Supermarkets have always buddied up with partners in their cavernous superstores: coffee shop chains, shoe repair shops, dry cleaners, nail salons, butchers, photo processing labs etc.
As great as the instinct has been among the supermarket chains to do everything themselves, the occasional moment of hubris and pragmatism has prompted them to let others have a go while pocketing some rent on the side.
But as online shopping grows, and with consumers able to fulfil a greater number of their everyday needs through high street and convenience stores, the various concessions and strategic in-store bolt-ons chosen by supermarkets to create a ‘destination’ shop in their giant sheds are taking on increasing importance strategically.
The most important concession signed up has been Argos. Sainsbury’s was so impressed with the 10 trial outlets, it’s buying the company. There are strategic aims beyond filling up low-yield space, but that’s some significant other.
The worst addition surely has been Tesco’s acquisition of Giraffe and Harris + Hoole, now both up for sale. Both were too premium for an everyman brand like Tesco. The instinct to own them was also mistaken: it offered no flexibility. And as hard as supermarkets work to make the in-store experience worthy of a destination, it’s stretching the ‘one-stop-shopping’ construct to breaking point to suggest anyone would want to hang out in any out-of-town superstore for a coffee or a glass of wine or craft beer, let alone for a fun family meal. Even at the glorious new Waitrose store in London’s King’s Cross, the wine bar was deserted on the two lunchtimes I visited.
With Extras now tantalisingly close to growth, the choices it makes over who to buddy up with to fill all that extra space will be crucial. Tesco is already working with Sports Direct and Arcadia, which feel like more credible partners. Appointing Duncan Hoy from Dutch supermarket Jumbo as MD of large stores is also noteworthy. Hoy pioneered its Jumbo Foodmarkt - a sort of poor man’s Whole Foods. Cheap and cheerful is a better fit for the Tesco brand than hip and pricey.