Google eyes Tesco’s customer analytics arm Dunnhumby

Google is reported to be on the verge of a bid for Dunnhumby, the well-known customer analytics unit behind Tesco’s Clubcard loyalty card.

Dunnhumby runs the loyalty card programme, which was a pioneer of its kind and is often said to be the strategic weapon that allowed Tesco to overtake Sainsbury’s as the UK’s favourite supermarket.

Google is in talks with private equity firm Permira about making a combined offer for Dunnhumby, Sky News has reported.

Tesco has not had troubles to seek in recent months following a £250m profit overstatement, identified in September 2014. The sale of Dunnhumby could net it £2bn, Business Insider has speculated.

WPP is reported, according to Sky News, to be another suitor for Dunnhumby’s database of more than one billion worldwide shoppers.

Tesco announced in August 2014 that it would slim down its IT function to reduce costs. This came after the retailer reduced its profit forecast for 2014/15 from £2.8bn to £2.4bn.

In February 2015 its CIO Mike McNamara left the UK to become CIO at US retailer Target. Around the same time it sold its Tesco Broadband and blinkbox video streaming service to TalkTalk for a bargain price of £5m, and it put Dunnhumby up for sale.

A year previously, in February 2014, Tesco had announced an ambitious expansion of its digital services, to include a digital wallet. The data generated by its Clubcard was said to be an advantage behind those services at the time.

Tesco’s Clubcard loyalty scheme has 17 million card holders in the UK and 43 million worldwide. Additionally, Dunnhumby casts its customer analytics net into 400 million households across the globe.

Google has itself given new force to the term "analytics" in recent years, with its free web analytics service that provides statistics and basic analytical tools for search engine optimisation and marketing purposes.

Dunnhumby is a British data analytics entity, founded in 1989, five years before the web, and employs 3,000 people. It might prove hard for Google to culturally assimilate this Tesco business unit.