Tesco is in discussions with sporting goods specialist Sports Direct over taking space in some of the grocer’s largest stores.
If the deal goes ahead it will be the latest in a line of deals for Tesco, which also acquired restaurant chain Giraffe recently and has been investing in its coffee shop chain Harris + Hoole. Tesco boss Philip Clarke has admitted the grocer has too much space, and the retailer is looking to make its stores stand out with new services and a different offer.
The new partnership is a good idea because it offers something Tesco doesn’t already have, says Neil Saunders, managing director at consultancy Conlumino. “Tesco has two fundamental issues at the moment,” he says.
“It has too much space relative to what it needs, and it needs to differentiate its larger stores.
“In part, this solves both those problems, because it makes the stores more of a destination and provides them with a unique offer.”
Sports Direct sells products not currently offered by Tesco, but both target a similar consumer. “Sports Direct has a value focus that will sit quite well with Tesco’s customers. Plus the mentality when people are grocery shopping is very value focused.”
Sports Direct, meanwhile, will benefit from the impressive footfall Tesco is capable of generating.
Tesco can probably get away with trying almost any new service or product range in its stores, but Saunders has a word of caution. “You’ve got to be careful it doesn’t start to look haphazard,” he says. “Tesco needs to be careful it all fits together and works well together, rather than a collection of different bits.”