The Euro72-billion Tesco was a back-end partner and provided sourcing and technical knowhow.
While announcing the formal joint-venture with Tesco last week (following the easing of retail FDI norms), Noel Tata, vice-chairman of the Tata’s retail arm, had said that the company’s understanding of the market along with the UK-based retailer’s expertise would allow them to leverage the potential of the India’s retail scene.
“As a JV partner, Tesco’s motivation to bring in its systems and knowhow is higher,” says Devangshu Dutta, chief executive of retail consultant Third Eyesight.
Dutta says that senior Tesco executives must have been involved in the Tata business earlier but Tesco’s management involvement can only go up.
He reminds that Tesco partnered with Tata not just to remain a back-end player but also study the retail front-end.
Both Tesco India and Trent did not respond to queries on the subject. Retail experts say that Tesco is known for three areas of expertise.
Knowing its customer
Tesco’s customer relationship management (CRM) is well documented. It has the popular loyalty card ‘Clubcard’.
It also owns dunnhumby, one of the biggest data analytics companies in the world.
“In the UK, depending on what customers have bought in the past, it sends customised mailers to shoppers, leveraging its database,” says Abheek Singhi, partner and director at management consultancy Boston Consulting Group.
Adds Arvind Singhal, chairman of Technopak Advisors, “It is its strength to analyse every transaction and design pricing and promotions at each store that makes it successful.”
Tesco has not brought in its CRM and data analytics systems to India yet because of Star Bazaar’s limited scale of operations.
Neither has it been able to introduce its good-better-best (value, premium and finest segments) approach.
However, it has helped the Indian chain across its 16 stores across the country.
Tesco provides its proprietary 'planogram' software to Star Bazaar, which helps the latter with a better display of products.
For instance, Tesco told Star Bazaar that the retailer need not stock soaps and shampoos near the entrance to the stores.
The customer will seek out these essential items wherever they are kept in the store.
Rather, it advised Trent to use the vantage position to showcase products with a novelty element and hence, commanding a higher margin, for more profitable sale.
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