Rumours had only just surfaced when it was confirmed that Tesco had bought the high street restaurant chain Giraffe yesterday for £48m in small change. It was news met with surprise and a wry smile as people juxtaposed the thought of Giraffe in a world of Horsemeat news.
Through the Twittesphere, it has been mentioned that one of the minor shareholders in the Giraffe chain saw an eight-fold return on their initial investment, so the deal would seem like a no-brainer from that point of view. But what does the 800lb gorilla in the retail space get from such a deal?
On reflection, I think it is a very clever move by Tesco. Here are some of the benefits I can envisage playing out:
1) In the very short term, it moves the consumer and press focus off horse (negative PR) and onto a more family-friendly message conjured up by the cuddly Giraffe (positive PR). As the acquisition beds in (pun not intended) Tesco will have a number of business gains to reap if they handle the mechanics of strategy correctly.
2) Giraffe restaurants can be introduced in-house into the larger Tesco Extra sites. This will drive footfall to their stores as families make the weekly shop more of an outing. This could be a key differentiator from their retail competitors in delivering a great shopping (and dining?) experience.
3) The high street chain of restaurants itself can be Tesco's testing ground for newly branded products that they might want to introduce in-store. Such a move has been hugely successful for Pizza Express and Nandos with all those shelves of product in a market that traditionally didn't exist years ago.
4) And let's not forget all that 'free advertising' in-store even if the products don't generate huge revenues due to being sold as meal deals or offers. (How many times have you thought about booking a table at Pizza Express as you browsed the pizza selection in a supermarket fridge?)
5) The Giraffe brand itself is fun, colourful and kid-friendly; the complete antithesis to the bland, soulless corporate image that Tesco desperately wants to shake off. Finally they have their Madagascar moment.
6) By introducing the Clubcard into Giraffe outlets, this will no doubt lead to further loyalty. Don't be surprised if Mums and Dads paying the bill at Giraffe get Tesco vouchers as a way of saying thanks. Again, driving store footfall. More importantly however it will give the retailer a whole new raft of metrics to study as they gently ease their way into the food service business such as they have done already with artisan coffee chain Harris and Hoole.
7) Come to think of it, will we see Harris and Hoole coffee being rolled out in Giraffe restaurants thus creating a kind of cross-pollinating sales eco-system? One hand effectively washing the other.
Whichever way this turns out, Tesco are in a very good position to leverage this deal into something spectacular. By caring for and nurturing Giraffe's family customer base, retaining that colourful brand and continuing to invest in great recipes and supply chain values, they might just pull ahead of their competitors by a long neck indeed.
Updated Saturday 16Mar13 to accredit photo, add a couple of links and generally tidy up this little post written and uploaded at 4am on my phone.
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| The comments in this Guardian story really demonstrate Tesco's dire issue with their brand's perception. |
On reflection, I think it is a very clever move by Tesco. Here are some of the benefits I can envisage playing out:
1) In the very short term, it moves the consumer and press focus off horse (negative PR) and onto a more family-friendly message conjured up by the cuddly Giraffe (positive PR). As the acquisition beds in (pun not intended) Tesco will have a number of business gains to reap if they handle the mechanics of strategy correctly.
2) Giraffe restaurants can be introduced in-house into the larger Tesco Extra sites. This will drive footfall to their stores as families make the weekly shop more of an outing. This could be a key differentiator from their retail competitors in delivering a great shopping (and dining?) experience.
3) The high street chain of restaurants itself can be Tesco's testing ground for newly branded products that they might want to introduce in-store. Such a move has been hugely successful for Pizza Express and Nandos with all those shelves of product in a market that traditionally didn't exist years ago.
4) And let's not forget all that 'free advertising' in-store even if the products don't generate huge revenues due to being sold as meal deals or offers. (How many times have you thought about booking a table at Pizza Express as you browsed the pizza selection in a supermarket fridge?)
5) The Giraffe brand itself is fun, colourful and kid-friendly; the complete antithesis to the bland, soulless corporate image that Tesco desperately wants to shake off. Finally they have their Madagascar moment.
6) By introducing the Clubcard into Giraffe outlets, this will no doubt lead to further loyalty. Don't be surprised if Mums and Dads paying the bill at Giraffe get Tesco vouchers as a way of saying thanks. Again, driving store footfall. More importantly however it will give the retailer a whole new raft of metrics to study as they gently ease their way into the food service business such as they have done already with artisan coffee chain Harris and Hoole.
7) Come to think of it, will we see Harris and Hoole coffee being rolled out in Giraffe restaurants thus creating a kind of cross-pollinating sales eco-system? One hand effectively washing the other.
Whichever way this turns out, Tesco are in a very good position to leverage this deal into something spectacular. By caring for and nurturing Giraffe's family customer base, retaining that colourful brand and continuing to invest in great recipes and supply chain values, they might just pull ahead of their competitors by a long neck indeed.
Updated Saturday 16Mar13 to accredit photo, add a couple of links and generally tidy up this little post written and uploaded at 4am on my phone.