Tesco unveils plan for next generation of loyalty card

Supermarket giant Tesco intends to create a next-generation loyalty scheme as a powerful weapon in its fight to prevent rivals eroding its market share.

The retailer will be looking to ramp-up both its marketing communications of its Tesco Clubcard and the analysis of its shopper behaviour data this year.

The UK’s largest retailer has announced it plans to “relaunch and invest substantially more in Clubcard” alongside store and product range expansion, after posting record profits of £3.13bn in its full-year results this week.

Although Tesco remains at the top of the market share table, over ten percentage points above its nearest rival, its market share growth has slowed in recent months in the face of Asda’s record share gains and stronger performances from Morrisons and Sainsbury’s.

Sources in the customer loyalty sector suggest the retailer will need to expand its Clubcard marketing to digital channels as part of the relaunch. Tesco will also need to expand its use of purchasing behaviour data to create more personalised and relevant offers to customers.

The retailer, which uses data specialist Dunnhumby to run its Clubcard programme, may also be looking to become the first retailer to test the use of non-contact reader technology, known as Radio Frequency Identification (RFID), currently used in the London Underground Oystercard system.

Such technology can be installed in mobile phones, and industry insiders suggest the days of using plastic cards for retail transactions are numbered.

Tesco’s rapid growth in the UK is mainly down to it encouraging customers to spend more. It led the way in loyalty cards with Clubcard, launched in February 1995.

Rival schemes have since proliferated and its closest competitor, Nectar, which operates its loyalty scheme for Sainsbury’s and numerous other partners, recently signed Homebase as it latest major partner.

The retailer, led by chief executive Terry Leahy, continues to seek new routes to market. Recent plans to open a string of retail banks were followed by an announcement this week that Tesco will look to increase share in the mobile phone retail market.

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