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TESCO CASE STUDY

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How Tesco manage/use Clubcard data

Identify buying habits.

Build up customer loyalty.

Monitor progress towards an objective.

Solve any problems in the business (such as cancelling sales/deals nobody makes use of).

Build up an accurate picture of customers and their orders.

To carry out “basket analysis”.

Notice trends.

Make sakes forecasts.

Customer profiling.

Balance stock based on traffic towards specified goods.

Segment the market and develop a business plan based off these segments.

Understand their competition.

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Management Information System of Tesco Plc

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Crucible is a geodemography computer system created by the United Kingdom-based grocery company Tesco. The system is run by a subsidiary Dunnhumby. The system collects information from the company's loyalty program, " Clubcard", as well as aggregating information from other geodemographic databases and other sources.

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clubcard Crucible

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Tesco stocks up on inside knowledge of shoppers' lives

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· Crucible database is exhaustive - and secret· Government bodies are tapped for information

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Is it OK ... to use loyalty reward cards?

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By using automated data collection software to feed information into its big data analytics program, British grocery and merchandise retailer Tesco has dramatically boosted profits and more proactively met consumer demands.

Since 2006, Tesco has used big data analytics to improve its supply chain, primarily targeting its inventory management systems. According to Information Age, Tesco's new supply chain optimization program helped the company save up to £16 million (approximately $24.5 million) annually because it is now better able to predict customer buying habits and track the effectiveness of special sales offers.
Download The Data Collection Software Buyer's Guide - A guide to finding the right automated data collection software solution for your supply chain automation needs.
In particular, Tesco has developed an analytics model that uses weather patterns to properly stock store shelves. By looking at historical buying data and expected temperature trends, the business can accurately predict what consumers in a specific area will want to purchase and then supply locations accordingly. For example, if warm weather is expected to come to an area after a particularly brutal cold spell, Information Age reported that Tesco will ensure that surrounding stores are well stocked with more barbecue meats and less cat litter. The program is even powerful enough to detect local habits, as what's considered hot or cold varies by region.

"By adding this effect to model, we reduced out of stock for good weather products by a factor of four," Duncan Apthorp, Tesco's supply chain systems development program manager, told Information Age. "That means there is a 97 percent change of customers who come into the store finding what they want, whereas other supermarkets might not have it."

Additionally, the retailer uses big data analytics to track the effectiveness of each sale or special offer at its stores, the news source reported. That way, the company is able to determine which sales should be run again and how store shelves can be better stocked to accommodate increasing or decreasing demand of certain products.

"That [program] has revealed some interesting insights," the news source said. "For example, a 'buy one, get one free' offer works better than a 50 percent discount for non-perishable goods, such as a cooking sauces, but the reverse is true for fruit and vegetables."

Power Big Data with Automated Data Collection Software

In order for supply chain analytics to work effectively, companies need to have complete oversight over materials at every point in the supply chain. To do this, businesses should leverage automated data collection software. This way, an organization can quickly and accurately determine where any given item is and divert it to the right location in real time. In addition, such systems can collect large stores of data, which can then be effectively analyzed by solutions such as the ones used by Tesco.

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Tesco Improves Supply Chain with Big Data, Automated Data Collection

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By using automated data collection software to feed information into its big data analytics program, British grocery and merchandise retailer Tesco has dramatically boosted profits and more proactively met consumer demands.

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We all know supermarkets use information about our shopping habits to target us with personalised vouchers and offers - but how would you feel about sitting down to watch a movie and being confronted with adverts based on what was in your shopping trolley a few hours earlier?

Or what would you think about Tesco using its Clubcard database to check what you are eating, and possibly offering vouchers for salad and fruit if your basket is usually groaning with unhealthy items?

These are just two of the ways the supermarket giants are planning to make use of the data they gather on us.

For every loyalty point or coupon that Sainsbury's, Tesco and the like dish out, they gobble up a huge amount of information about our shopping habits. We are all familiar with targeted offers linked to loyalty cards, but you might be surprised at the amount of data the big retailers collect on all of their shoppers - and even potential customers - and what they do with it.

If you have opted out of taking out a loyalty card because you don't want "Big Brother in your shopping basket", then too bad, because the supermarkets also track debit and credit card payment data and till receipts - so someone, somewhere, knows about that bottle of wine you bought at 12.28pm on Tuesday, and that you recently switched your brand of athlete's foot cream.

How do the supermarkets use this data?

If you have a loyalty card or shop online, the supermarkets will build up a demographic profile of you, and collect data about how loyal you are, what you buy and how much you spend, says Guy Montague-Jones of The Grocer.

They can then change what you see when you log in to make it easier to find the products their data suggests you will buy, and in-store they will use their data to make decisions about what they sell.

For example, Sainsbury's discovered that a cereal brand called Grape-Nuts was worth stocking - despite weak sales - because the shoppers who bought it were extremely loyal to Sainsbury's and often big spenders.

Last month the supermarket giant announced it was taking full control of Sainsbury's Bank by buying the 50% it didn't already own - partly because its data showed that after taking out a bank product, Sainsbury's shoppers became more loyal and spent more in-store.

Tesco, meanwhile, is using data about what its 16 million Clubcard holders buy in its stores to serve targeted ads to online users of its new free movie service, Clubcard TV. Launched in March, this streaming site also offers TV shows such as The Only Way is Essex, and is available to anyone with a computer and a broadband connection.

But in order to tune in, you have to register your Clubcard number and postcode. Clubcard TV director Scott Deutrom boasted on his blog that "we can target adverts based on what our customers bought yesterday" (a Tesco spokesperson later claimed this was just "a vision" at the moment).

A few days ago it emerged Tesco also plans to use its Clubcard data to tackle obesity, and "wants to see whether customers would welcome tailored suggestions for how they could shop more healthily" - which could mean vouchers for healthier products or suggested recipes (customers would need to opt in, it says).

What if you haven't given the supermarkets your personal details?

Even if you haven't handed over your details and product preferences through a loyalty scheme, it's likely you have used a debit or credit card to pay for your shopping at some point - and this is another way that the supermarkets can track what we buy.

"We know that an anonymised card number paid for a particular basket of groceries one week and how much was spent with the same card number the following week," says a Morrisons spokesperson. "It means we know when customers are lapsing because we won't see their card for a week. We use it to measure the effectiveness of promotions and events."

When asked whether its customers give permission for their card numbers to be tracked in this way, the supermarket says customers "would only need to opt in" if Morrisons intended to send them any form of communication.

"All the large grocers track payment cards in this way," says Matthew Harrop at data analysis firm emnos. "All your till receipts are linked together using either a known customer identifier - or anonymously in the absence of a loyalty card - to analyse what you're buying and how loyal you are."

Waitrose and Asda also admit analysing aggregated payment card data to monitor "customer shopping patterns" (for example, items purchased) over time. Both stress this is common practice in the retail industry and that card numbers are not connected to an individual or an address. Sainsbury's and Tesco say they do not track or monitor their customers' payment cards.

The supermarkets also want to find out what their customers are doing outside their stores. Waitrose, for example, paid data analytics firm Beyond Analysis to use "aggregated and anonymised data" about shoppers' Visa card transactions to help it decide on new store locations.

Beyond Analysis integrated the Visa transaction data with Waitrose's own data to figure out what proportion of potential customers were buying groceries from other supermarkets, and the general locations of these competitors.

A Waitrose spokesperson says the supermarket would never see details about an individual customer's spending - the data would only show broad trends. Along with Visa, the supermarket emphasises that the work fully complied with the Data Protection Act. Beyond Analysis refused to comment and Waitrose says it no longer works with the firm.

However, both MasterCard and Beyond Analysis still offer data analytics services to UK retailers - which means anonymised, aggregated information about what we are all spending on our credit and debit cards and where we are spending it is potentially up for grabs to the highest bidder.

How is it that your card data can be monitored in this way?

Visa says it requires its issuing banks to seek your agreement when you apply for the card. MasterCard states, in its global privacy policy, that it will "perform data analyses" and offers the chance to opt out on its website. Otherwise, you are automatically opted in.

Both Visa and MasterCard emphasise that they do not hold your personal details, such as your name and address.

What if I pay in cash?

Sainsbury's and Morrisons can still monitor what you buy and identify products which, when they are scanned in at the till, act as '"triggers" for the cashiers to hand over different types of incentives.

Both use a "coupon-at-till" system called Catalina, which proclaims on its website that it "finds just the consumers whose buying preferences match" a particular product. At Sainsbury's, Catalina also makes extensive use of the wider Nectar card database.The database contains information about what Nectar cardholders buy at every retailer in the scheme - not just at Sainsbury's - which makes it particularly adept at identifying and targeting customers according to their demographic profile. Sainsbury's is using its data to offer online discounts to in-store shoppers from large households with kids, to give them an incentive to shop online.Its rival Morrisons doesn't have a loyalty card database to rely on. Instead, it admits it will buy in "very detailed and segmented demographic data" and use this to analyse your shopping basket and extrapolate trends about what you are purchasing, so it can decide which offers to target you with. Morrisons claims all of its competitors do the same.

What do the supermarkets do with all the different data they collect?

"A brand of, say, coffee will approach Sainsbury's, Morrisons or Tesco and ask to buy access to customers purchasing rival brands, so it can put an offer to these customers," says Charles D'Oyly, MD of Valassis, which handles the redemption of product coupons for supermarkets. Brands are willing to pay "a lot of money" to the supermarkets for this service, he says, because the amount of customers redeeming these "highly targeted" coupons jumps from as little as 1% to "over 50%".

Tesco, Morrisons and Sainsbury'ssay they would not allow a brand to solely target the loyal customers of one particular rival. Sainsbury's and Tesco also stressed that they do not sell their loyalty data to third parties but would not divulge details about how they work with brands to provide customers with "relevant" offers and promotions.

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How supermarkets get your data - and what they do with it

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We all know supermarkets use information about our shopping habits to target us with personalised vouchers and offers - but how would you feel about sitting down to watch a movie and being confronted with adverts based on what was in your shopping trolley a few hours earlier?

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Ordering Systems/Monitoring of Stock Level

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Ordering Systems/Monitoring of Stock Level

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Ordering Systems to monitor stock levels

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https://www.ukessays.com/essays/data-analysis/tesco-report-analyses.php

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An order management system (OMS) automates and streamlines order processing for businesses. An OMS provides constantly updated inventory information, a database of vendors, a database of customers, a record of customer returns and refunds, information on billing and payments, order processing records, and general ledger information.

Benefits of a well-implemented OMS include improved sales visibility, improved customer relations, and efficient order processing with a minimum of delays and back-orders.

Order management is important primarily in the retail industry, but also in the telecommunications, health care, pharmaceutical, financial, and securities sectors.

https://searcherp.techtarget.com/definition/order-management

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https://www.cio.co.uk/it-strategy/technology-helps-tesco-beat-crunch-3204/

https://www.slideshare.net/tharakaj/mis-of-tescoplc

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Ordering system/Monitoring of Stock Level

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Ordering system/Monitoring of Stock Level

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Ordering Systems to monitor stock levels

This shows a business what their most popular/unpopular products are with customers and allows them to stock accordingly to demand.

‘Since 2006, Tesco has used big data analytics to improve its supply chain, primarily targeting its inventory management systems. It is now better able to predict customer buying habits and track the effectiveness of special sales offers.’

‘Tesco has developed an analytics model that uses weather patterns to properly stock store shelves.’

[https://www.rfgen.com/blog/bid/285148/tesco-improves-supply-chain-with-big-data-automated-data-collection]

EPOS data reports are produced to successfully work out what products need to be ordered to meet demand.

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For M1, explain why business information is important to the success of an organisation. EG The

growth of Tesco in the UK has depended, in part, on using the full range of business information to make

good decisions to enable business growth. ANOTHER EXAMPLE: Greenfield developments have slowed as a result of government

legislation so the company has moved into convenience stores. It was the first to build individual customer

profiles as a way of tailoring its promotions. Compared to its rivals, it is rarely out of stock as sales information

is closely monitored and timely action is taken to replenish empty shelves.

For D1, learners must reach justified conclusions about how an organisation might improve the quality of the

business information it generates. Tracking fast and slow moving sales will suggest to a retailer how to adjust its

product range. Monitoring staff absence will allow absenteeism patterns to be identified and absence reduced.

Improving the quality of information will improve the business. Learners must make judgements about the

value of the different ways of presenting information to interested parties. A senior manager will be likely

to understand information presented in a formal report. A junior assistant may be better able to assimilate

information presented in a visual format. A poor choice of format hinders communication of the message.

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EPOS System for Tesco

As example, the process of TPS in Tesco which can be specialized as the system of Electronic Point Of Sale (EPOS). It can clearly be seen when the customer made the transaction at payment counter. The system that have been use for Tesco is that they will scan the bar codes of the products by using the scanner and then it will show at the monitor of the cashier. Note that this is not only for the costumer to know how much the total price but also for the Head Office usage as it will determine how many stocks that have been sold and how much that need to be restocked.

Supermarket checkouts are called EPOS terminals

UK supermarkets use the European Article Number or EAN barcode system

Advantages of EPOS systems in supermarkets include:

Shelves are always well stocked, fresh food is readily available and products very rarely run out;

Customers can be dealt with much more quickly at the checkout;

Customers receive a fully-itemised receipt;

Goods can be paid for using electronic funds transfer (EFT);

Accurate and up-to-date sales analysis information is always available for managers;

Customer buying patterns can be analysed and used to target customers with offers for goods and services that they might be interested in

Disadvantages of EPOS systems in supermarkets include:

EPOS may fail when there is no internet connection.

EPOS systems are expensive to install.

This software requires regular maintenance.

This software has to be updated if competitive edge is to be maintained against rival company systems.

Bibliography:

https://itprovider1.livejournal.com/856.html

https://revisionworld.com/gcse-revision/ict/applications-ict/ict-supermarkets

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Monitoring Success of promotional activites

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Monitoring Success of promotional activites

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To understand the results advertising, the business must first monitor the business before a campaign begins.

If the business knows roughly how many customers visit their store each day, you can compare the numbers once the advertising begins. If they see a significant increase in customer inquiries, it is likely the sales will increase as well.

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they launched a clubcard app on mobiles - Nathan
Tesco case study on moodle