Tesco buys Giraffe

Disapproving Giraffe

Tesco has acquired UK restaurant chain Giraffe in a £48.6 million deal announced this morning (13/03/2013) in an attempt to pursue chief executive Philip Clarke’s vision of making stores “warmer and less clinical”. By opening up a number of child friendly eateries in its superstores to help boost the attraction of the Tesco brand among families.

Russel Joffe (founder of Giraffe) whom is thought to have remained on the management team of Giraffe says: “This move will allow us to introduce Giraffe to a wider audience, presents great opportunities for growth and for the team to be involved in an exciting stage in our brand’s development. It will be very much business as usual at Giraffe.” This supports Tesco’s group commercial director Kevin Grace’s view that Tesco “have the opportunity to develop some of the space in our larger stores to create retail destinations that offer customers even more choice. Giraffe is hugely popular with a wide range of ages and particularly families – we think our customers will love it.”

giraffe_resturaunt

In my opinion this strategic move is highly risky because when i have been to Giraffe it has been expensive for myself being a student; I view restaurants chains such as Nando’s and Wetherspoon’s as cheaper and believe that families will feel the same. Now that I think of it a Wetherspoon’s would have been ideal for Tesco in their vision to create Tesco as a shopping centre to be the location customers automatically go for their shopping. And why not? Tesco have a wide range of products from clothing, food, furniture, electronics, coffee shops and now Giraffe.

In reference to Tesco’s vision; why not  a play zone for kids within Tesco superstores? That way parents will enjoy shopping with their kids more as a babysitter looks after the children in the play zone. Referring back to Tesco’s chief executive vision of making stores “warmer and less clinical”; this idea would make certainly make customers enjoy shopping more which in turn creates a warmer atmosphere. In addition, i am confident research has been conducted that reveals people buy more when they are happier? Not to mention hungrier which is a fact; by seeing a Giraffe restaurant and the smell from the kitchen flowing around the store it will increase sales in store and in the restaurant. What do you think?

However we all know how supermarkets love to use pester power to increase sales, this idea will reduce the reach of pester power which offers Tesco a negative financial offering. However happier customers spend more and Tesco could operate the play zone as a loss leader if they wish as a free service, or charge a fair charge for the service? Or potentially rent an area to a baby sitter organisation creating a Daddy Day care in Tesco.

crying child

In terms of Tesco’s strategy, acquiring Giraffe, 49% stake in coffee-house Harris+Hoole and an undisclosed amount in bakery chain Euphorium. This shows Tesco are actively pursuing the chief executive’s vision; one implication of this strategy will result in an increase in prices that will shift Tesco’s Brand position higher within the market. To differentiate itself from competitors Sainsbury’s and Morrison’s that are Tesco’s closest rivals in my opinion as Asda continues to focus on reducing prices and is the cheapest supermarket in the UK.

In terms of Tesco’s marketing strategy which should be devised from Tesco’s Strategy will enable Tesco to market itself towards gaining a higher market share by becoming a preferred choice for families weekly shopping. In my opinion this quite an exciting time for Tesco and shows signs of delivering higher levels of customer service (something that has eluded many UK businesses for a long time now in my opinion in low-medium cost shops). It appears Tesco are attempting to make shopping fun again! Tesco currently spend millions on relationship marketing aided by the Tesco Loyalty card scheme offering rewards for loyal customers that leads to higher prices as costs are increased as a result. This is why Asda do not offer a loyalty card scheme, instead focusing on their strategy to lower prices. It appears Tesco are attempting to gain a competitive advantage by offering intangible services to encourage customers to shop at Tesco as oppose to the markets traditional methods of being cost-orientated approaches displayed by loyalty card schemes.

In comparison, Morrison’s happily market themselves as ” Market St Morrisons”. This is relayed into their store design in my opinion by not only having separate meat counters, bakeries etc. The design of the stores makes me personally feel I more in a market by their display of fresh produce and wooden counters as oppose to competitors hospital like environments. See the Morrisons latest advertisement to see what i mean below (watch out for “Market St Morrisons” at the end.

Would be interesting to see Tesco conduct some Guerrilla marketing as part of their marketing campaign when Giraffe restaurants are introduced into Tesco stores. See my Top 5 Guerrilla marketing stunts at https://stevenpreston21.wordpress.com/2013/03/09/top-5-guerilla-marketing-campaigns/

Enjoy! Please leave your views on Tesco’s acquisition of Giraffe

Credit to http://www.marketingweek.co.uk/news/tesco-acquires-giraffe-restaurant-chain/4005983.article for providing details on Tesco’s acquisition of Giraffe. Thanks.

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