WPP appears to be in pole position – or be the last man standing – in the auction for Tesco’s dunnhumby research business, the motor behind its Clubcard.
When the business went up for sale last year, shortly after the appointment of ‘Drastic’ Dave Lewis as Tesco’s new CEO from Unilever, there was rather fanciful talk of the business being worth £2bn. That supposed valuation fell when big US retailer Kroger dropped its dunnhumby partnership, taking over the business itself.
The latest fly in the ointment seems to be Tesco’s stipulation that whoever buys dunnhumby will have to repitch for the Tesco business within five years. Which makes it something of a risk, to put it mildly. Tesco may well decide to drop the sale altogether.
‘Data investment management’ is WPP CEO Sir Martin Sorrell’s current big thing although previous expensive acquisitions, like £1bn plus TNS/Sofres, have failed to deliver the goods. Sorrell evidently reckons that, in a world obsessed by ‘Big Data’, WPP can make itself the world expert in customer behaviour. Dunnhumby describes itself as a ‘customer science company.’
But even £1bn, without a partner, would be a big step for WPP, given that Tesco’s custom can’t be relied on. After decades of trying WPP has finally managed to insert itself into the Tesco fold with MediaCom appointed to handle its media business and Kinetic Tesco’s out of home. Are Martin and Dave now best pals?
Lewis, though, may be having second thoughts about handing over all that Tesco info to a third party. Tesco has debts of around £8bn, so he needs to do something unless trading has miraculously recovered. Tesco is also trying to sell its Korean business for around £4bn.