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Showing posts with label Giraffe. Show all posts
Showing posts with label Giraffe. Show all posts

Wednesday, 16 April 2014

New Tesco Emerging

Tesco's preliminaries today holds few surprises. The 6% fall in annual profits and 1.4% decline in like-for-like sales haVE been well trailed and the markets may even mark the stock up after recent pressure. The announcement and other news gives a much stronger sense of Tesco tomorrow and joins dots on previous Cheshunt comments.

1.    Superstores will become mini-malls combining a mixed footprint of reduced Tesco food stores, other retailers, food outlets and other entertainment activities. In respect of the UK, today's announcement notes: 

"We have been testing the ingredients for our large destination stores.  We introduced our 'Next Generation' F&F departments to 104 of our stores this year, with around 140 planned for the year ahead. We will also expand our casual dining offer by opening over 100 Giraffe, Decks and Harris+Hoole outlets next year. As well as remodelling our stores, we have also trialled an overall reduction of our selling space in two Extra stores this year.  We repurposed a total of 41,000 square feet across both stores and introduced new tenants.  In Newport we reallocated general merchandise space, introducing discount-department store 'Original Factory Shop' and children's soft-play centre 'Funky Monkeys'.  At Stockton, we introduced an 'Xercise4Less' gym on the mezzanine, and a 'Funky Monkeys'.  We are pleased with these two stores and plan to complete another five similar projects within our Extra format in 2014/15"
And similarly in Central Europe

"We are making the most of our existing assets...Our store in Budaors, Hungary is one of our best examples, with c.50,000 square feet - around a third of the original store space - repurposed to include H&M and Sports Direct in the development".
2.    Dominic Walsh writing today's City Diary in The Times, calls out the "expanding Family Dining    Division" and the increasing presence of senior ex Mitchells and Butler management in the business. This looks like an earlier question of whether Tesco might become the next Whitbread, may be much closer to the mark than originally speculated.

3.    If you didn't see it, Tesco Finance made almost as much money as Tesco Europe.....but whether     either of these elements of the mix have long-term potential is unclear. The European profits fell by 27% this year and business operates on a paltry 2.57% trading margin. Banking whilst a stellar   performance in the group, with profits up 1.6% and 19.34% trading margin has a different  challenge: scale. One can imagine an Amazon Bank taking on all-comers and it is hard to see how Tesco creates long-term sustainable advantag

Back to Dominic Walsh, he also notes Bookmaker Paddypower 
are taking bets on Phil Clarke's likely successor. This is especially harsh in the light of today's announcement. There are real signs of a New Tesco emerging. Whether shareholders give Clarke the opportunity to see his vision fulfilled, remains to be seen. 

Wednesday, 26 March 2014

Tesco: The New Whitbread?

Whitbread PLC (according to Wikipedia),


is a multinational hotel, coffee shop and restaurant company....Its largest division Premier Inn, is the largest hotel brand in the UK with around 650 hotels and over 50,000 rooms. Its Costa Coffee chain has around 1,600 stores across 25 countries and is the world's second-largest international coffee shop chain.  Its other brands include the restaurant chains Beefeater GrillBrewers FayreTable Table and Taybarns."

It wasn't always so.

From 1742, when Samuel Whitbread formed a partnership with Godfrey and Thomas Shewell and acquired two small breweries in London, until the 2002 sale of The Laurel Pub Company, Whitbread was in the beer business. 

Indeed, at its height, between 1961 and 1971, Whitbread's output increased from 2.1 to 7.4 million hectolitres and became Britain's third-largest brewer by output.
But the beer industry consolidated and globalised. Being big in one market was not sustainable. Facing the rise of InBev (now ABInBev), Diageo and SABMiller. Whitbread sank their last pint and moved on, leveraging their leisure experiences more profitably.

And Tesco?

Dominic Walsh in The Times today (March 26th) notes that Tesco have taken a minority stake in a New York Deli Diner concept restaurant Fred's Food Construction with the first outlet debuting from Monday in Tesco's main Osterley store. And Tesco are building up a portfolio of neat eateries: Giraffe, Decks, Harris + Hoole and Euphorium Bakery: Fred's is just another name on a developing roster.

Intended as incremental devices to pull traffic in to their retail stores; they may be a much bigger indicator of Tesco's long-term future. Whitbread beware: 
Fred's might be small beer today but not even Amazon have figured a way to let you eat out on-line.


Monday, 17 March 2014

Thinking inside the box

Grocery retailers have spent the last twenty five years trying to figure out one question: how little space does a superstore need allocate to groceries to trade effectively? A major thrust of category management was to optimise range and space for mature, commoditised areas, to make room for new profitable areas. The thinking being, what else can we sell you whilst you're in store buying groceries?

The question has morphed into something bigger. Evidencing Tesco stores innovations like Watford, the total store mix is up for grabs, the challenge being how to transform the retail space into an altogether different communal experience. The inclusion of Giraffe restaurants, yoga classes etc offers an insight to the future: let's go out for lunch, we can pick up some shopping whilst we're there.