and futures Martin Hayward is confident it can be done: “Tesco doesn’t impair us. Obviously we couldn’t work with Wal-Mart, but beyond that we’re free to explore relationships.” A Tesco statement reads: “Should we want to work together in international markets, we can achieve this in a way that does not jeopardise Dunnhumby’s international ambitions.”
Hayward points to Dunnhumby’s Cincinnati office, which has serviced a joint venture with US grocery giant Kroger since 2002. The retailer has reported ten successive quarterly sales increases, with chairman and chief executive David Dillon commending the data company’s involvement. But Hayward declines to comment on Tesco’s thoughts about the Kroger relationship, which has been questioned now Tesco is planning to open stores in the US (MW February 16).
One former Dunnhumby employee says: “Tesco has its fingers in so many pies that it must be amazingly difficult to work with anyone else.” Hayward, a former executive chairman of The Henley Centre, counters: “Tesco is the best case study we could have. It is regarded as the UK’s leading retailer, making other organisations think that if we can do it for Tesco, we can do it for them.” Yet a senior source at a rival data specialist adds: “Why would a retailer go to a company that has expertise with a rival, rather than seek help from a specialist that would make it an honoured client? Isn’t Dunnhumby a department of Tesco?”
Dunnhumby saw a 53% increase in turnover for the year to April, to about &£75m. It employs over 500 people in London and the US, has dabbled in Australia, and opened an office in Ireland.
But the former employee believes the departure of Plumb’s predecessor Steve Gray, and the expected folding of one-stop data arm Crucible back into the main agency less than four years after it launched, reveal turbulence. He speculates this is down to Tesco’s closer involvement, and thinks acquisitions would be “difficult”.
Yet Dunnhumby is tipped to expand its market research capabilities. One observer was approached about a new data role at a major research company, which is trying to marry the disciplines and “keeps tripping over Dunnhumby”. Hayward comments: “We’re heading in many directions. We haven’t acquired to date, but there is always potential.”