Tesco sell Euphorium bakery to re-focus on core renovation
Tesco CEO Dave Lewis’ ruthless re-focusing on the core is in the news again, with the sale of the Euphorium artisanal bakery. This follows the sale of Harris + Hoole coffee shops, Giraffe restaurants and Dobies garden stores. These businesses were all part of the fatally flawed vision of former CEO Philip Clarke to transform Tesco into a “retail destination” for customers. Selling them will allow Tesco to “place even greater focus on our core UK business”, as a Tesco spokesperson said in this earlier post.
Below I suggest some interesting learnings about brand renovation from Tesco’s bakery strategy.
1. The need to upgrade the core offer
The Tesco team were spot on when they highlighted several years ago the need to upgrade their bakery offer. I am sure they had access to trends data which would have shown the growing demand for more “artisanal” bread that looks, feels and tastes more natural and more handmade. In line with many food categories, from pizza to coffee to burgers, the high street bakery offering is becoming more sophisticated. One example of this trend is the growing Gails chain of bakeries, where the bread is baked on the premises, and beautifully displayed, rather than being wrapped in plastic. Gails currently has only 20 outlets in the South East of England, but it gives an idea of the “trajectory” of change in the market.
2. Pilot then pivot
Tesco was also smart to pilot the upgraded, more artisanal bakery offer it developed in the South East of England. A pilot concession outlet was opened back in 2013 in Tesco’s Kensington store on West Cromwell Road. The roll-out of the format was dependent on the success of the Tesco pilot, as Andrew Green, operations director at Euphorium Bakery, explained in this article.
A pilot concept like this allows a retailer to test out a new offering, learn what works and then adjust the proposition before rolling out. This is in line with the fashionable “lean start-up” approach I posted on here, where you trial your idea and then adjust it. If the change is a big one, this is called “a pivot”.
3. Focus on the core
So, Tesco spotted a trend and got into a pilot. And the new proposition seemed to “really take the core Bakery / Sandwich offer up a notch,” according to this report. The article went on to say that “Euphorium has been a great investment for Tesco.”
Or was it?
I suggest that Tesco would have been better off investing in upgrading the core Tesco bakery offer, as I expect it will now do under Dave Lewis’ leadership. Hire artisanal bakery experts from Gails or Euphorium and get them experimenting. But do this under the Tesco brand, so the improved bakery offer nourishes and helps revitalise the Tesco brand. “We know how important a great bakery offer is to our customers, and this agreement will mean we can continue to serve shoppers with great quality Tesco bakery products,” observed a Tesco spokesperson here.
And come on. If there was ever a bloody brand that was so obviously, patently NOT not for Tesco it is Euphorium. I’d bet a trolley-full of artisanal sour dough loaves that a brand with such a daft, poncy name would never have been launched by former CEO Terry Leahy.
4. Renovating the core brand: Costa Fresco
A better example of how to pilot and pivot to renovate the core brand is Costa Coffee’s Fresco concept store in central London, that we recently visited ahead of a project briefing meeting with the Costa team. Here, Costa is also experimenting with the food offer, including beautifully presented, fresh bakery products. But the big difference is that the focus is fully on renovating the core Costa brand.
In conclusion, upgrading the core product and service offer to keep up with trends and increasing quality expectations is essential. However, when doing this ensure the focus is on the core brand like Costa, not on secondary non-core brands like Euphorium (and Harris + Hoole and Giraffe)