Sir Martin Sorrell just explained why WPP is interested in buying a piece of Tesco
It has long been rumored that WPP would like to own Dunnhumby, which would fit well with its growing set of data and analytics companies that provide information to marketers on what consumers are buying and why they're buying it.
Reuters reported yesterday such a deal would be worth £2 billion (or $3 billion), but relied on anonymous sources.
Sorrell told the conference WPP was "interested" in Dunnhumby, and then went on to explain that the company was interesting because manufacturers ought to have the best data on what their own customers are doing but, oddly, Dunnhumby had better data on brands than many brands do.
Tesco wants to sell Dunnhumby for a couple of reasons:
- It's not core to the company's supermarket business.
- New CEO Dave Lewis has pledged to cut costs and raise cash at Tesco, which has suffered a withering decline in sales in the face of an onslaught from upstart discount supermarket brands like Aldi, Lidl and Ocado.
Dunnhumby is regarded as one of the most interesting pieces of Tesco's business. It was the company that invented the Tesco Clubcard in 1994, leading the former chairman to state, infamously, "What scares me about this is that you know more about my customers after three months than I know after 30 years."
One more interesting note: Sorrell described his traditional ad agency businesses as WPP's "legacy" business, due to the overwhelming shift to digital away from traditional "Don Draper" media.