Professor Chris EdgerProfessor Chris Edger, the author of ‘Effective Multi-Unit Leadership – Local Leadership in Multi-Situations’ and ‘International Multi-Unit Leadership’, is Professor of Multi-Unit Leadership at Birmingham City University where he researches and teaches the ‘art and science’ of high performance service-based retail, hospitality and leisure.

From the 1990s onwards the received orthodoxy in UK supermarket retail was that ‘bigger’ meant ‘better’. In a ‘race for space’ operators such as Tesco and Asda opened hundreds of square footage per annum – largely edge of town hypermarkets – in which they were able to expand their ranges into non-food categories such as electrical, audio, books, clothing, etc. At the time the winners were perceived to be those that sunk capital into new out-of-town sites and/or extended their existing space (through mezzanines and ‘bolt-ons’). This strategy was fine as long as companies could sweat these large expensive assets, optimising sales through constant range and product extensions. However, the onset of internet trading, commoditising or cannibalising many of these non-food categories has rendered a fair degree of this space redundant. Over the last three years item sales in these hypermarkets have declined by approximately 2 per cent per annum, with (in some cases) only food price inflation and expansion into the convenience sector, propping up organisational like-for-like sales comparisons. The question that many of the operators of these ‘retail cathedrals’ surrounded by a ‘sea of car parking’ face is how they are going to utilise their larger assets more effectively given current consumer trends?

The purchase of the ‘better’ family urban casual dining concept Giraffe by Tesco this week (approximately 50 sites purchased for a consideration of £50m) – alongside their investment in ‘best’ coffee concept Harris + Hoole – gives us some indication as to where the supermarket behemoths are heading in this regard. The ‘eating out’ restaurant and casual dining market in the UK has fared better than retail during the recent downturn (performing at 3-4 per cent annual growth), with consumers still prepared to deploy their discretionary spend on ‘small treat’ occasions. ‘Retailtainment’ malls such as Westfield, Merry Hill, Trafford Centre and Meadowhall have had few problems finding tenants for their ‘food courts’. Consumers seem very keen to combine retail therapy with gastronomic indulgence! Can Tesco achieve the same?

For sure, the provision of better food service offers might better utilise hypermarket ‘dead space’, attracting greater footfall and encouraging longer dwell times. Other offers that will be engineered into this space over time might include upmarket concessions, services (health and beauty), pop-up market traders, etc. Such moves would increase the atmospheric dynamic of visiting hitherto functional environments. However, this dramatic increase in variety in supermarket retailing threatens to disrupt the very factors that led to organisational success in the first place – huge volumes underpinned by lean supply and service systems. Going beyond the simplicity of volume and value, means encountering (and dealing with) the complexity of variety and ensuring quality over a range of unfamiliar products/services. In the case of Tesco, the investment in ‘emotional’ products/services that will fill space, whilst simultaneously increasing the ‘personality’ of its brand and sites, seems to be a sensible move – its success will rest on whether their business model will cope with greater complexity. History tells us that we should not bet against them!

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Chris Edger

Chris Edger

Professor of Multi-Unit Leadership at Birmingham City University