Ever since Tesco’s establishment their main objective was to reach their customers through Value and Variety. Faced with cost cutting regulation and hurdles (in the 80’s CHECK) the grocery store pushed to see their vision fulfilled. Despite a fierce competitive environment, Tesco’s management focused on volume purchasing and higher market shares through sacrificed profit margins.
The innovation however was introduced with Tesco’s Club Card (a computerized version of the Stamp system they adopted). This is basically when Technology and Tesco forged their alliance. Initially an expensive endeavor, the new system proved to be Tesco’s biggest competitive advantage. Every time a customer made a purchase (above 10 sterling initially, and later amended) they earned redeemable points (good for future store purchases).
The results of the system for Tesco were remarkable. They gained a competitive advantage in customer loyalty. At their height, there were over 20 million card holders (10 million active). Not only where more customers incentivized to shop at Tesco, but they shopped more; increasing their primary and secondary purchases. Tesco’s market share increased to 15%, overtaking Sainsbury as the number one grocery retailer in the country.
Their competitive advantages extended beyond customer loyalty and service. By investing in an NCR Teradata Warehouse, Tesco was able to keep detailed profile data on their 20 million customers enrolled in the card system. This led to other competitive advantages such as finding out customer preferences, sending them personalized mails (subscribed customers 8 million in 1998),discount vouchers, special offers and points.
Focusing on technology as a means to enhance sales, Tesco later took it a step further and introduced their online shopping website (TESCO Direct Service). By 2001 the website had over 750,000 registered customers and was the number one E-Grocer in the England. The website had many online features (such as the Lower Price Check and Club Card Account access) which made the service even more enticing to customers. They took the opportunity to expand in other non-grocery departments such as clothing, banking services (debit cards, ATMS), insurance, furniture, etc. Even though most competitors later followed suit, and had their own rewards system and online shopping website, Tesco always enjoyed the first mover advantage, where it managed to capture its market.
The innovation however was introduced with Tesco’s Club Card (a computerized version of the Stamp system they adopted). This is basically when Technology and Tesco forged their alliance. Initially an expensive endeavor, the new system proved to be Tesco’s biggest competitive advantage. Every time a customer made a purchase (above 10 sterling initially, and later amended) they earned redeemable points (good for future store purchases).
The results of the system for Tesco were remarkable. They gained a competitive advantage in customer loyalty. At their height, there were over 20 million card holders (10 million active). Not only where more customers incentivized to shop at Tesco, but they shopped more; increasing their primary and secondary purchases. Tesco’s market share increased to 15%, overtaking Sainsbury as the number one grocery retailer in the country.
Their competitive advantages extended beyond customer loyalty and service. By investing in an NCR Teradata Warehouse, Tesco was able to keep detailed profile data on their 20 million customers enrolled in the card system. This led to other competitive advantages such as finding out customer preferences, sending them personalized mails (subscribed customers 8 million in 1998),discount vouchers, special offers and points.
Focusing on technology as a means to enhance sales, Tesco later took it a step further and introduced their online shopping website (TESCO Direct Service). By 2001 the website had over 750,000 registered customers and was the number one E-Grocer in the England. The website had many online features (such as the Lower Price Check and Club Card Account access) which made the service even more enticing to customers. They took the opportunity to expand in other non-grocery departments such as clothing, banking services (debit cards, ATMS), insurance, furniture, etc. Even though most competitors later followed suit, and had their own rewards system and online shopping website, Tesco always enjoyed the first mover advantage, where it managed to capture its market.
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