Ahead of Tesco’s prelims next Wednesday there has been much speculation about the future of the Fresh & Easy business in the US.
Ahead of Tesco’s prelims next Wednesday there has been much speculation about the future of the Fresh & Easy business in the US, but affairs closer to home are likely to most influence the grocer’s longer-term success and investor sentiment.
The performance in the core food business and the wider, digitally driven shift in shopper habits that prompted a rethink of space are likely to be crucial.
After Christmas, Tesco reported a continued improvement in food. Since then we’ve had Horsegate, and the most recent Kantar data showed that other grocers had added sales ahead of Tesco.
However, Tesco generally handled the nag-bol controversy well and, following last year’s revamp of the Everyday Value range, has the opportunity to keep up momentum even if there are mishaps along the way.
The bigger story must surely be the transformation of space necessary as online sales grow, both at Tesco and across retail. It’s testament to the pace of retail that, less than two decades after Tesco’s landgrab in general merchandise categories, the format that delivered success - Extra - looks increasingly outdated.
Tesco noted again at Christmas that general merchandise was “a drag on our overall rate of growth” and future focus would be on “sustainable, profitable categories”.
While Tesco Direct has been growing - it was ahead 16% over Christmas - and click-and-collect has proved popular, the changes in general merchandise categories are surely behind the grocer’s investments in businesses such as coffee shop chain Harris + Hoole and Giraffe.
Each could have a valuable role to play in breathing new life into Tesco’s big boxes, though neither will be enough on its own merely as sections of a soulless shed. However, the right in-store variety, blending leisure and shopping and an appropriate look and feel, could create compelling destinations.
Done well, the Extra stores could find a new appeal as potentially game-changing as the original incarnation.