Tesco
Tesco’s Clubcard Customer Relationship Management Programme:
The challenges of coming to terms with a changing market
Synopsis
For almost two decades, Tesco was seen to be one of the most successful retail organisations in the world, with a pioneering Clubcard-based loyalty scheme and the development of a strategic CRM (Customer Relationship Management) programme that provided the company with the basis for true customer insight and greater brand engagement. However, in 2011 the company began to suffer as the result of a more competitive environment and a series of internal pressures. In 2012, it issued its first profit warning in 20 years and saw £5 billion wiped off its market value.
Within this case study, we examine Tesco’s spectacular growth, the development of its highly successful Clubcard, and some of the problems that began to emerge after the departure of its boss, Terry Leahy.
Background
In 2003 Management Today voted Tesco the UK’s Most Admired Company and its boss, Sir Terry Leahy, Most Admired Leader. In 2005, the company again picked up the two awards, a feat that had not been achieved since Management Today, in conjunction with Mercer Consulting, launched the Most Admired Companies scheme in 1989. In doing this, they also won outright two of the nine criteria used to judge companies: Capacity to Innovate and Use of Corporate Assets. In 2009, the company was ranked by The Financial Times as the 106 th most valuable company in the world.
However, in 2010, Terry Leahy, one of the principal architects of the company’s success, announced that he would retire the following year and, within two days,
£778 million was wiped off the company’s stock market value.
Under Leahy’s leadership and the development of a strongly collegiate approach to management, the company developed an ability not just to control costs and expand cleverly and consistently, but also an extraordinary imagination in delivering change
1
to the
The challenges of coming to terms with a changing market
Synopsis
For almost two decades, Tesco was seen to be one of the most successful retail organisations in the world, with a pioneering Clubcard-based loyalty scheme and the development of a strategic CRM (Customer Relationship Management) programme that provided the company with the basis for true customer insight and greater brand engagement. However, in 2011 the company began to suffer as the result of a more competitive environment and a series of internal pressures. In 2012, it issued its first profit warning in 20 years and saw £5 billion wiped off its market value.
Within this case study, we examine Tesco’s spectacular growth, the development of its highly successful Clubcard, and some of the problems that began to emerge after the departure of its boss, Terry Leahy.
Background
In 2003 Management Today voted Tesco the UK’s Most Admired Company and its boss, Sir Terry Leahy, Most Admired Leader. In 2005, the company again picked up the two awards, a feat that had not been achieved since Management Today, in conjunction with Mercer Consulting, launched the Most Admired Companies scheme in 1989. In doing this, they also won outright two of the nine criteria used to judge companies: Capacity to Innovate and Use of Corporate Assets. In 2009, the company was ranked by The Financial Times as the 106 th most valuable company in the world.
However, in 2010, Terry Leahy, one of the principal architects of the company’s success, announced that he would retire the following year and, within two days,
£778 million was wiped off the company’s stock market value.
Under Leahy’s leadership and the development of a strongly collegiate approach to management, the company developed an ability not just to control costs and expand cleverly and consistently, but also an extraordinary imagination in delivering change
1
to the