U.K. supermarket giant Tesco said Thursday (Jan. 8) that it will dump nearly 100 stores, lay off thousands of employees, and possibly sell Dunnhumby, the customer-data subsidiary responsible for the chain’s highly successful loyalty program, The Guardian reported.
The dramatic overhaul comes after disappointing holiday sales and an accounting scandal last year that cost the chain much of its top management. Same-store sales were down 0.3 percent for the six weeks before Christmas.
CEO Dave Lewis, who was hired in September from Unilever, said Tesco will close 43 unprofitable stores and stop planned construction of 49 new stores — most of them in the oversized Tesco Extra format — cut about 30 percent of headquarters staff, sell off Tesco’s broadband and streaming-video operations, and look for a buyer for Dunnhumby data-mining business.
Officially Tesco is just “exploring strategic options” for Dunnhumby, but it has reportedly been shopping the data business around since at least October. U.K. advertising company WPP was rumored to have made a $3 billion bid for Dunnhumby before Thursday’s announcement.
Tesco, which as recently as 2013 was the world’s third-largest retailer, can probably survive without more of Dunnhumby’s help for its loyalty program. But Dunnhumby is also credited with with major customer loyalty successes at big U.S. chains including Kroger and Macy’s, which both have longstanding joint ventures with the data-mining group. Dunnhumby was one of the first organizations to merge customer-data collection with checkout data, and has data on an estimated 770 million people around the world, according to Gigaom.
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