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NEW YORK - Most software and service vendors have a fairly straightforward relationship with the retailer community: They provide a product and/or service that the retailer purchases and uses. The vendors can pursue a variety of retail customers, including retailers that compete with one another.
But this simple model does not apply to London-based Dunnhumby, a 20-year-old loyalty marketing firm that has launched widely recognized loyalty card programs with such blue-chip retail customers as Tesco and Kroger. That's because Dunnhumby, with annual revenues of $500 million, prefers to form equity partnerships with the retailers it works with. Tesco has a greater than 50% stake in Dunnhumby, while in the U.S., Kroger and Dunnhumby USA have been 50-50 partners since 2002.
Last November, Dunnhumby announced a 50-50 partnership with Canadian grocer Metro, based in Montreal. In France, Dunnhumby has struck a similar arrangement with the Casino grocery chain. "In every market, we seek to achieve a joint venture with a pillar retailer," said Edwina Dunn, chief executive officer of Dunnhumby, who founded the firm with her husband Clive Humby. Dunn spoke with SN earlier this month at the National Retail Federation Convention and Expo here.
The first complication for Dunnhumby is that in each market it seeks to remain exclusive to the food retailer it partners with, though it does have customers in other retail channels, such as Macy's and...