Supermarkets give retailers food for thought

Tesco is making a bold move in announcing the opening of stores that will sell non-food products only (MW last week), and if the venture is successful, the potential impact on UK retail is huge.

If the initial store concept performs well, we could see anything from 200 to 350 Tesco stores of this type opening in the next few years.

With the opportunities for large supermarkets’ expansion

limited by planning regulations, Tesco sees general merchandise as a way of increasing further its retail market share in the UK. Tesco’s announcement follows the recent opening of Asda Living in Walsall.

There has been speculation that both Tesco and Asda have had their sights set on acquiring discount clothing retailer Matalan. Both companies have now laid this speculation to rest by striking out alone into the general merchandise arena rather than acquiring an existing player.

Both Tesco and Asda have strong positions in the retail market, and it would make much more sense for them to develop and strengthen their own brands than to acquire someone else’s: after all, which other retailers offer as broad a customer appeal as our trusted supermarkets?

And if such a bold move is taken by Tesco, the market will have to evolve to make room for its new stores – no doubt much to the detriment of other non-food retailers.

Dave Tyrer

Consultant

GMAP Consulting

Leeds

West Yorkshire

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