Tesco
UK supermarket leader with 28.5% market share deploying AI pricing and retail media to extract value from Clubcard data.
Tesco posted £3.13 billion adjusted operating profit in 2024/25, up 10.6%, with UK market share hitting 28.5%—a 0.7% gain year-over-year. This is not growth through new stores; it's growth through data. Clubcard penetration reached 84% of UK transactions, covering 23 million households. The Tesco app has 18 million users, up 12% annually. This data infrastructure enables three interlocking strategies: dynamic pricing, personalized offers, and retail media.
The AI-Price Flex system, rolled out January 2025, adjusts prices hourly using competitor data, weather, and footfall. This is optimal foraging in action—the algorithm hunts for price points that maximize revenue given local conditions. Pricing labor costs fell 40% while maintaining competitiveness. Clubcard members get additional personalized pricing, creating a two-tier market: data contributors (Clubcard users) get better deals, subsidized by non-members who pay higher prices.
Retail media is the real innovation. Tesco's media platform contributed to 10% profit growth in H1 2024, using Clubcard data to show supplier ads to shoppers most likely to buy. A cat food brand can target households that bought cat litter last month. This is mutualism: suppliers get efficient advertising, Tesco captures part of the value. Partnerships with GroupM (June 2024) and The Trade Desk (September 2024) expand programmatic advertising capabilities, making Tesco a media company that happens to sell groceries.
Digital expansion includes Whoosh rapid delivery (1,500 stores) and 16.3 million regular app users. These create network effects: more users generate more data, improving personalization, attracting more users. Total revenue hit £63.6 billion with retail profit £2.97 billion. The business model is ecosystem engineering—Tesco doesn't just sell products, it creates a platform where suppliers, customers, and advertisers all interact, with Tesco extracting value from each connection. The 2026 roadmap targets high-50s cost-to-income ratio while growing revenue, demonstrating how data and automation improve metabolic efficiency.