“This is the future.” Four fateful words wielded by ex-Tesco CEO Philip Clarke as he unveiled a radical reinvention of his Watford Extra in August 2013. The most high profile launch of a supermarket in years, the £12m refit boasted a brand new layout with low-slung fresh produce aisles and a sleek F+F concession sprawled across 80,000 sq ft.

It also featured Clarke’s latest acquisitions displayed under one roof: the modern-rustic Euphorium bakery, the charming Harris + Hoole coffee shop and the bright and colourful Giraffe restaurant. Ten months after posting Tesco’s first profit drop in 20 years, Clarke had hedged all his bets – wagering a reported £12m – on this Watford vision.

But it didn’t deliver. After an initial spike, sales “slipped back into negative like for like” says Bryan Roberts, global insights director at TCC. And within a year of the Watford launch, Clarke had been booted out, setting off a chain of events that ultimately saw new CEO Dave Lewis slash capital expenditure, call a halt to the space race, cancel several projects and close a number of existing stores.
With Tesco’s big four rivals also in retrenchment mode the property sector is the quietest it’s been for years. But that doesn’t mean developers have had to shut up shop. So who’s building what, where and why? And how have Tesco and its rivals evolved their stores in Watford’s wake?

Tellingly, many features Clarke pushed through at Watford have been adopted elsewhere by Tesco. Low level fresh produce counters now appear in revamped Tesco Extras nationwide and non-food has followed Watford’s lead by adopting a more “John Lewis” approach, says Roberts, with a slicker, less commoditised look. Bigger health and beauty departments have also popped up offering in-store treatments.

Stripped back electrical ranges are now more commonplace thanks to the trial store, adds David Gray, senior analyst at Planet Retail, with a greater focus on higher margin categories like homeware and clothing. Click & collect kiosks equipped with digital touchscreens have also been rolled out.

Lewis has also pushed forward with Clarke’s plan for more concessions. With 248 hypermarkets in its portfolio (three times more than Sainsbury’s and nearly eight times as many as Asda) Tesco has more reason than its rivals to reinvigorate out-of-town stores as destinations and Clarke’s approach was a “good proposition” adds Gray. Concessions “increase dwell time, customers stay in store longer, and in theory you increase sales”.
Rollout has been limited but steady. Fourteen Tesco stores now have Giraffe restaurants, 29 have Harris + Hoole coffee shops and 63 have Euphorium bakeries. In October 2015 Lewis signed a deal with Arcadia to open Dorothy Perkins, Burtons and Evans concessions in Tesco, and earlier this month took control of Harris + Hoole in a move that put paid to rumours he would ditch the coffee business.

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