British grocer Tesco's customer data science and loyalty division dunnhumby, reportedly on the market for several months now as its parent company explored "strategic options," will transfer many of its employees and data assets to Tesco's US-based joint venture partner Kroger.
Under the transaction, "dunnhumby Ltd and Kroger will replace their existing exclusive joint venture with a new long-term license and service agreement and the acquisition of certain assets from dunnhumbyUSA by Kroger," according to a Kroger press release.
Kroger has created a new standalone subsidiary company to house the dunnhumby assets. Called 84.51°, a reference to the longitude of its Cincinnati headquarters, the venture will include dunnhumby's technology and about 500 of its employees.
It will not own dunnhumby's analytics tools directly, but will access them through a perpetual license. About 300 employees will remain at duhnhumby in the US with about 2,000 in 29 countries. Goldman Sachs will continue the search for outside investment for dunnhumby ltd., now sans Kroger.
The new arrangement follows dunnhumby's estimated $200 million acquisition of retail-centric demand-side platform Sociomantic last spring, which improved dunnhumby's digital prowess greatly. Sociomantic will still belong to duhnhumby ltd., which houses non-Kroger assets like Macy and grocer Raley data, as well as some of the other technologies acquired like social marketing company BzzAgent.
Shopper media and marketing is a lucrative business making lots of waves of late with mass retailers like Walmart developing exchange-based platforms based on its trove of rich customer data. Dunnhumby may be valued at close to $1 billion, its parent company Tesco claimed in a corporate update.
But there are questions about how these companies work with retailers and how they enable brands or third parties to pivot off that coveted first-party dataset.
In dunnhumby’s case, you could say that the data services unit has a “master” database with direct access to some 770 million profiles from such CPG data sources as Tesco, Kroger, etc., but it also allows third parties (competitive retailers notwithstanding) to white label its tools and build out private DMPs powered by data onboarders LiveRamp and Datalogix.
As is expected, there are privacy restrictions in place designed to keep PII secure.
“We keep our match partner and our execution partner separate, so those who are delivering media only see the de-identified ID,” Lung Huang, VP of digital advertising for dunnhumby told AdExchanger in an earlier interview. “We can further mask our data by modeling to protect our retail client or use permission-based access within someone’s tech stack.”
In addition to its agency services, which measure things like, “what combination of TV and digital advertising helped move product?” dunnhumby lets retailers tap tools for pricing and promotion analytics and inventory management.
They can also activate cross-platform campaigns from “dunnhumby MediaCentre,” an offer optimization platform and factor in digital executions through demand-side platform Sociomantic.
“The ‘SaaS’ platform is primarily used for retail insights for our CPG partners who sell within our stores, and any media campaigns are managed through the usual ad tech infrastructure,” Huang explained in an earlier interview. “Generally speaking, a retailer could use Sociomantic to layer on additional data for use in their own campaign, or it can be done on the dunnhumby side as well, so the insights really span the buy or the sell side.”
At the time of the Sociomantic acquisition, dunnhumby CEO Simon Hay said the company aimed to deliver end-to-end loyalty and relevant communications wherever customers engage, which increasingly means mobile channels.