Financially troubled British grocer Tesco confirmed rumors it intends to offload its data marketing and analysis division, dunnhumby.
In documents released Thursday, Tesco said it has appointed Goldman Sachs as its adviser to explore “strategic options” for the US$756 million business as it embarks on a complete overhaul of its assets.
It’s hard to bucket dunnhumby. Some call it an agency. Others, a data platform.
In its 2014 annual report and financial statement, Tesco said it “uses our unique insights from dunnhumby to track how British consumers feel about the economy in general, as well as their own individual situations.”
But dunnhumby’s insights are certainly not limited to understanding macroeconomic conditions. Because the company harnesses loyalty card data from parent company Tesco, Kroger and others, it has a unique frame of reference on the purchase habits of 770 million shoppers.
Offline and in-store data may be its specialty, but Tesco bought dunnhumby a $187.5 million present last March: digital prowess in the form of demand-side platform Sociomantic.
At the time of purchase, Simon Hay, dunnhumby’s CEO, told AdExchanger that “if we hadn’t joined forces with Sociomantic, we probably would have ended up competing against them because they were moving more toward our space and we were moving to theirs.”
This coming together of loyalty and CRM data with digital signals is a hot thing for marketers and acquiring minds want a piece of it.
In dunnhumby’s case, Reuters reported in the fall private equity firm TPG’s interest in the company. The latest name to enter the mix is agency holding company WPP Group, which may be gunning for a US$3 billion buyout of the business, reported The Drum.
Ironically, WPP’s outspoken CEO, Sir Martin Sorrell, called dunnhumby a “competitor” to his agency conglomerate during Advertising Week 2013.
“It’s the retailers who have the connection or thinking to develop the data,” Sorrell said onstage at the IAB MIXX conference, as AdExchanger reported. He heralded how agency holding companies today aren’t only competing directly with one another, they’re competing also with data companies, research firms and the retailers themselves.
Dunnhumby works with more than 20 retail partners and has net profits of $151 million, according to Tesco’s annual corporate statement. If WPP moved in on dunnhumby for the rumored amount, the deal would be similar in size and scope to Publicis Groupe’s pricy $3.7 billion SapientNitro buy.
Both dunnhumby and WPP declined to comment for this story.