The major supermarket chains’ share of our food shopping has been growing rapidly over the past few years. They have also been diversifying into different sectors, both new types of shops and completely unrelated products and services such as finance and travel. Supermarkets now sell everything from music downloads to legal advice and flu vaccines.
In fact, in July 2013 Tesco announced plans to turn its out-of-town supermarkets into ‘exciting retail destinations’ offering everything from yoga classes to cookery courses. It's new superstore in Watford will be the first to trail the new approach featuring a 600 sq ft free ‘community space’ for local groups as well as a nail salon, and will also be the first to have a Giraffe restaurant, Harris & Hoole coffee shop and Euphorium bakery – all brands in which Tesco has a stake – under one roof.
Restaurants, Cafes and takeaways
In 2011 Sainsbury's tested its first Fresh Kitchen shop, a spin-off takeaway offering hot and cold food. At the time, the Guardian reported that several other British supermarkets are also determined to take on the nation's sandwich shops and fast food chains.
Waitrose tried to buy the EAT chain, but failed and expanded its "eat now" business through its new Little Waitrose convenience stores. They will sell groceries but focus on what the company describes as "food for now".
In 2013, Tesco bought a 49% stake in Harris + Hoole, a new chain of coffee shops. Customers were very critical of Tesco's ownership of a chain which portrayed an 'Indie' image. Shortly after in March, Tesco bought the family-friendly restaurant chain Giraffe for £50m, prompting fears of further buy outs of small chains by supermarkets.
In 2011 Tesco announced plans to open 70 new in-store beauty salons across the UK. Treatments include manicures, threading, and waxing, with haircuts and colouring being offered later. Customers will also be able to buy prestige beauty brands such as Clarins or Clinique. See articles in the Grocer, 19th January 2011 and in My Daily, 7th February 2011.
Asda was the first supermarket in the UK to introduce an estate agency service when it introduced an in-store scheme in stores in the North East in July 2006. Tesco launched an online property conveyancing service "Tesco Property Market" in June 2007. However, following complaints by estate agents, the Office of Fair Trading ruled in October 2007 that this was effectively an estate agency service. The project was suspended and Tesco reviewed its plans and in 2008, Tesco developed plans to launch a comprehensive property selling service.
Tesco has a “legal store” which in Tesco’s words “DIY legal solutions at great value prices.” The Legal Services Bill, known as “Tesco Law,” was announced in the Queen’s Speech in November 2006, and received Royal Assent in October 2007 allowing law firms to be owned or part-owned by companies, including supermarket chains. Read a Guardian comment piece from a solicitor expressing grave concerns about the effect that this legislation might have on the legal profession.
Electricity, gas, phone and internet
Sainsbury’s has a Sainsbury’s Energy package with EDF Energy, selling electricity and gas. It also sells mobile phones and tariffs and a landline tariff with Talk Talk and Asda sells mobile phones. Tesco has a wide range of utlities and communications services including its own Tesco mobile network, other phones and tariffs, home internet access, landline phones, internet phones, and a directory of gas and electricity tariffs and online switching service. Tesco also sells cheap own-brand software.
Supermarket chains have been developing links with banks to offer financial services.
-Asda offers insurance, credit cards and loans.
-Sainsbury’s operates Sainsbury’s Bank with Halifax Bank of Scotland, offering loans, savings accounts, credit cards and insurance services.
-John Lewis announced an insurance and travel company, Greenbee, with Axa and Expedia in October 2006.
-Tesco launched its financial services in 1997 and Tesco Personal Finance became one of Europe's fastest growing financial services providers.Tesco Bank was launched in 2009 and offers around 28 different financial products including car and home insurance, loans and savings accounts. In April 2010 Tesco revealed that it expects to gain a 10% share of Britain's financial services market, making it roughly as big as Abbey and more than half the size of Barclays. By February 2012 Tesco announced that it's mortgages would be on the shelves this spring. See an article in the Scotsman, 9th February 2012.
A Guardian investigation in December 2010 found millions of customers were being hit with unexpected costs when using their Tesco plastic abroad. Unbeknown to many of its cardholders, Tesco had started using its own exchange rates to convert overseas purchases into sterling, which were much worse than standard Visa and Mastercard rates used by rival cards. In February 2011 Tesco backed down and announced that, "in response to customer feedback and to improve transparency", it would be bringing its exchange rates into line with the rest of the industry. See the article in the Guardian, 1st February 2011.
Tesco and Asda both offer travel services such as insurance on their websites. In August 2006, Lidl linked with Air Berlin to sell flights from its UK store checkouts. In 2008 Aldi launched its "Aldi Travel" website offering a range of package holidays. Tesco sells flights at its stores in Hungary.
So far there are fairly limited ways in which supermarkets can offer healthcare, including the following. However, this may change with the new NHS reforms being introduced in 2013:
Chemists: Supermarket chains have in-store chemists selling pharmaceutical and beauty products as well as services such as photo processing, NHS and private prescriptions. In November 2011, following fears that Tesco’s new Beauty Stores will push out smaller salon owners, the Head of the Irish Pharmacy Union warned of major job losses in pharmacies in Ireland, as they struggle to compete with the UK’s biggest supermarket chain. The retailer opened its first two pharmacies in Ireland in early November. See the article at internationalsupermarketnews.
Eyecare: Tesco and Asda have in-store opticians (Asda has opticians in over 80 stores) offering eye tests and selling contact lenses. Sainsbury’s also sells contact lenses.
Complementary medicine: Some Tesco stores contain outlets of Nutri-centre, stocking “health and well-being products” with nutritionists and health advisers dispensing advice.
Nutrition advice: Tesco set up a diet website which it referred to as “the UK’s biggest online dieting and healthy eating service”.
Health advice: Morrisons offers “free advice about general health matters, your medication or the treatment of any common illness.”
Flu jabs: In 2008, the major supermarket plans increased their flu jab programmes, with Asda providing them at 150 stores. Read an article in the Manchester Evening News on the criticism Asda faced from a regional representative of the British Medical Association for selling flu-jabs to anyone, while there was a shortage of the vaccine and widespread concerns that not enough vaccines will be available for at-risk groups.
Dentists: A private dental surgery opened in a Sainsbury's store in Sale, Great Manchester, in September 2008.
The British Medical Association has argued that supermarkets are not appropriate for providing healthcare, given that they sell and advertise unhealthy food, tobacco and alcohol (read BBC coverage).
The USA's supermarket chain, WalMart introduced the concept of selling non-food goods on a significant scale when it acquired Asda in 1999. Since then it has become an increasingly regular feature of supermarket shopping, and an increasingly important part of the activities of all the major supermarkets. Tesco became the UK’s largest non-food retailer by 2007 (See BBC coverage), overtaking Argos and Homebase. Similar trends are occurring across Europe.
Tesco: By 2008, around 22% of Tesco’s sales were in non-food. Tesco’s first Homeplus non-food only format store opened in Manchester in October 2005, with the trial extending to six stores by 2007. For more information see this article "Tesco Terry's nice little earners: From electric guitars to used cars, is there ANYTHING this trader can't sell to you?", Daily Mail, 12th February 2011.
Asda was a major pioneer of supermarket non-food activities, launching its George clothing range in 1990. Asda launched the Living format of stores, which sell non-food only, with a store in Walsall in 2004. In September 2008 Asda announced plans to open another five Living stores by the end of the year, bringing the total to 21. Asda also launched standalone High Street George stores, although it announced in 2008 that these would be closed, and that Asda would instead concentrate on out-of-town non-food retailing.
Products types sold by the major supermarkets include:
Clothing: Tesco’s share of the clothing sector overtook Asda’s in 2008, its share rising to 9.3% and Asda’s rising to 8.3% putting the chains in third and fourth place. Marks & Spencer’s share was 11.4%. Tesco launched its clothing lines, including Cherokee and Florence and Fred, in 2002. In November 2006, Tesco announced that it would start a massive expansion of its clothing operations, including building stores within stores, selling more up-market clothes, and an online fashion catalogue (see Guardian coverage for further information). The supermarket chains have come under considerable scrutiny for the poor working conditions faced by many of the people - often women- producing their clothes in countries such as Bangladesh, Sri Lanka and China. See the workers overseas section for more information.
Books, CDs, DVDs, games: Supermarkets tend to stock only the best sellers in each of these areas, so as supermarkets gain an increasing market share in these products, consumer choice will shrink. Tesco’s website now sells music downloads as well.
Electrical goods, household products, furniture: This range of goods has become increasingly important particularly for Tesco and Asda’s large format hypermarket stores. Tesco launched a delivery service in October 2006 for household and electrical items. Asda announced an expansion of its online services in November 2006 in response.
Petrol: Supermarkets started selling petrol in the 1970s, and it has become an important part of supermarkets’ business. Over the past few years, Tesco and Sainsbury’s in particular have begun building smaller stores in High Street locations and these often work well with petrol station forecourt format stores.
Tyres: in January 2011 Tesco announced it is moving into the tyre trade and teaming up with Blackcircles.com, a tyre specialist company run by former Tesco worker Mike Welch More details are in this article in the Daily Telegraph, 18th January 2011.
Cars: in March 2011 Tesco launched Tescocars.com and entered secondhand car market. Read the article in the Guardian, 3rd April 2011. However, the site was closed down a year later in April 2012 due to a lack of stock to sell.