Grocery Guru

Grocery Guru Episode #29: The Demise of Tesco Metro and What is Happening to the Tesco Jack's Format

Grocery Guru
Grocery Guru Episode #29: The Demise of Tesco Metro and What is Happening to the Tesco Jack's Format
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Tesco Metro’s Demise and Fewer Formats for Tesco

Join Andrew Grant and Darren A. Smith in the twenty-ninth episode about the demise of Tesco Metro, what is happening to the Tesco Jack’s format, and maybe the start of Tesco managing fewer formats.

Jack's sign outside Tesco

Darren and Andrew discuss Tesco Jack’s format and the demise of Tesco Metro

 

You Can Read the Demise of Tesco Metro Episode Transcript Below:

Darren A. Smith:

Hello, and welcome to episode 29 of the Grocery Guru. We’re here with Andrew Grant. Andrew, how are you doing?

Andrew Grant:

Morning, Darren. You well?

Darren A. Smith:

Yes, I’m very good. I’m very good. We’ll ignore all the technical issues we’ve just had, because no one cares, but we’ve just had a few. What are we talking about this week?

Andrew Grant:

Well, I picked up the news. We often try and bring the most topical items in the grocery world. So yeah, I picked up this week, didn’t get a lot of press, but the demise of the Tesco Metro. It will be no more.

Darren A. Smith:

Oh really? Okay. Tell us more.

Andrew Grant:

Yeah, so I’ve got to do some very quick math here. 147 Tesco Metros, all being rebranded either as Tesco Express or as Tesco Superstores, which I find interesting. I can understand 89 of them becoming Expresses.

Darren A. Smith:

Yeah. I can.

Andrew Grant:

58 Superstores, god, there must be some big monsters out there forgotten about.

Darren A. Smith:

That seems odd, so just remind us what is a Tesco Metro?

Andrew Grant:

Well, originally it was a reason to take… So if you think back to what Tesco’s original heyday of operation check-out and Green Shield Stamps, all their stores were in bustling town centers.

Darren A. Smith:

Yep. Very true.

Andrew Grant:

So, you and I are probably old enough to go back that far, but your quintessential high street with your Woolies, your Marks & Spencer, your Boots, and your Tesco. [crosstalk 00:01:46] So Tesco ended up in the 80s as it was starting to build their out of town estate, which was the making of them, left with all of these city and town center stores on a high street, and they thought, “What the hell do we do with them?” And they came up with a Metro format. But essentially all they did was took an existing small supermarket and stuck a camp sandwich cabinet and some soft drinks chillers at the front, and still to this day most metros have far more range probably than the shoppers need. And it was interesting in the press release, Tesco said that 70% of the shopping missions in Metros are for top-up shops.

Darren A. Smith:

Oh okay. All right. So we’ve got a good understanding of Tesco Metro. All right. So these guys are saying, they’re going to take 80… How many was it? 89?

Andrew Grant:

89 into Tesco Express format, and I’m 58 into the Superstore format.

Darren A. Smith:

Okay. So does this mean that Tesco Metro format will be gone completely?

Andrew Grant:

It’s like the proverbial parrot. It is no more. It is dead.

Darren A. Smith:

All right. Okay. Okay. So do you think this is about head office trying to manage fewer formats, or the other format’s more popular? What’s your take on this?

Andrew Grant:

No, I think, again, it shows the power of shopper insight and club card. They know precisely what every single one of their shoppers is buying in every single store, every single minute of the day, and it’s fine tuning a very, very well honed engine.

Darren A. Smith:

Okay. All right. So I get that. I get the insight into shoppers, but why remove Metro? What does it add, or what does it add by removing it?

Andrew Grant:

Well, no, I think you said it as you said that first, what does it add? Express is a phenomenally successful C-store concept, the out of town extras again phenomenally successful. Why do you want a Metro stuck in the middle, which is neither one thing or the other. It’s not a full on c-store, and it’s definitely not a full range, weekly supermarket shop store. And of course we know, many town centers out there and it’s sad. The ones I visited, really sad what this pandemic has done to the traditional town center, and interestingly, maybe a slighter side of BBC news last night, worth watching actually. The regeneration of town centers. I don’t know if you’ve ever been to Nottingham.

Darren A. Smith:

No.

Andrew Grant:

The Broadmarsh Centre in Nottingham is perfect example of 70s planning terrorism. I mean, it is just horrific.

Darren A. Smith:

Okay. Well, we’ll let the link at the bottom of the video to the regeneration. I’ve just written it down, BBC.

Andrew Grant:

What they’re looking at is basically taking out this 70s concrete covered shopping center and restoring the original medieval winding streets.

Darren A. Smith:

Oh, okay. Okay. So a lot more like a Cheltenham or Gloucester town center.

Andrew Grant:

Yeah. And they then contrasted that with Maidenhead down in the affluent south, about to get the east west rail link. So, Maidenhead, and part of the tech corridor of Slough to Redding, and they’ve done exactly the same thing. They’re taking a 70s covered shopping center, ripped the roof off, and moved it to, I think 30% shops, 30% residential, 30% leisure.

Darren A. Smith:

Wow. Okay.

Andrew Grant:

And literally breathing life back into the town centers. So, interesting that Tesco haven’t said they’re offloading any of this estate. Maybe they’ll wait a couple of years until property values, or until commercial property values rise again, and they’ll have another think about it.

Darren A. Smith:

And just coming back to your other points, so the other format they’re going to move some of them into are superstore. So some of them aren’t small. These are big stores that they’re moving or changing.

Andrew Grant:

Yeah. I guess it depends on the location. I can’t think of any specifically, but there will be some that are by the town car park, or by the town multi-story. So in theory, you could take your car in there, do a full trolley shop, and it’s still practicable, but equally there’s ones I can think of where they’re landlocked in these dying little town centers. And yeah, you can imagine why Tesco would have taken a good close look at them.

Darren A. Smith:

That makes sense. All right. So let’s throw it into the mix Jack’s. I know you did for The Grocer probably 18 months ago, a review of Jack’s out in Chatteris . So how does that feature in this thought?

Andrew Grant:

Well, I was afraid you were going to bring that up. I think it’s the only time I’ve made a false prediction. So please don’t add the link to The Grocer article to this. [crosstalk 00:07:10] Yeah. I remember on a particularly cold wet unpleasant East Anglia day being sent out to Chatteris, which is literally in the middle of deep, deep Finland, and yeah. Doing a review of the new Jack’s format, which Dave Lewis, Tesco CEO at the time, was very, very excited about. And it was their answer to Aldi and Lidl.

Darren A. Smith:

Oh, we see. So there are what, 10, 12 Jack’s out there?

Andrew Grant:

Yeah. 12 of them, yeah, basically they are a British Aldi. Almost carbon copy of an Aldi with the special buys down the middle, very, very simply merchandised, and fitted out. And some very limited, but pretty high quality range. And I’m sure you’ll remember at the time, me making this grand prediction that wouldn’t it make perfect sense to transport the Jack’s brand into all of these oversized Tesco Metros, where they’re not quite sure whether they’re a c-store or a supermarket, but hey, for my grand strategies.

Darren A. Smith:

I think I do remember now, if that’s the only prediction you’ve got wrong, we’ll ask you for the lottery numbers in a minute.

Andrew Grant:

Okay.

Darren A. Smith:

So, excuse me, we’ve got these 12 Jack’s out there. How are they performing? What do you think they’ll do with those in the future?

Andrew Grant:

Well, it’s interesting. If you Google Jack’s there’s nothing. There’s the corporate website, but it doesn’t look particularly loved. Everything says copyright 2018. So it looks like it’s not had a lot of updating and love. I would imagine that Tesco’s, we know, have been phenomenally successful in their main [inaudible 00:09:16] Aldi. The Aldi price match [inaudible 00:09:20] changing products, stop the flow of customers to Aldi. It’s been massively successful. And they probably think we actually don’t need something that will go head to head with an Aldi, but could actually end up damaging Tesco.

Darren A. Smith:

[inaudible 00:09:41] So what’s your prediction for Jack’s for the future?

Andrew Grant:

Oh, thank you for that. I think it will go the way of Tesco Metro very quietly.

Darren A. Smith:

Yeah. I would have thought so, because it doesn’t seem to be adding anything from what we can see. It was a good trial, worth testing, didn’t work, and making the other formats work more successfully would be my guess.

Andrew Grant:

Yeah. I think they found the answer to how to neutralize Aldi. We talked about it three episodes ago, the latest [inaudible 00:10:11] data. I was [inaudible 00:10:13] the Aldi was one of the slowest growing of the grocers. Half the growth rate of Tesco.

Darren A. Smith:

Yes.

Andrew Grant:

So Tesco have found that sweet spot to neutralize the threat of the discounters. So yeah. Why do you need a Jack’s?

Darren A. Smith:

Very true. Very true. Okay. All right, Andrew, before we go and thank you for your guru-ness, what’s the takeaway you want to give our viewers?

Andrew Grant:

What’s the takeaway? Yeah, just again, it just shows how fast grocery moves. Jack’s less than three years old. We’re questioning that. The changes on the high street just phenomenal, but as ever Tesco very, very quick to move ahead of the pack.

Darren A. Smith:

Yeah. I did hear that Tesco used the phrase, “Ready, fire, aim.” A lot. And it seems to be working for them.

Andrew Grant:

[inaudible 00:11:12]. Yeah.

Darren A. Smith:

All right, Andrew, thank you for your guru-ness and we’ll see you next week.

Andrew Grant:

Bye-bye.

Darren A. Smith:

Take care.

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