Management / WPP leads potential buyers for Tesco's £2bn customer analytics company
WPP leads potential buyers for Tesco's £2bn customer analytics company
15 January 2015 |
WPP, the global advertising giant, and US venture capital firm TPG are among buyers reportedly interested in buying shopping data firm Dunnhumby.
Goldman Sachs has been taken on to prepare Tesco-owned Dunnhumby for sale with a £2 billion price tag attached to it. Tesco is selling off Dunnhumby along with other assets such as video service Blinkbox. The beleaguered supermarket giant is amassing a war chest to take the fight to discount supermarkets Lidl and Aldi.
On the face of it, £2 billion sounds reasonable for a data company that earned $1 billion (£630 million) in 2012. The global firm works with about 20 major retailers in nearly 50 countries.
But the world of customer shopping data has changed since Dunnhumby revolutionised supermarket loyalty schemes back in 1995. Brands have caught up with Dunnhumby when it comes to analysing shopper behaviour, encouraging purchases across multiple retailers and increasingly contacting customers directly. Rivals such as Sainsbury’s with its Nectar card and Boots with its loyalty card have mimicked Tesco. Visa has been in talks with Google about launching its own loyalty scheme tied in to social media. One danger is that Dunnhumby could be perceived as a legacy data business, outpaced by more agile competitors.
Tesco is unlikely to sever its connection to Dunnhumby when it does sell the business off. Data crunching on the scale of Dunnhumby is expensive to reproduce, even if you could find the manpower. Dunnhumby has 3,000 employees worldwide. Rather, Tesco will become just another client alongside Coca-Cola, Procter & Gamble and GlaxoSmithKline — presumably with a clause stopping the analytics company taking on another UK supermarket.
About 40 per cent of Dunnhumby’s revenue comes from retailers, while the other 60 per cent comes from selling data to consumer goods companies such as Daigeo.
Photo © Les Chatfield (CC BY 2.0). Cropped.