Tesco may be edging closer to the possible sale of Dunnhumby, which it wholly owns, following an announcement that the data-analytics business has restructured its relationship with Kroger, opening the way to work with new retail and FMCG clients and develop its existing platform of client relationships in the US and globally.
Kroger, one of the world's largest retailers, employs nearly 400,000 associates who serve customers in 2,625 supermarkets and multi-department stores in 34 states. Now the joint venture between Dunnhumby USA and the American retail giant will be replaced by “more flexible long-term license and service agreements,” Tesco said in a statement yesterday. The move will allow Dunnhumby to pursue new clients without the Kroger’s involvement.
Tesco has been looking to divest Dunnhumby, which is behind the Tesco clubcard, for months now as part of Chief Exec Dave Lewis’s master plan to reduce £21.7bn worth of debt. Analysts have predicted that the unit could bring as much as £2bn.
This move removes one of the obstacles to selling Dunnhumby, and potentially adds another revenue stream. North America represents a very attractive market and significant opportunity for Dunnhumby to market its customer science and data-driven insight and media products to retailers, consumer brands and media partners, it should help boost the price bidders could be willing to pay.
Under the new agreements, Dunnhumby’s insight products and data expertise will now be deployed to capture the substantial, previously unavailable potential the North American market represents. dunnhumby will be free to work with new retail and FMCG clients and to develop its existing strong platform of client relationships in the US and globally.
Simon Hay, CEO of Dunnhumby, said:
“We are excited to bring our insights and capabilities to more of the North American market. The wider US market is a fantastic opportunity for Dunnhumby to help more retailers and brands undertake a similar journey using data-driven insights and media to delight their customers and earn their loyalty.”
Dunnhumby and Kroger have operated an exclusive joint venture in the United States since 2003 in which Dunnhumby provides customer science and insight products to Kroger. This relationship has been an important part of Kroger’s strategy to use innovative data science to drive growth across the business through a “single focus on the customer and a personalised experience.”
Kroger has acquired the balance of its 50-50 DunnhumbyUSA marketing partnership with Tesco to form a new unit that will continue to handle data and promotion programs, otherwise known as 84.51°.