U.K. Supermarkets Blur Lines
By George Anderson
Turnabout, as they say, is fair play. While supermarkets here and elsewhere have seen other channels steadily chipping away at their share of grocery categories, store operators in the U.K. are targeting non-food categories to grow overall sales and profits.
Today, supermarkets own an increasingly large share of product categories, including CDs, DVDs, clothing, books and computer games. Over the past five years, for example, supermarket share of clothing and shoe sales has grown from 11 percent to 19 percent of the market. Supermarket sales of DVDs represents 27.4 percent of the total U.K. market.
Teather & Greenwood retail analyst Sanjay Vidyarthi sees the combination of their store’s already strong foot traffic and higher margins paying off for supermarket operators venturing further into non-foods.
The chain that has done the best job so far has been Tesco, Mr. Vidyarthi told BBC News, “For Tesco, two-thirds of the space it’s putting on is non-food. Its Extra formats are now half food and half non-food. With any store extensions, most of the space is non-food.”
Some supermarket operators, such as Wal-Mart’s Asda division, have experimented with non-foods only stores. The company’s Living store format sells clothes, consumer electronics, housewares, CDs/DVDs and jewelry.
“We’re just trying to have a flexible approach across different formats,” an Asda spokesperson told the BBC.
Moderator’s Comment: Are there any lessons from the U.K. experience for American grocery retailers? Do you see something
similar happening in the domestic market? –
George Anderson – Moderator