Tesco Case: a succesful IT Story

Every Little Helps!


This case shows a successful story about a former tiny grocery stores and it can become a worldwide group with +60M£ of year sales and how this "miracle" could be possible with a new strategic decision made through a new IT and technology implementation.

Started in 1919 to sell groceries from a market stall in the East End of London, the company opened more and more stores following its motto "Pile it high, sell it cheap" aiming for volume of sales. Growing with some important milestones, 100 stores by the IIWW or the first self-service market in 1960, the Tesco in 1995 developed the concept of a fidelity card: the Clubcard.

Looking it as a way to reward loyal consumers they develop something more and more powerful, also it was the Uk's first loyalty program and the competitive advantage to competitors was still to discover.

"The customer who shopped frequently and purchased more as points accumulated for every £5 that he or she spent after a minimum spend of £10. The points were converted quarterly into Clubcard vouchers, which then could be redeemed within Tesco stores."

But apart the loyalty program, this card gave the company a tremendous flow of information that could be used for any market research, segmentation and positioning of products, response to campaign and many more other analysis of the consumers’ behavior.

As an example: " Tesco realized that both pensioners and students, who often made frequent purchases, were not benefiting from the scheme, as their purchases did not always exceed the £10 threshold required to qualify for points. The scheme was thus adapted to cater to this situation."

What Tesco set up was a close brother of an Customer Relation Management system, in order to get competitive advantage to market contenders, and although they followed Tesco program the first move gave the biggest advantage.


Finally although the Clubcard is dated 1995,but with some major changes, is still the main competitive advantage that the Tesco group has, as number of a continuous growth show:
Growth on 2009 Year to Year: 6.8%
Last 5 Years Sales: 2006 2007 2008 2009 2010
Group sales (£m) 43,137 46,611 51,773 59,426 62,537