Tesco set to sell Dunnhumby for £2bn after offloading Blinkbox and Tesco Broadband to TalkTalk
Troubled retail giant Tesco is reportedly looking sell its Dunnhumby customer intelligence and analytics company as new CEO Dave Lewis looks to streamline the organisation, selling off non-core assets and cutting costs in order to focus on the main supermarket business.
Other assets that Tesco is selling include the Blinkbox video-on-demand service and Tesco's 70,000 fixed-line and broadband customers, which telecoms company TalkTalk has picked up for a knock-down price, believed to be about £5m.
Tesco only acquired Blinkbox in 2011 for £3m, adding by acquisition Blinkbox Books and Blinkbox Music via the purchases of Modcast for £4.5m and WE7 for £10.8m, respectively. The business, though, never took off, with Blinkbox racking up a post-tax loss of £24.7m on revenues of just £3.5m in Tesco's last finanial year.
Vodafone was also reportedly interested in Blinkbox and, indeed, currently provides the infrastructure via Vodafone's local-loop unbundling (LLU) business. TalkTalk plans to integrate Blinkbox with its YouView-based television business and transfer customers from Vodafone's LLU to its own by September 2015.
Tesco is also closing 43 stores - although more may follow as it rationalises the sprawling Tesco Metro and Express estate of smaller, more local stores. In addition, Tesco will consolidate the management of its larger "Extra" and superstore formats in one division, split only by geography - north, central and south. Extra and superstores are currently managed as separate entities.
Dunnhumby was behind the phenomenally successful Tesco Clubcard in the 1990s, when the retailer alighted on the small, husband-and-wife-run marketing company, owned and led by Clive Humby and Edwina Dunn, to set up and run the scheme.
"I met Clive on my first day at the UK arm of market analysis company CACI and we married a year
later. Clive became chief executive and I was vice president. We saw customer data as the future. After nine years of generating large profits, but frustrated by the lack of investment, Clive resigned. Ten minutes later I was fired. Having just taken on a very big mortgage, we had two choices: get jobs - or set up on our own," Edwina Dunn later told Director magazine.
Tesco contracted Dunnhumby to help with its trial of the Clubcard after the company had proven its technology with a number of other clients, including Booker cash and carry.
"Tesco was running a trial of Clubcard in 14 stores. Sales were up but Tesco wasn't sure why. When we presented our findings, Sir [now Lord] Ian MacLaurin [then Tesco chairman] said, 'What scares me about this is that you know more about my customers after three months than I know after 30 years'," Humby told Director .
He continued: "We won the Tesco account because we believed we could run Clubcard for 20 million people for hundreds of thousands of pounds. Technologists said it would take three years and cost tens of millions of pounds. We launched in three months because we used maths, not just data."
The pair set up Dunnhumby in 1989, selling a controlling 53 per cent stake to Tesco in 2001 for a reported £30m. It increased its stake to 84 per cent in 2006 and took outright control in 2010, when Dunn and Humby left the company, remaining only as non-executive directors for three years.
Tesco has since maintained Dunnhumby as a standalone outfit, offering customer information services to other retailers around the world. Dunn and Humby, meanwhile, are working on a start-up analysing social media data, called Starcount.Source: www.computing.co.uk