Final_Exam_practice_case_Tesco_ProblemSet - Stores of...

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Stores of Knowledge: No.1 Retailer in Britain Uses 'Clubcard' to Thwart Wal-Mart Cecilie Rohwedder. Wall Street Journal. (Eastern Edition). New York, N.Y.: Jun 6, 2006. p. A.1 CHESHUNT, England -- When Wal-Mart Stores Inc. entered the British market in 1999 by buying a chain of stores here, many expected it to dominate. Instead, Wal-Mart's largest non-American operation has been struggling recently, and its top local rival is thriving. That rival is Tesco PLC, Britain's largest retailer. Its big weapon is information about its customers. Tesco has signed up 12 million Britons for its Clubcard program, giving cardholders discounts in exchange for their name, address and other personal information. The Clubcard has helped boost Tesco's market share in groceries to 31%, nearly double the 16% held by Wal-Mart's Asda chain, according to market-research firm Taylor Nelson Sofres. The data let Tesco tailor promotions to individual shoppers and figure out quickly how new initiatives are working. After Tesco introduced Asian herbs, cooking oil and other ethnic foods in neighborhoods with many Indians and Pakistanis, the data showed the new products were also popular with affluent white customers. The company quickly expanded the rollout. Tesco's computers often turn up counterintuitive results. Shoppers who buy diapers for the first time at a Tesco store can expect to receive coupons by mail for baby wipes, toys -- and beer. Tesco's analysis showed that new fathers tend to buy more beer because they are home with the baby and can't go to the pub. The data-driven strategy puts Tesco at the vanguard in retailing as traditional advertising loses effectiveness. Procter & Gamble Co., Coca-Cola Co. and Kimberly-Clark Corp. are among the consumer-products companies that buy analyses based on Tesco data. The British retailer is increasingly battling Wal-Mart around the globe. It plans to open a chain of small stores on the West Coast of the U.S. next year, its first foray onto Wal- Mart's home turf. Wal- Mart wants to expand in Central Europe, where Tesco has a firm foothold. As the U.S. market becomes saturated, Wal-Mart is looking overseas for growth. It has had some successes, including Mexico and Canada, but many of its overseas ventures are hurting. Its Japanese unit has suffered losses. Last month, Wal-Mart abandoned an eight-year effort in South Korea by selling its 16 outlets there to a local competitor for $872 million. Tesco says its 39 Korean stores are successful. Asda in the U.K. accounts for about 10% of Wal-Mart's overall business and 45% of its international sales. The unit thrived under Wal-Mart's ownership for several years but
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Wal-Mart says sales were "slightly negative" last year and profits were "below plan." (It doesn't report exact figures.) Tesco has used its knowledge of shoppers to fight Wal-Mart's core appeal: low prices. After Wal-Mart bought Asda, Tesco searched its database and singled out shoppers who
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Final_Exam_practice_case_Tesco_ProblemSet - Stores of...

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