Should we shoot Tesco and put it out of its misery? We don’t think so – it’s far from being a basket case and is doing everything it can to revive and thrive and be the leading light in UK and international grocery retailing.
Three years ago, Tesco bought the trendy coffee chain Harris + Hoole and Giraffe the family restaurant business in an attempt to “sex up” the big box shopping experience and with mixed success (closing some of the coffee shops recently). Look, dragging the family around a Tesco Extra isn’t an uplifting experience, so, maybe the attempts to add some excitement to big box shopping is akin to putting lipstick on a pig (it’s still a pig/big box!).
More recently, Tesco have provided space for food service concessions in Tesco Extras like the NY style deli-diner Fred’s Food Construction and Decks family restaurants. In late-March, Tesco is trialing an “In Farm We Trust” food-to-go concession in its Goodge Street Metro store, London. The food is British, with provenance and offers gastro-pub grub at very affordable prices (e.g. fish pie on a Friday, slow-cooked beef cheek stew on Tuesday). Farmers, fishermen, bakers and butchers are the heroes! The menu and ingredients are very much “on-trend” – simple, classic, natural but served at speed to satisfy the “want it now” requirements of the customers. Two “Burrito-Kitchen” concessions are opening in April in Tesco stores, too.
Does an in-store food service offer complement and build traffic for the retail store overall? Maybe for a Tesco Extra but probably not for the grab & go Metro stores. However, the Metro stores have a different function: located downtown next to offices, customers may visit 2 or 3 times a day – popping in for breakfast stuff in the morning, picking up lunch mid-day and grabbing dinner requirements in the evening. Clearly, the Metro stores are hybrid food retail and food service. In the Goodge Street store at lunchtime, there were 100+ customers being whisked through the checkouts with most holding food and drink that would be consumed within minutes of purchase.
The Tesco turnaround won’t be overnight. But, the big ship isn’t doomed and all hands are to the pumps! In a hyper-competitive grocery retail market, Tesco are happy to take “share of stomach” from food service operators to compensate in part for the lost retail sales to the hard discounters. Clearly, food retail and food service is converging as consumers forsake the traditional 3 meals per day pattern and opt for a succession of mini-meals/snacks. It was always a Tesco mantra to follow the customer and her money!