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.

At the beginning of April the broadsheet business press reported that Trevor Masters, Tesco’s Asia CEO, said that the firm’s business in South Korea and Thailand (where it has 1,400 stores – with another 350 opening this year) provided its UK business with “valuable experience to learn from…  creating retail destinations is something we have been doing for some time in Asia and we have learned a lot from creating a compelling offer for local customers…  in the UK we are working on creating retail destinations and Asia gives us valuable experience to work from…” What does this mean?

Effectively, through its purchase of the Giraffe casual dining chain, majority ownership of ‘better’ coffee chain Harris + Hoole and roll-out of the Euphorium Bakery concept, Tesco is beginning to assemble a portfolio of offers that are designed to transform its large hypermarkets into retail destination sites. Out with the aforementioned ‘reverse diffusion’ of knowledge from their Asian operations, two of the main drivers to this strategic thrust are first, the need to drive ‘high margin’ footfall to compensate for a drop-off in non-food shoppers (due to internet commoditisation) and, second, the insight that ‘click and collect’ actually liberates time for consumers to do other things on site if there are sufficiently compelling offers in place. It is highly likely that other large supermarket chains will follow Tesco’s lead in this regard.

What are the implications of the absorption/construction of these supplementary ‘experiential’ offerings for the high street? First, there are obvious implications in terms of hoovering up further footfall; not least because these hypermarkets offer free (and safe) car parking. Second, the one element of the high street that has been fairly immune to the ‘hypermarket attack’ since the 1990s – casual dining – is now ‘in play’. Up to this point hypermarkets have provided fairly mundane value food offers, being viewed as operators as an (irritant) amenity rather than as a means to drive traffic. Given the economic resources of the hypermarket owners – which will enable them to buy and then leverage a ‘food court’ of branded food service offers (through conjoined pricing, promotions and marketing) – the threat to existing high street casual dining chains and independents cannot be underestimated.

Nevertheless, it would be remiss of high street food service operators – in particular – to over-react to such moves just yet. Why? First, the complexity of bolting on ‘quality and variety’ food production and service offers into ‘volume and value’ food retail contexts is complex on a number of levels (ie differential skills, service culture, operations etc). Second, whilst companies like Tesco may extract learnings from their foreign operations – believing them to be exemplary templates – it must be understood that consumer behaviour (ie the perception of retail occasionality) is completely different in Asia compared to the UK. To date, consumers in the UK have not connected the ‘functional’ routine of combining their ‘weekly food shop’ with a more ‘emotionally-led’ dining experience. The two activities have tended to be mutually exclusive. The challenge will be for hypermarket owners to create a ‘fusion’ between the two activities that both exploits and increases their current footfall! This will be a non-trivial task but one which will be made much easier given advances in technology that will enable families to ‘click, dine, collect and go’!

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Chris Edger

Chris Edger

Professor of Multi-Unit Leadership at Birmingham City University