Tesco targets retail media opportunity

Tesco CEO Ken Murphy is “very excited” about the potential of retail media and expects to invest significantly in this area, seeing it as “a meaningful contributor to profit” in the medium term. 

Why it matters

Towards the end of 2021, Tesco launched a media and insights platform to connect brands and their agencies with the retailer’s extensive first-party behavioural dataset from the longstanding Clubcard loyalty scheme. But that is now being taken to a new level.

Speaking on an earnings call today, Murphy explained that achieving that potential would not only require a lot of work on its dunnhumby platform, but also “on our capability in the whole retail media space – in terms of our reporting tools for suppliers to give them the confidence that we’re giving them a great return on their marketing investment, and also integrating with the various media planning agencies so that they can use us as part of a total media planning proposition”.

Context

• The dunnhumby platform has been at the heart of Tesco’s Clubcard loyalty scheme (launched back in 1994), which is shifting away from physical cards to a digital proposition contained within an app that now commands over 14 million users across the group and is used in more than 50 million weekly transactions.
• Tesco, the biggest supermarket chain in the UK, believes that combination of first-party data and reach, along with 30 years of experience, puts it in “prime position to take advantage of the exciting media monetisation and personalisation opportunities available to us”.
• Tesco claims to have the largest closed-loop grocery media platform, including media screens in 500+ stores, powering over 6,500 campaigns a year. Earlier trials have come up with an average ROAS of £6.60 with Tesco Media, compared to an average of £3.80 on other channels.
• More than 400 suppliers have taken advantage of sponsored search opportunities within the Tesco app, running over 5,000 campaigns.

^{[Image: Tesco]}