As test runs go, it doesn’t get much higher-profile than Tesco’s unveiling of its new Tesco Extra format in Watford last week.
After months of speculation about how Tesco would reinvent its larger stores to react to the exodus of customers to online, here it was in all its glory and the small army of journalists and retail experts descending, almost outnumbering the shoppers, was testament to just how pivotal this could prove, not just for Tesco but for the future of retail.
We were promised a transformation of a run-down, tired store, all too typical of a two decades’ old hypermarket. So does it live up to the hype? And can Tesco’s new beast really save its 250 biggest stores from becoming expensive white elephants?
What’s new in Watford?
- Culinary equipment dominates the general merchandise section
- Mist rises from the pak choi in a nod to Morrisons, although Tesco claims it was using this feature in China years ago
- “Endless aisles” touchscreens showcase Tesco’s full range in toys and home
- The Harris + Hoole coffee shop
- Fresh food has become central to the redesigned Extra
- The health & beauty section includes a nail bar
- The Giraffe restaurant is one of 10 planned for this year
It is actually a giant Giraffe (restaurant) that first greets shoppers. And the 80,000 sq ft store - not much more than a stone’s throw from Watford high street - is the first to bring together under one roof Tesco’s new line-up of Giraffe restaurant chain, Harris + Hoole coffee and the artisan Euphorium Bakery.
But it is no single feature that stands out on entering, rather the overall wow factor given by a much more airy and less crowded layout, with wider aisles and lower fixtures and shiny floors, many with wooden finish, polished to within an inch of their lives. The expansive central corridor is reminiscent of the best European hypermarkets and fresh food fixtures have been moved from the back to pride of place at the front.
With hordes of placard-wielding helpers and staff offering shoppers free samples and a chance to live the Love Every Mouthful marketing message that dominates the store - noticeably more than Every Little Helps - it’s a far cry from the experience all too many Tesco customers have complained of in its Extras of late.
Watch the video: Harris + Hoole boss tours new-look cafe
“Customers were telling us - we don’t really enjoy shopping with you. We are here because you have everything under one roof, but it’s not tailored to us,” admits Tesco Extra MD Tony Hoggett. Now a three-pronged strategy runs through the various iterations of the new Extra business model - “exciting, relevant and convenient”.
As for the vast array of general merchandise once the domain of every Extra, the internet has killed that, admits Hoggett. “A food store can never be at the mercy of a big general merchandise shop,” he says.
Food is front and centre. As well as the huge fresh produce area, Tesco hopes the nearby food-to-go will be as much of a game changer as the attention-grabbing H+H and Giraffe. From the City Kitchen fresh food counter and the pizzeria where customers can choose their own combination of fresh food, or a pizza of their choosing whipped up in a few minutes, to the hugely impressive meat and fresh fish counters designed to look almost like customers are strolling around an indoor market, this is a step change from all but a handful of Tesco destinations (isolated examples such as Chelmsford, Tooley Street and Kensington have previously rolled out some of these features but this is what it will look like on a mass scale).
The staff, now totalling 600, have all received extra training, with the priority being given to personal service now automated ticket queues have been ditched. “In some areas it has meant we had to increase the amount of staff, but we think if we add more people we will get more sales,” says Hoggett.
Take a photo tour of Tesco’s new model for the future of big-box retailing
A focus on service is also to the fore in pharmacy and the new health & wellbeing section, to exploit what Tesco hopes will be “huge growth” in the sector. There is a consultation room for NHS appointments, fitness checks and dietary advice, complete with glass that magically turns opaque at the touch of a button to preserve privacy, while Tesco Loves Baby is a clear bid to park its tanks on Asda’s mum-friendly lawns.
The first Giraffe restaurant, one of 10 planned for this year, also aims to deliver a family-friendly feel,although a Watford gap appears to be developing in Tesco’s strategy here.
Hoggett insists Tesco has listened to the Giraffe management’s thoughts on where they should be rolled out. “They are very clear about where they think they will work best,” he says, explaining why another new Tesco Extra model due to launch in Coventry next week will not have a Giraffe but a new in-house carvery concept called Decks. While not quite acknowledging a North-South divide, Hoggett admits Coventry was much further down the list of Giraffe’s preferred locations.
“What they have done with the fresh food is a massive step change from what we’ve seen before”
Bryan Roberts, Kantar Retail
A third different approach, in Purley, is also due to open next week. Here the focus, says Hoggett, will be to concentrate on fresh food on the lower floor while its mezzanine floor will be turned into a standalone F&F.
Tesco is in fact trialling so many different ideas, one danger, some feel, could be lack of clarity. Already it has revealed plans for some hypermarkets to include gyms on the mezzanines, while it has held talks with Sports Direct about co-location sites on retail parks - one is already virtually next door here.
Hoggett admits Tesco is still in talks with a host of potential retail partners. But for any of this to be truly significant, it has to be scalable.
“There are moments of absolute brilliance here,” says Kantar Retail analyst Bryan Roberts. “I think this is really significant because while stores like Tooley Street have effectively been living trial stores for Tesco, Watford feels like the first time all this is being rolled out in a way it could be dropped into other stores on a large scale. What they have done with the fresh food is a massive step change from what we’ve seen before.”
If Watford works, Hoggett says Tesco is ready to press the accelerator quickly to roll out the new look, within six months if necessary, despite promises so far of only a handful of further big store revamps this year. “If this works funds will be found and invested.
“This is a test of ideas. This is not the answer, it is part of the answer but it is a test of many of the new propositions under one roof. The whole point is, none of this is just a one-off gimmick. They are all things that are absolutely scalable but we’ve ensured they are also affordable. It gives us real hope that we can create destinations that shoppers will be excited about. And are not just trying to fill up the space.”
Tesco’s new model:
- Restaurants: Giraffe; Harris + Hoole coffee shop; artisan Euphorium bakery, and Bakery Project (a joint initiative with Euphorium on own label).
- Fresh food: somewhat reminiscent of Morrisons formats, with tastings, misty veg and market-style counters, a City Kitchen and pizzeria.
- Health & beauty: Nail bar and top brands such as Barry M and Max factor; unlike Dudley trial, no hair salon
- Pharmacy/health & wellbeing: Wooden floors and consultation room with glass that turns opaque at a touch.
- Kids: Tesco Loves Baby area. Toy section to shrink and grow based on seasonal peaks.
- Technology: “endless aisles” touchscreen for browsing entire home and toy catalogues; ordering via mobile/click & collect.
- Clothing: standalone F&F store within store.
- Community space: free/subsidised activities for community groups supporting less well off
- Ethnic: range includes fresh halal meat section.