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Every little helps: TESCO
1st September, 2004
Are you a ‘premium loyal’, a ‘loyal low spender’, a ‘can’t stay away’… or don’t you care? Tesco does, and uses the data collected from your loyalty card to dictate what you buy, when you buy and how much you buy.‘Why not try spreading it on a muffin?’ I turn round trying to locate the shop steward but I am alone in the aisle. Just above the top shelf of cereals, however, I see the screen of a TV. I stand and watch as the banal nightmare unfolds on the screen in front of me: a 10-second clip of a woman spreading cheese onto a slice of bread is accompanied by a caption reading, ‘it’s great with bread, too’. The first clip is followed by one suggesting an inspirational way to make your own flan (buy a Tesco flan base; fill it with Tesco tinned fruit pieces; add Tesco gelatin).
And so it goes on. And on. Welcome to the world of Tesco TV: 24-hour advertising without the boring programmes in between.
Wherever I push my trolley, another TV glares at me. And depending on which one of seven retail sections I am in, I get a different set of adverts cunningly masked as handy hints, recipe suggestions or make-up tips.
This is Tesco’s latest marketing development, and it looks set to be huge. By the end of this year, it will be ‘available’ at Tesco’s 300 largest stores, which account for 530 million shopping trips each year and 10 million shopping trips per week.
As Tesco explains to prospective advertisers, ‘10 million shoppers are equivalent to a ‘40 rating’ on TV, which [is] comparable to a top-rating TV programme’. In other words, Tesco can make big money by charging companies for showing their products for 2.5 or more seconds on its screens.
There is a certain amoral genius to the concept. Seventy per cent of purchase decisions are made in-store, meaning that the vast majority of advertising seen on TV outside of stores, or read in magazines or on billboards, is not in the front of consumers’ minds when they are shopping. But if you see an advert while 10 feet from where the product is on sale, that, as Tesco media manager Bill Pennell somewhat evangelically explains, is ‘advertising where it matters – at the moment of truth’. Indeed, according to Tesco, companies advertising on Tesco TV have already seen their sales of advertised products increase 10 per cent.
Furthermore, despite its reach, Tesco TV is not regulated by media regulator Ofcom. But not to worry, assures the UK’s biggest supermarket, all adverts are vetted by Tesco’s Orwellian sounding ‘Editorial Governance Team’.
While the Editorial Governance Team is deciding what we are allowed to watch, another Tesco team is increasingly watching us.
The company is investing heavily in RFID, which stands for radio-frequency identification, a technology that uses tiny computer chips smaller than grains of sand to track items. RFID chips can be placed either in packaging, or, if the products are non-food, in the products themselves. Each tiny chip is hooked up to an antenna that picks up electromagnetic energy beamed at it from a reader device. The chip then sends back its unique identification number to the reader, allowing the item to be remotely identified up to 20 or 30 feet away. Tesco began including RFID chips with non-food products in April of this year.
Imagine you walk into a Tesco store wearing a jumper with an RFID chip woven into its fabric. Tesco knows who you are. Because you also use a store card, it knows exactly what you have bought on any given hour of any given day. It knows you only shop in the evenings, probably after work; so you will probably be tired, maybe more susceptible to offers. It knows you like chocolate. How long before the television is programmed to talk to you and sell you exactly what you are most ready to buy?
Is such a relationship between surveillance and shopping far-fetched? So great is supermarkets’ knowledge of their customers that, as Jessica Williams writes in her book 50 Facts That Should Change The World, they now know more about you than the government does. So, when the government looked to develop its proposed ID cards, who did it turn to for advice? Tesco.
Last year Tesco was secretly trialling RFID tags in Gillette shaving products in a store in Cambridge. A camera was placed above the shelf where the razors were, and everyone who picked up the products was photographed. Only a protest by members of the public outraged at this invasion of their privacy got the trial stopped.
Earlier this year shopper Lynn Pierce went to her local Tesco to buy some flowers for her mother’s grave, using her Tesco loyalty card when she paid. At home two days later she answered a knock at the door only to find the police standing on her doorstep. Someone monitoring Tesco’s in store CCTV had seen Mrs Pierce put her scarf into her handbag. Wrongly assuming she was shoplifting, Tesco found her home address from data stored in her loyalty card account. It was only when the police inspected the CCTV footage themselves and saw that she had entered the store wearing the scarf that the mistake was realised. ‘I’m disgusted that information from my store card was passed on to the police and used in this way,’ Pierce later told a reporter.
Some might not see the problem. ‘If supermarkets want to sell me things,’ you might think, ‘better if it is more tailored to what I actually buy. If they understand my shopping habits and respond to them more accurately, I’m more likely to get what I want.’ But what if your shopping habits happen to be the same as a terrorist’s? Would you also be happy to know that following the 9/11 terrorist attacks a grocery chain in the US voluntarily handed over all its loyalty card records to the FBI, without telling its customers? Apparently, the US authorities had reviewed loyalty card transactions made by the 9/11 hijackers and created a profile of the ideal terrorist’s shopping preferences. By comparing this pattern with the pattern of every shopper at the helpful grocery store they were able to see which shoppers were potential terrorists.
Loyalty cards are increasingly big business. In the UK a 2002 Mori poll showed that more than half of UK adults use loyalty cards. And while most of the major supermarkets (with the notable exception of Asda) have them, the Tesco card has been by far and away the most successful.
Before it launched its loyalty card, known as Clubcard, Tesco was the UK’s second-ranking supermarket. In the eight years from the launch of Clubcard to the end of 2002 Tesco gave away more than £1 billion in vouchers, yet managed to run the Clubcard scheme since 1995 for no net cost. The increase in sales that accompanied the ‘loyalty’ generated among users of the card more than covered its cost. Indeed, research by management consultancy McKinsey found that rather than saving money from loyalty cards, 48 per cent of people who join such schemes actually increase the amount they spend in supermarkets. But then that’s the point.
So how did Tesco achieve this? What the loyalty card allows Tesco to do is to follow your shopping patterns, and from that build up a profile of what sort of shopper you are. (As one supermarket customer forecaster explained, ‘if you’re buying a Britney Spears CD and you’ve got no one else registered on your card, you’ve either got young kids or you’re a gay man’.) Tesco’s ‘valued’ customers are split into a series of 27 categories, known as ‘Tesco Lifestyles’, depending on how, when and why they spend their money. For despite all their and every other supermarket’s social rhetoric, that is all you are to Tesco – a spender of money. Perhaps you are a ‘premium loyal’, one of the 20 per cent of customers who account for 80 per cent of its sales. Or maybe you’re a ‘loyal low spender’, a ‘can’t stay away’, a ‘weekly shopper’ or a ‘high-spending superstore family’.
Once it has worked out what sort of group you are in, it can then track down any aberrant behaviour. For example, suppose you enjoy asparagus and organic wine, only shop late in the evening when you are home from work, buy your copy of Cosmopolitan magazine and the occasional Dido CD. Tesco knows what sort of person you are. But for some reason you aren’t buying fresh Parmesan or over-priced shampoo – just the sort of things your group is supposed to love, according to the company’s research. Once Tesco knows who you are, it will start selling you the products you should be buying.
It all makes complete economic sense. Through analysing the information gleaned from Clubcards, Tesco has learnt that regular customers often shop in 12 out of 16 areas of its stores. Maybe they buy all types of food, but never even look at the CDs, or washing products, or beer. The store discovered that if consumers could each be persuaded to shop in the other four sections just once every three months, Tesco’s revenue would go up by £1.8 billion. As the company says, every little helps.
Every three months, therefore, Clubcard holders are sent a letter with a series of money-off vouchers for products available in Tesco stores. (Tesco charges companies to make offers in the mailings, so the coupons are already half-funded by suppliers). Not everyone gets the same set of vouchers, however. Far from it. Depending on your shopping profile you could get any one of 8 million possible variations of the mailing. In your particular mailing there will always be discounts for products Tesco knows you already buy (thus encouraging you to buy more of them), as well as discounts for products you have never tried before but should (that’s where the Parmesan and shampoo discounts come in). So customised are the mailings that although it is possible for Tesco to arrange its combinations of vouchers and offers in 8 million different ways, it has only charted 4 million different combinations of customer behaviour. In other words, the mailing is more individual than you or I.
Of course not all your vouchers will offer you savings on food. In recent years Tesco has increasingly diversified. It wants to be all things to all people. So profitable have Tesco’s sales of non-food products become that Sainsbury’s told the UK’s Competition Commission that they account for 73 per cent of its profits. (Sainsbury’s said all of Asda’s profits come from the sale of non-food goods.)
Tesco now sells books – at such cheap prices that one of the country’s leading book suppliers recently shut down, unable to make ends meet. It now sells CDs. Think about the number of adverts you have seen for new albums on TV. What is always at the bottom of the page? Tesco’s logo. So powerful has Tesco become in the music industry that it is considered impossible for a single to get to number one without being sold through its stores. In fact, Tesco sells more CDs than Woolworths and Virgin combined. Tesco sells magazines and newspapers. It sells clothes. Cleaning products. Make-up. Plants. More toiletries than Boots and Superdrug combined. Now, add all these up and think how much information your shopping habits tell Tesco about you.
But Tesco is about selling much more than products: it’s about selling lifestyles. One of the main ways it does this is through specialised clubs that are open to Clubcard members to join – World of Wine, Healthy Living, Kids and Baby and Toddler clubs.
These clubs wield great influence. In its first two years, for example, two out of every five expectant mothers joined Tesco’s Baby and Toddler Club. More than half of those did not join themselves but were enrolled by their own mothers. What better marketing could a store ask for? ‘We’re so trustworthy your own mother is enrolling her granddaughter with us.’ The result? A third of new-to Tesco shoppers remained loyal to the supermarket after their Baby and Toddler Club membership lapsed. Rather than resist their marketing efforts, customers have made it easier for the supermarkets. When they enrol their children for Kids Club, Tesco asks parents if they will allow the store to send free samples direct to their children. Seventy per cent say yes.
As well as these clubs, Tesco has entered all manner of other markets – always insisting that ‘every little helps’. The UK’s largest grocer now runs the world’s most successful internet supermarket, delivering to more than 1 million homes and with nearly 400,000 regular shoppers. Two out of every five customers using Tesco.com are not regular shoppers at Tesco stores. By tracking what you buy through your Clubcard, Tesco creates for you a favourite products list (similar to a list of favourite websites). When you connect to Tesco.com there is the list of products you normally buy. A helpful short cut, or too much information about you? One woman contacted Tesco when she saw condoms on her favourites list: she was puzzled because she and her husband didn’t use them when they were having sex. Tesco knew her husband was having an affair before she did. The company is also one of Europe’s fastest growing financial services providers. Tesco Personal Finance had 3.5 million customers and made profits of £96 million by 2003. By the same year it had leant £1 billion in personal loans, and insured the cars of 500,000 customers and more than 250,000 of their pets.
Until it was replaced earlier this year with a free in-store magazine, Clubcard magazine had the highest circulation of any lifestyle magazine in Europe, and was sent to 8.5 million people. It too was an effective marketing tool. More than half of all UK adults read a supermarket magazine, and 64 per cent are likely to buy products because of articles they read in those magazines. That means 5.4 million people were being influenced in their buying patterns by a single magazine. The front cover of the new magazine tells you exactly what it wants to offer: ‘Ideas… Solutions… Lifestyle’. Just about everything, really.
Tesco has launched its own mobile phone service, its own home phone service, and in 2000 it launched Tesco SchoolNet, which is now the largest school internet service in the world. When your children are learning, they’re staring at the Tesco logo as they do so. Tesco has long seen linking up with schools as a great way to get its name out there. Since 1990 it has run the Computers for Schools scheme, whereby tokens on certain products (including such healthy alternatives as Walkers crisps and McVitie’s biscuits) can be exchanged for computer equipment for local schools. Tesco is very proud of this scheme, which in October 2000 won the Nestlé Social Commitment prize at the UK Food Industry Awards. However, as Ben Laurence stated in The Observer, the cost of Computers for Schools to Tesco is modest. Lawrence wrote: ‘Customers have to spend £110,000 on groceries for a school to get a basic PC.’ Of course, most computers provided by the scheme bear the Tesco logo.
Recently, Tesco has been one of many companies getting involved in New Labour’s beloved private finance initiative (PFI). Education Action Zones (EAZs) are a type of PFI that involve companies like Shell, ICI and McDonald’s in the funding of local schools. The benefits for business are obvious. An article on the website of Dingle Granby Toxteth EAZ reports: ‘Pupils and staff from Beaufort Park School enjoyed a fabulous visit to Tesco Metro recently.’ The visit was supposedly organised to promote healthy eating. To that end, Tesco staff showed children round the store, ‘pointed out healthy foods and then demonstrated how to use the electronic tills’. As the emphasis on healthy eating faded further into the background, the children were then given a ‘chance to ice a cookie in the [store’s] bakery’ before being shown how they could buy floral bouquets for Mother’s Day. ‘To round the visit off,’ the website states, ‘[Tesco’s] staff provided treats for the children to take home.’ Who benefited most? The school, the children, or Tesco?
On top of all of this there are the constant messages displayed all across Tesco stores assuring you of the company’s values. The most conspicuous are located in the fruit and vegetable aisles, where can be found a series of signs telling you only half the story – the half Tesco wants you to hear. What, other than bland assurances, is offered by statements such as ‘quality you can trust’, ‘our growers respect and protect wildlife’, or ‘daily deliveries ensure freshness’ (but not ‘daily deliveries mean much more CO2 released into the atmosphere by our lorries and planes’)? These messages crop up in the most unlikely of places, displaying the extent to which Tesco will go to remind us that every little helps. In the car parks outside stores are fenced-off areas where people leave their trolleys once they have unloaded them into their cars. Signs read: ‘To make your shopping trip easier we have a wide selection of trolleys.’
Throughout the store every price tag has some sort of pledge. ‘Everyday low prices,’ read some. Others claim: ‘We won’t be beaten on value,’ which is, of course, much harder to prove than whether Tesco is beaten on price. Every single price tag reminds the consumer that buying the company’s products earns them Clubcard points. For everything we do is fed back into the mainframe.
Where will it end? You are born and enrolled in the Baby and Toddler Club, then graduate to Kids Club. At school you look up information on a Tesco website on a computer earned for your school by you and your friends eating lots of food bought at Tesco. Your lunchbox is, of course, full of Tesco lunchables. On school trips you visit Tesco supermarkets to see how things are done in the only store left in town.
When you leave school you could go to university and study one of the many courses sponsored by Tesco, or you could just bite the bullet and start working there yourself. You don’t want to stack shelves or man the tills? No problem. The UK’s biggest private employer has openings for qualified pharmacists, GPs, etc.
What about your life outside of Tesco? What do you mean, outside? You do all your shopping there. What you’ve forgotten, you order online. You buy your clothes, your CDs, your books, your videos… all from Tesco. You read the Tesco magazine each month, deciding how to cook the food you bought from the company. Each year on your mum’s birthday you use Tesco’s flower-delivering service to send her a bunch of roses.
When you are ill you see the Tesco in-store GP, and get your prescriptions from the in-store chemist. Your mobile and home phone were bought at Tesco, and operate on a Tesco tariff. Your home, car, pet, holiday and even your life are insured through Tesco. Your bank account is with Tesco, as is your mortgage, and each month a portion of the salary you earn working for Tesco goes from a direct debit in your Tesco bank account to pay off the Tesco loan you took out to pay for your car (filled with petrol each week at the station in the Tesco forecourt).
And so life goes on. One day when you are older you might sit back and reflect. You might remember the old days when people used to waste so much of their time walking up and down streets, going into all those different shops, having to talk to all those different people, hearing about all their different lives. Now it’s just old dears running charity shops full of unwanted goods bought at the local Tesco, bookmakers where you can bet on the 3:30 Tesco Handicap at Doncaster, and a gift card shop you don’t use that much. Now the community’s gone, there’s no one to send a card to anyway. It’s lonelier, too, now your husband’s died. But at least you’ll be with him when you go. Thank God he took up the buy-one-get-one-free offer at Tescoffins.com. Wasn’t so keen on what they engraved on the headstone, though. There it was, in three-inch high silver letters just below his name:
‘Every little helps’.
This article first appeared in the Ecologist September 2004
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