Tesco, the world’s second-largest retailer by profit, is set this year to become the second in sales also, behind only Wal-Mart. An alumnus of The Boston Consulting Group, Michael Holmes led Tesco’s M&A and strategy activities and established its Group Corporate Finance function before taking on his current position, which involves setting up a division that will lead Tesco into new sectors where its capabilities can add value—with or without the Tesco brand.
Key to Tesco’s success in the past two decades has been its ability to achieve a deeper understanding of the customer through innovative, data-driven approaches—such as its groundbreaking Clubcard loyalty program—and through its early investment in and subsequent acquisition of Dunnhumby, the world’s leading retail data-mining and data-analysis business. This ability to achieve a “signal advantage”—to capture, interpret, and act upon signals from rich, dynamic data—is essential in today’s unpredictable retail environment. Martin Reeves, a senior partner and managing director in the New York office of The Boston Consulting Group, recently spoke with Holmes about how a data-driven customer focus helps Tesco maintain a competitive edge in a changing industry. The following are excerpts from their conversation.