Tesco to launch first paperless Clubcard

Date : 21 March 2013

Speaking at the World Retail Congress in Singapore this week, Tesco CEO Philip Clarke announced that Tesco is to launch a paperless Clubcard in China later this year.

Shift from postal to electronic communication

China will be the first country in which Tesco will launch a fully digital Clubcard. The move will see an end to the retailer's postal mailings, with vouchers and loyalty information delivered to customers electronically. In a speech focused around how Tesco plans to 're-tool' so that it can adapt to a changing world, Clarke explained how the retailer is to spend $750m on digital retailing this year, a threefold increase in investment in just three years.

Asia to overtake the west in digital innovation

China is an obvious country in which to launch its first paper free Clubcard. Given the huge logistical problems in the country, a rapidly growing tech-savvy young population, who are increasingly shopping online and the issue of mailings not necessarily reaching their intended destination, due to the inaccuracy of  postal address data. Clarke said, 'In China we’re leapfrogging the establishment of a modern mail system by launching digital Clubcard over the coming year. One of the most exciting things is that our digital innovation is being driven and refined by the demands of our Asian markets.'

Possibilities for a more flexible and personalised relationship

A fully digital Clubcard launch could coincide with Tesco's entry into online retailing in Shanghai, in the summer of 2013. With ultimate ambitions to move towards a paperless Clubcard across all markets, this development could have significant implications as to the increased flexibility around how and  when the retailer can communicate through its Clubcard scheme with its customers. A move to a more digitally focused loyalty scheme will play nicely into the retailer's strategy of developing a more personalised offer, specifically through the use of smartphones.

Sales momentum continues into 2013

Ocado updated on Christmas trading mid-January and today's interim release confirms that sales momentum has continued to build through 2013 as the group enters a critical period with the opening of CFC2 (Customer Fulfilment Centre 2) in Warwickshire. Gross sales reached £162.1m for the 12 weeks to 24 February 2013, while average orders per week have increased 12% year on year to reach 130,995. A small increase in basket size to £117.99 signals that shoppers continue to manage their shopping carefully and highlights the importance of frequency and new customer acquisition to the business model. The SmartPass encourages both of these with free delivery and product savings on a subscription basis.

Discussions to license technology to Morrisons

Ocado has also announced it is in discussions with Morrisons to license parts of its technology and operating knowledge for the purpose of Morrisons starting an online grocery service. Management states any agreement would be complementary to its supply partnership with Watirose and there can be no certainty that an agreement will be reached in any case. Nonetheless the news serves as an endorsement of Ocado's model in terms of long term sustainability in eCommerce.