Data could be Tesco’s salvation

Analysis of the downfall of Tesco inevitably focuses on the things it no longer has: a clear sense of purpose, consumer trust and affection, sustainable relationships with suppliers, and so on. Most recently, it was revealed that Tesco no longer has £250m of profits it had previously booked for the first half of this year. Its woes are unlikely to end any time soon.

But amidst the executive suspensions and shareholder grumblings, it’s worth looking at what Tesco still has going for it. The UK’s biggest supermarket chain is in need of drastic reform, of course, as new chief executive Dave Lewis was surely well aware before he took the job in July. But in the rush to revive the company’s fortunes it would be wrong to take a scorched earth approach to its entire business model.

Much speculation has surrounded the future of Clubcard, with some commentators calling for a major overhaul of the 19-year-old loyalty programme and others for Tesco to ditch it completely. The impact of the grocery price war sparked by lower-priced competition from Lidl and Aldi, as well as the apparent success of Waitrose’s ‘instant rewards’ scheme, has added to the sense that Clubcard is increasingly redundant.

However for all the structural problems currently weighing Tesco down, its biggest challenge by far is reconnecting with UK shoppers. It’s here that Clubcard – and the invaluable data it brings – will prove crucial. With 16.5 million active members, Clubcard is still Tesco’s best link to its customers and its best resource for understanding how they want to shop.

The company undoubtedly needs to re-establish an emotional connection with customers – a requirement that will feed into a wider brand building effort led by Lewis. It’s important this new strategy filters down to Tesco’s loyalty scheme, so that the focus shifts from a simple transactional relationship of points-for-pounds to a deeper membership experience for customers.

In the first instance, though, Tesco must go back to the data and invest in insight. That will be a big step towards putting the customer first again.

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