A retail revolution as supermarkets try to eat the mall

Marc Sidwell
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IF YOU want to understand what Tesco is up to with its acquisition of family-friendly restaurant chain Giraffe, you need to head to a garden centre. A very special chain of garden centres to be precise: Dobbies, founded in 1865 but now a wholly-owned Tesco subsidiary.

With 32 branches and 16m customers a year, Dobbies is dwarfed by its parent, which has 2,979 stores worldwide and 16m active members for its UK Clubcard scheme alone. But Tesco evidently wants to learn from Dobbies’ singular take on the retail experience, one that is a world away from the current big box supermarket model.

Dobbies may sell plants and gardening equipment, but it does so by creating a destination that families want to visit and spend time in: with live chickens to watch, educational events to absorb and, crucially, coffee and cake. A fifth of all sales at the chain are made by its restaurants. Aside from bedding plants, its bestselling item is a scone. This is a garden centre that expects to be judged on the quality of its coffee as much as its plants.

Tesco apparently sees the Dobbies model as one possible future for some of its UK supermarkets. Faced with an oversized estate of shops as the purchase of many goods shifts online, it is considering turning its excess square footage to good use by creating a family entertainment experience in certain stores: come for the babycinos and falafel burgers; stay for a quick trolley dash along the tinned goods aisle.

The Giraffe purchase confirms a strategy already evident in Tesco’s 49 per cent stake in the Harris & Hoole chain of coffee shops. Chief executive Philip Clarke said in January he would bring H&H into Tesco stores when the founders were ready. The Euphorium bakery chain already has four so-called shops within shops that sell the chain’s delicious morsels in Tescos across London.

But is this a brave new future for shopping, or just the desperation of a chain trying to justify expensive real estate it no longer needs? There are precedents, and not just in the Dobbies business model. Tesco knows from its Asian ventures that supermarket restaurants are much more common in other regions.

But the real precedent here is the shopping mall with its food court. Having seen supermarkets expand from groceries to sell everything from clothes to electronic gadgets, the trend has now reached its logical conclusion: the supermarket wants to eat the entire mall.

Rather than thinking of out-of-town superstores as oversized, they may soon be better understood as compact Bluewaters and Lakesides, with restaurant concessions inside run by owned, partly-owned or even independent businesses, just as the shelves now contain a range of branded and own-brand products. In such a Westfield Express, you could shop-by-click from your handheld device while splashing out on scones, then collect a few items in the real world on your way out.

It may not work. Any attempt to rethink the UK shopping experience carries a high risk of failure. But Tesco needs to think big, and buying Giraffe is a very big idea indeed.