NEWS8 January 2015

Tesco reportedly exploring sale of dunnhumby

News UK

UK — Supermarket group Tesco is appointing advisors to “explore strategic options for the dunnhumby business”, according to a press release from the company.

Dave Lewis, the new CEO of Tesco who joined from Unilever in September, has announced a dramatic overhaul of the business, inclucing the closure of its head office, thousands of job cuts and the closure of 43 unprofitable stores.

Another downsizing option being explored is the sale of dunnhumby, the supermarket chain’s data division, famous for establising Tesco’s Clubcard loyalty scheme over 20 years ago. According to some reports, advertising group WPP is preparing to purchase the company for around £2bn.

Furthermore, TalkTalk Group has announced its acquisition of blinkbox, Tesco’s competitor to Netflix. The price is reported to be in the region of £5m.

“For Tesco to offload blinkbox and its broadband business to TalkTalk makes strategic sense as they both appeared to represent a bit of corporate overreach,” commented Nigel Walley, MD of media strategy consultancy Decipher. “The logic that it needed blinkbox to make up for lost DVD sales as the world turns digital probably looked good in a strategy presentation, but it moved it into a fundamentally different industry that it wasn’t well equipped to play in.”

“The sale of dunnhumby strikes me as odd,” he added. “Tesco quite rightly is moving to focus on its core business, but the analysis of sales data and the insight it can generate would seem to support that core?

“It will be very interesting to see what contract terms this business is sold under, and how Tesco will seek to protect the business advantage that owning dunnhumby has given it.”