Google is considering an acquisition of Tesco’s technology wing, responsible for developing the Clubcard that has become a staple of the Tesco shopping experience for millions.
Dire times call for dire measures. Tesco reported a huge loss in revenue over 2014, with its price lowering and investments in technology not cutting it against Asda, Morrisons and smaller stores like Lidl and Aldi, both of which have gained market share.
Google would like to use Dunnhumby, the technology arm, to offer more reward and loyalty bonuses for Android Pay users. Apple Pay recently received an update adding store cards to Wallet, a new app on iOS 9.
The deal might be facilitated through Google’s growth equity fund, instead of the main company. This may avoid any issues with the Ofcom, the UK’s regulator on acquisitions.
Dunnhumby’s data analysis programs interest Google, considering Clubcard is by far the most popular store card from all four major supermarkets. Google might use the same analysis on its advertising network, or to push users to become loyal to its services.
Google already faces pressure in Europe due to its massive market share in search, meaning it might be hard to broker a deal with Tesco. In the UK especially, the Mountain View-based company has received a good lashing, with Chancellor George Osborne announcing a corporation tax bracket for online companies, named the Google Tax.
Acquiring Clubcard may allow Google more insider knowledge as to the workings of the UK market. This might be necessary, considering Apple Pay will launch in July, meaning Google needs to work fast to secure at least some market share in the mobile payments industry.
No word on the price for Dunnhumby, but Tesco is eager to sell it off to clean its appalling revenue sheet.