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File image of a new contactless Tesco Clubcard. Alamy Stock Photo
Tesco

'Money today for data tomorrow': Why are Tesco Clubcard prices so appealing?

‘It’s right there in front of you, the value that this company puts on knowing about you, it’s right conspicuously there and undeniable.’

PEOPLE ON SOCIAL media were taken aback recently when they discovered that a can of a certain brand of deodorant cost €9 in a Tesco store.

Many were bemused at the fact that the deodorant was supposedly half price, costing €4.50, for those who have a Tesco Clubcard.

It’s not the only Clubcard deal on offer of late; the Tesco website currently says that customers can get a third off the price of multivitamins and two euro off certain hair products if they buy them while using a Clubcard as just two examples. Packs of Pampers nappies are €16 each for non-Clubcard customers but €27 for two packets for Clubcard holders.

A Clubcard allows customers to avail of special discount prices and to gather loyalty points for money spent in Tesco stores, which can then accumulate into Tesco vouchers.

Tesco Ireland describes the card as its way of “thanking you for shopping with Tesco”.

But some are concerned that the discounts given for handing over personal data can come with a cost. 

‘It’s undeniable’

Johnny Ryan, a Senior Fellow at the Irish Council for Civil Liberties, said he noticed a discrepancy between prices of products bought with and without a Clubcard when he was in a Tesco store over the Christmas period.

“There were Christmas fairy lights that were €90, and you get them for €45 if you agree to use a Clubcard,” he explains.

“So it’s right there in front of you, the value that this company puts on knowing about you, it’s right conspicuously there and undeniable.”

In order to sign up for a Tesco Clubcard, customers need to give details of their name, phone number, email and address.

If a Clubcard is not actively used for two years, it is automatically removed from Tesco’s system and its data is deleted from Tesco records.

But Ryan suggests the data gleaned from the use of a Clubcard is of high value to the company because it helps Tesco decide how to run its business.

He says it is “very clear how big Tesco are into the idea of the Clubcard” and that it is “willing to sacrifice money today for data today and tomorrow”.

“We know that the big data industry is often hidden behind the scenes, but it rears its head right in the store when you see those two prices,” he says.

He adds that if customers get something at a significant discount in this way, that discount shows “how much that company values learning about you” and that data may be “worth that much because it is selling that data to someone else too”.

But Tesco maintains that Clubcard prices are a way of giving our “loyal customers great value and exclusive deals”, according to a company spokesperson.

The retailer told The Journal added that it is committed to “consistently delivering great value and providing competitively priced products” in a highly competitive market. 

“All retailers operate different promotional cycles,” the Tesco spokesperson said in relation to the specific example of the deodorant.

“(And) in the case of this premium branded product, the recommended retail price is €9 and with a Clubcard reduced to €4.50.” (Searches online showed a variety of prices for the same can of deodorant ranging from €2.50 to €6.99.)

Churning data

Others suggest that the Clubcard is a way of enabling Tesco to stay competitive with other retailers.

Christina O’Connor, a lecturer in marketing at Kemmy Business School University of Limerick who has used Clubcard data in her research, acknowledges that while data is important to Tesco, Clubcard prices are also a way for Tesco to “compete” against other stores, particularly discount stores.

She says that Clubcard data is used in a way that is akin to the deals local grocers of old would have offered.

“Fifty years ago, the retailer knew everybody coming into their store every day,” O’Connor explains.

“And if they knew that there was a particular product on sale, they were able to say to Mary: ‘That product down there is half price. I know you buy that every week, go down there, I have that one put aside for you’.

“No different from the experience now of being able to say to someone via their their phone or via email: ‘Here’s a coupon for that product that you buy every week.’”

But Ryan of the ICCL said that Tesco isn’t a “local grocer”, but rather a “machine that is churning and crunching information about us”.

“People used to say, ‘tell me what you eat and I’ll tell you who you are’. But now add in things that reveal what makes you tick and where you are at this moment in your life,” he says.

“This isn’t about your local grocer knowing you, this is about a machine knowing you and possibly selling that information about what makes you tick under the table to other big companies in massive data traits.

“You can collect data for some reason that seems benign, not a big deal, but when it falls into the wrong hands, it’s utterly terrifying.”

Brands partnership

Key to the concerns of some is the history of the Clubcard and other Tesco ventures.

The card was launched in 1994 by Tesco in partnership with a global customer data collection science company called dunnhumby (Tesco later went on to purchase dunnhumby and is now its parent company).

A partnership between Tesco and dunnhumby, Tesco Media and Insight, was recently launched; it has claimed that it will “allow brands to understand customers like never before”.

Dunnhumby’s website says this partnership “allows brands and agencies to benefit from the reach and scale of Tesco” and that it includes other partnerships with companies like Sky, ITV, and Meta (which owns Facebook, Instagram, and Whatsapp).

Dunnhumby promises that these brands will obtain “powerful first-party data to target key audiences away from Tesco’s digital storefront”.

A Tesco spokesperson confirmed that a local ‘media and insights platform’ operates in the Irish market.

But the spokesperson says that Tesco does not share personal data with third parties outside of Tesco.

“We take our responsibilities with regard to data and GDPR extremely seriously and confirm that we do not share any data with third parties.”

They added that “analysis of Clubcard data helps us to examine shopping trends, so that we can target activity and communications that are most relevant to our customers”.

“Dunnhumby is a part of Tesco Group, and helps us to improve our understanding of customers’ shopping behaviours and to personalise their experience. Irish data is not shared across the wider dunnhumby network,” a statement said.

Christine O’Connor explains that dunnhumby has been “revolutionary” in influencing how data is now used.

“For the first time ever [it] started to create a picture, started to humanise and put a profile around the shopper,” she says.

“We were moving beyond just mere transactional data into what is really consumer purchasing behaviour data based on real behaviour, based on real time data, and that can make real differences for anybody who uses that data.” 

‘Toxic radiation’

O’Connor has also described person data as “the new oil” and says it can generate major returns for businesses.

“From a business perspective, it certainly is so rich, in terms of being described as the ‘new oil’,” she says.

However, Johnny Ryan suggests a different metaphor.

“Data isn’t the new oil, you should instead think of it as a kind of toxic radiation; if it’s not handled carefully, it ends up being very, very harmful and supermarket data is some of the most intimate data that there is,” he says.

He points to the case of a prominent priest in America who was outed as using gay websites by a group that obtained “anonymised” data.

A group of conservative Catholics in the state of Colorado spent millions of dollars to purchase a data set from a data broker.

“If you have a database of what makes everyone in a society tick and what makes them different, you can compromise them all,” Ryan warned.

When presented with this example, O’Connor acknowledged that “there will always be people out there who will try to make a gain on any different types of data sets, or any type of new technologies and advancements”.

“Every type of technology out there can be skewed for wrongdoing,” said O’Connor.

“However, typically data of this nature and this level, it’s credible.

“If you take a look at dunnhumby’s website, they define themselves as the number one data science marketing company in the world. So it’s credible data, used by people who are aligned to those organisations.”

But O’Connor says that Tesco Ireland’s data stays within Ireland and that the data is “not on an individual level, it’s aggregated”.

“The whole idea is that you will never be able to drill back into that data into one original source. That will never be the case and should never be the case. They have systems and checks in place to make sure that’s not what it’s used for,” she says.

“The reality is we relinquish data on a daily basis through the websites that we click on, so I’m just very conscious that we don’t compare dunnhumby to other big datasets and other big sources that have been used for illegitimate purposes because that’s not what this data set has been used for.

“This data set has been transformational for the future of retail food, and for the advancement of business development for small agri-food businesses all over Ireland who have been able to use this data for the good of local and regional and national consumers.

“It’s based on real time data, but it’s not in the moment. This is market intelligence data that’s captured at the source two weeks previous and is aggregated, collated, and stored.”

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