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Produce Business

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American Food & Ag Exporter

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Publix Tests Curbside Service… Hello, Tesco?

Jim Prevor’s Perishable Pundit, July 12, 2007

When Tesco announced its new concept, before it even confirmed the name, it kept saying that the new store would be convenient. Many American analysts took that to mean that it would be a convenience store concept. As it became obvious that this was not so, but that Tesco was looking to create a more convenient small supermarket, leaning heavily toward prepared food, we questioned exactly how convenient this whole concept was:

…even assuming execution is perfect, readers report that the concept has real risks.

My key question is whether the West coast mom will stop, get out of the car, purchase a rather expensive main dish and perhaps a few side dishes for dinner. The ease of purchase is a higher hurdle than the UK mom exiting the tube station and finding oneself at the door of Tesco Express and only being a few doors away from her London flat.

Indeed, and this is the great dilemma. Tesco is proposing to open, very quickly, hundreds of stores all built in a format that has no track record of consumer acceptance.

This is a ”brilliant or bankrupt” strategy. If it works, Tesco and its executives will be hailed as pioneers and innovators and will establish a new category for food retailing in the US. If it doesn’t work, Tesco will be attacked as foolhardy adventurers so anxious to make a big splash they were unwilling to test out their concept in America.

So which will it be?

Well, there is already a substantial market for high quality prepared foods in urban areas. If they were talking about doing this in Manhattan, San Francisco or Boston, it would be uneventful. It isn’t surprising that Wall Street bachelors, midtown lady lawyers and yuppie couples stop on the way to their apartments to pick up some food.

But move out to the burbs and the soccer moms and things change. Money has other uses when you have a family, so they don’t go for higher margins as quickly. And getting a couple of kids unstrapped from the car seats and strapping them in again starts to seem like a big reason not to go into a store.

If Tesco really wants to revolutionize the business, it should refuse to rent non-urban locations without drive-throughs. Drive-throughs are the American way. Retailers hate them because the retail DNA wants to drag people past items they don’t want in order to induce impulse buys. But that is not a consumer-friendly philosophy.

We talk about retail learning from foodservice. Well, the business of big hamburger chains is now going through the drive-through — 70% of business at a chain like Burger King. And the big issue is how can everyone do it faster.

The pizza business is driven by delivery. Casual dining chains, such as Outback, Carrabba’s and Applebee’s, went to curbside pickup to remain competitive.

It is very clear that in this market, it is not just the food, the quality and the location — a lot of people simply don’t want to get out of their cars.

We pointed out that, to be truly convenient, Tesco would need an option so that people didn’t have to get out of their cars:

Maybe Tesco has some tricks up its sleeve. If they don’t have drive-throughs, maybe they will offer curbside delivery or even home delivery.

In another piece, we pointed out that in most of America you can’t think about convenience without thinking about how Americans interact with their cars:

The way for Tesco to really create a more convenient store is to recognize that Americans don’t want to get out of their cars. The revolution Americans want is not what is inside the store, nor it being close to the house. It is not having to go inside. Drive-throughs, curbside-pickup, convenient delivery.

For all the talk of being consumer-centered, most proposals to do these things are met with resistance because, after all, how are you going to sell consumers impulse buys if they can just call in or e-mail their lists and when they pull up, you’ll just put it in their trunk?

To our British friends from Tesco, that would be a boot and if they want to be truly convenient in the American context, they should look at all the restaurants that offer curbside service. No reason a retailer that is consumer focused can’t do that as well.

Well we have no idea if Tesco is going to take us up on any of this, but Publix seems inclined to test the concept:

PUBLIX TESTS CURBSIDE SERVICE

Supermarket chain tries in-car delivery of deli take-out items in one Fort Myers store.

Publix Super Markets Inc. is taking a page from the restaurant industry for its latest innovation: Curbside carry out. Spokeswoman Shannon Patten said the company recently began testing a curbside service for deli items at a store in Fort Myers, allowing customers to have things like subs, salads and fried chicken delivered to their cars. “For customers who are time-starved it’s a way for them to consider us as an option for lunch or dinner,” Patten said. “It’s convenient.” Patten said the program works similar to a restaurant curbside service, in which customers phone in orders, park in designated spaces and submit their payment to an employee. She said Publix allocated a handful of parking spaces near the deli entrance at the Fort Myers site and monitors them with a video camera…

The only question is why limit it to the deli? The obvious answer is that the main competition of supermarket deli foods — restaurants — is doing it. But how about Tesco getting ahead of the curve and just doing it on the whole store? That would wow Americans.

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