Tesco's IT competitive advantage

If Tesco was a person it would have a couple of stories to tell it's grandchildren. One of them was about the launch of its Clubcard loyalty program and it would go something like this: "once upon time the highly competitive market of retailing in the UK was lead by Sainsbury; your granddaddy Tesco wanted to change this and decided to launch a loyalty card so that the customers would be so happy to come to Tesco and would come back again and again. This was a big success and after 6 months Tesco increased market share significantly eventually becoming number one in the country.".

This story seems to belong in the fairy tale world but it is, nevertheless, a true story. The unusual success with Tesco's loyalty Clubcard (by the way, loyalty cards already existed in several other industries) is related not to the card itself but to what Tesco did with it. Tesco used the card to collect a lot of relevant information about the customer shopping habits and preferences (ex.: "38% of customers cared about price) and acted on them (ex.: basket of goods on promotion was reduced from 750 to 350 matching customers preferences).

Tesco used the technology developed around the Clubcard as an enabler to improve their product and boost customer satisfaction. Tesco successfully created of unique, not easily replicable, set of processes that, through IT as enabler, was able to create consistent and sustainable value to their customers.

And in the business jargon this is called "competitive advantage".