The Grocer – 17 August 2019

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analysis tesco metro

Job cuts and store overhauls are due for Tesco’s 153 Metro stores

R

esidents in the UK’s
easternmost town of
Lowestoft expressed
dismay earlier this month when
Tesco announced it would be
closing the doors of its Metro
store in September.
‘Let’s face it – this town
is dead,’ was the reaction
on Twitter from one of those
affected.
But is the same true for the
Metro format itself, after it was
revealed it faces a huge over-
haul and the loss of 4,500 jobs?
The Metro brand, currently
boasting 153 stores or around
one million sq ft of space, is set
for huge changes, as Tesco looks
to ramp up the profitability of
its stores and adapt to shopping
patterns shot to pieces by the
rise of the discounters.
Tesco has indicated the over-
haul will affect ranging (with a
much reduced lineup), as well
as major changes to staff work-
ing hours and the slashing of
layers of store management,
with a focus on workers becom-
ing all-rounders.
The Grocer has learnt the
moves will include arming
Metro staff with new headsets to
improve communication about
where they are needed, as well
as the use of “capping shelves”,
which house stock at the top
of shelves rather than in ware-
houses to reduce workload.
At a Capital Markets Day
in June, UK CEO Jason Tarry
admitted Metro had a long-
running identity crisis. Having
originally been launched as a
town centre location that could
handle passing trade as well
as weekly shops, Tesco’s own
research shows nearly 70% of
its Metros are now being used

Can Tesco reimagine Metro

for new shopping habits?

Ian Quinn

and backrooms at Tesco’s Metro

estate to be realigned with the

more limited shopping mis-

sions,” says Bruno Monteyne,

senior analyst at Bernstein.

“Simply having a more focused

range, in easier-to-fill plano-

grams, will make it a lot more

productive. The more range you

have to fill, the less productive

you become.”

Revamping Metro

But gearing the Metro estate

to convenience and food to go

will require more than sim-

ply rebadging Metro stores as

Express, much as Tesco might

like to do so. With the average

Metro being around 11,000 sq

ft compared with 2,000 sq ft for

an Express, Tesco faces a much

more complicated mission.

Longer term, Tesco admits it

is looking at a host of potential

evolutions to its store model. In

Metro’s case this could include

bringing in new F&F outlets, as

well as new third-party partners

from food-to-go businesses to

fashion retailers.

Booker has also been touted

as a potential player in the new-

look Metros. Already around

100 larger Tesco stores offer

bulk packs of products supplied

by Booker, and Tesco also plans

to offer Booker services in a fur-

ther 200 stores, which could

fit nicely into those changing

shopping patterns.

Of course, if Tesco’s

announcement of its Metro jobs

cull had happened a year ago,

with the retailer then on the

cusp of launching its much-

hyped Jack’s budget chain,

assumptions would have been

very different. Some analysts

predicted 100 or more Jack’s

would launch to take on Aldi

and Lidl, including in underper-

forming Metro locations.

Indeed, the latest Jack’s

opened last week in a former

Metro site in Walton, Liverpool.

Yet the other most recent Jack’s

opening – in Rawtenstall,

Lancashire – appeared to take a

new direction, operating more

like a cash & carry. This would

surely not fit with the 70% of

Metro shoppers using the stores

for food to go.

Yet another kite flown by

Dave Lewis and Tarry is the

potential for Tesco to open dedi-

cated Tesco Finest stores, which

could work in some upmarket

areas, but surely lack the scal-

ability key to an operation like

Te s co.

Before launching new experi-

ments, Tesco needs to ensure

it can carry off the latest cuts

without disastrously affecting

service or staff morale – areas

so crucial to the turnaround

since Lewis came in.

Metro in numbers

● Year launched: 1994

● Number of stores: 153

● Total space: 1 million sq ft

● Average size: 11,000 sq ft

● Average staff number: 100

for top-up shops and food to go.

Less than a third (31%) are typi-

cally being used for main shops.

As Shore Capital analyst Clive

Black, one of those at the event,

says: “Metro has became a jack

of all trades and a master of

none.”

At June’s presentation, Tarry

revealed a trial at one unnamed

Metro store had shown huge

improvement in gross mar-

gins (up to 400 basis points) by

changing the service model to

dramatically slash the range

and bring in simpler levels of

price and promotions.

“I would expect space, range