Collaborations and how to make them work

There have been many unexpected repercussions of covid-19 but it’s difficult to know how we
reached the point whereby the Primark store on London’s Oxford Street now contains a Sausage
Roll swing located within a ‘Tasty by Greggs’ café. Amid the fast fashion goods the in-store diner
serves up the food company’s iconic rolls alongside pizza and a new hot version of the popular
ultra-sweet Yum Yums.

This is the second such café, following the initial trial outlet in Birmingham earlier in the year, and
comes alongside the Iaunch of a limited edition range of Greggs clothing and clogs produced with
the fashion retailer. Who would have seen that one coming? Such collaborative activity is
increasingly blurring the lines between branded food operators and retailers and has taken off to a
dramatic degree in recent months as both sectors come under pressure to sweat their brand
values and physical assets.

Particularly active right now are the major supermarkets that have rather ironically for food sellers
delivered a pretty poor level of foodservice over the years. Their in-store cafes have typically been
rather depressing environments serving up a humdrum range of dishes requiring minimal culinary
skills. They have hardly been great adverts for the stores’ retail offering.

Change is certainly afoot at Morrisons including at my local branch that housed an old school café,
which has recently been overhauled and expanded to become one of the retailer’s new Market
Kitchen food courts. It now serves up a range of own-brand offerings including Bird & Baste for
roasted chickens and Char & Smoke for flame-grilled meat and vegetarian dishes. Such has been
the positive reaction to the upgraded offer that it is now being rolled out to further Morrisons
stores and, more radically, a number of standalone Market Kitchens are being opened following
the success of the first unit in Manchester.

Meanwhile, Sainsbury’s is ratcheting up its foodservice offer through the extensive roll-out – to
potentially 250 stores over the next three years – of its joint-venture with Boparan Restaurant
Group (BRG) to open ‘restaurant hubs’ that incorporate BRG-owned brands Caffe Carluccio’s,
Gourmet Burger Kitchen , Ed’s Easy Diner and Slim Chickens. Reflective of the success of this multi-
branded proposition is the recent license agreement with Deep Blue to bring in the Harry
Ramsden’s fish & chip offer into future hubs.

The introduction of recognised food brands into supermarkets is not particularly new as Tesco
brought in Harris + Hoole, Giraffe and Euphorium Bakery into some of its stores. Although they
were largely removed this was more down to the fact the grocer had bought these businesses and
at a later date came under financial pressure to divest non-core operations and so these
restaurant businesses got the chop.

The asset-lite arrangements possible through joint-ventures look to be a much better route for
retailers and could lead to further opportunities for food operators to tie-up with the major
grocers. This might be a possibility at Marks & Spencer where its food marketing director Sharry
Cramond has recently been appointed director of hospitality with the remit of overhauling its 330
in-store coffee shops. The retailer is not averse to joint-ventures with foodservice brands as it
earlier this year began supplying a range of its food products into Costa Coffee outlets.

This supply of products between retailers and food operators (in both directions) is certainly
another potential rich seam of opportunity judging by recent activity from the likes of itsu. The
brand has been accelerating its activity in the grocery sector with its sales in this category growing
at an impressive 50% annually. The prediction is that this revenue stream will soon be generating
£100 million of sales annually as the company drives greater levels of new product development,
which has seen the launch of new frozen products and the first moves by Itsu into chilled food-to-
go.

Such juicy additional revenue streams have not been lost on the likes of Franco Manca that has
just launched an initial range of cook-at-home sourdough pizzas in 500 Tesco supermarkets, with
the potential for this to be extended into further stores. Such a move is right out of the playbook
of Pizza Express that moved into grocery years ago in what was regarded as a suicidal move for the
brand.

It did not work out that way and retail sales became a very valuable part of the business
while it was other moves that would ultimately deliver a near-death experience for the company.
In these straightened times for all consumer-facing businesses it is likely that we will see more of
this collaborative cross-sector activity including in ways that might not seem immediately obvious.
Sausage Roll swings in fashion stores suggests nothing should be off the table.

Glynn Davis, editor of Retail Insider 

This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Retail Insider would like to thank Propel for allowing the reproduction of this column.