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Tesco’s Downfall is a Warning to Data-Driven Retailers

Michael Schrage wrote an article for HBR titled Tesco’s Downfall Is a Warning to Data-Driven Retailers.

The premise of the article is thought provoking and the headline is catchy. Though I doubt there will ever be a credible argument for criticizing a business in its efforts to understand its customer better – now so less than ever.

One thing that would add another useful dimension of context to the article would be that when Tesco began their foray into customer science with dunnhumby they were pretty much the only ones doing it. While it is a stretch to say that today everyone’s doing it, it certainly is being done more and more, and increasingly by their key competitors. Reality is the customer science industry is small, and many of the same people who built the solutions and methodologies for dunnhumby which provided the original (unquestionable) differentiation are now employees of companies providing the same services to Tesco’s competitors. Given such a scenario it would be difficult to expect that the competency could hope to provide the same competitive moat that it did ten years ago – to some degree it’s become table stakes.

ALDI have less than 5% of the market, Sainsbury’s closer to 16% – take a look at the investment that Sainsbury’s have made in precisely this type of analytics over recent years.

In the final analysis Tesco is undeniably facing major problems presently, not sure that I’d be blaming their analytics for the problems, nor that I’d be blaming analytics for not rescuing them from the problems. There would be probably be happier hunting in areas like this, and what they reveal about the culture of the company: High-flying Tesco executives come down to earth as jets division wound up

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