UK-based dunnhumby exports know-how to USA

11 June 2003: dunnhumby builds upon UK success with Tesco Clubcard and sets up US joint venture

Customer insight and marketing specialist dunnhumby announces the establishment of a joint venture with one of the world’s top 5 retailers - US supermarket giant Kroger. The deal will enable Kroger’s 3,500 stores covering over 20 sub-brands, including Fred Meyer, Food 4 Less, Smith’s and Dillon, and turning over in excess of £36 billion annually ($55.44 billion) to benefit from the expertise and customer analysis technology that dunnhumby has developed and pioneered with Tesco in the UK.

dunnhumby usa, which will be based in Cincinnati and is a new 50/50 joint-venture company with Kroger, Inc. The organisation already employs 22 people in the USA, and anticipates that this number will grow to 45 by the end of the year. dunnhumby usa is expected to be a $multi-million revenue earner in its first year of business.

dunnhumby usa will take the Tesco’s successful model of using loyalty data to provide shoppers with a more customised shopping experience and export this to cover Kroger’s +65 million customers in the USA – one fifth of the population. In the same way that Tesco Clubcard customers receive targeted, personalised offerings, dunnhumby usa will enable Kroger to offer its customers the products they want, at the right time and the right price, thereby enhancing their overall shopping experience.

Don McGeorge, Vice President at Kroger, Inc. comments, “We admire what dunnhumby has achieved with Tesco in the UK and believe that our customers will benefit significantly from this expertise. We are determined to become the number one in our marketplace and firmly believe that dunnhumby will be a key part of our future success.”

Edwina Dunn, chief executive of dunnhumby, adds, “We are now partnered with two of world’s top ten retailers and are determined to grow that number as we move into new geographies and develop our business. Although there are differences between the UK, US and world models, we see these as new challenges which reinforce the flexibility, efficiency and effectiveness of the dunnhumby approach. Kroger’s strategic aims are a very good fit with dunnhumby’s. They offer a huge market for us to work in, and it is really a natural progression for us to take a proven and successful formula, tailor it appropriately and allow US customers to benefit.”

The dunnhumby model has also helped to establish Tesco as the premier supermarket chain in the UK. The customer segmentation and analysis work that dunnhumby and Tesco have carried out, has enabled, and continues to enable, Tesco to improve its decision making on price ranging and assortment. It has also contributed to the targeting of Tesco’s direct marketing campaigns, resulting in cost effective sales uplift and improving returns on investment for Tesco and its suppliers.

Edwina Dunn concludes, “A partnership of this scale and potential requires a great deal of commitment, so we will provide new resources above and beyond that of Kroger’s existing business. The success of this joint venture will mark the next step in dunnhumby’s aim to become the world’s leading provider of customer insight and communication services.”