TESCO Case

What is the IT-generated competitive advantage at Tesco?

Originated in London in 1919, Tesco is now the market share leader of the retail grocery trade in UK. Since the very beginning of its history when Tesco introduced the Green-Shield trading stamps, the company strategy has been to effectively lower its prices for its customers. During the years the company has elaborated this concept until defining its current core purpose as “create value for its customers, to earn their lifetime loyalty”. In order to pursue this objective the company aims to offer the following values:
· Understand its customers
· Be innovative, be first for its customers
· Deliver value to its customers
· Look after its people so they look after customers
The most important means of collecting the necessary information about shopping habits of its customers, in order to support the company value proposition, is the Tesco Clubcard. It was introduced almost 14 years ago and was the UK’s first supermarket loyalty program. Nowadays it includes about 20 million members of which 10 million are active users.

Based on the remarkable information about its customers registered to the Clubcard loyalty program, Tesco has built its IT-generated competitive advantage. In fact, throughout the years the company has:
· pursued the premature “vision” of its loyalty program;
· made significant investments in POS technology, IT supporting systems and data warehouse;
· attracted a great number of customers to register to the program, thereby constituting a huge database of information.
Moreover, not only the company has been the first mover in launching a loyalty program among UK grocery retailers, but has continued to invest in order to maintain its competitive advantage. The continuous improvement and development of the program and its supporting systems has enabled Tesco to effectively exploit the information collected in order to support the company purpose of creating value for its customers for a lifetime loyalty.
Some of recent initiatives at Tesco aimed to improve the IT-generated competitive advantage are:
· the investments to support Computers for School initiative in order to further enlarge the customer basis;
· the customization of promotion/ communication to the customers through the information collected from the Clubcard help line;
· the Clubcard Plus account which enables members to have access to financial products offered by Tesco Personal Finance;
· the constitution of Tesco.com web site with its online shopping services.
All these initiatives are consistent with the overall purpose of the company and enable Tesco to effectively deliver value to its customers thereby earning their lifetime loyalty.