According to a recent LinkedIn post by retail futurist and trend speaker Matthew Brown, “the UK mid-market feels like it has given up”. This statement might sound fatalistic, but we understand this way of thinking.  

The comment was prompted by a Sunday visit to a local Tesco featuring empty, sad looking fresh service counters. Brown comments that during a recent visit to Ireland “looking at the superb fresh innovation from SuperValu and the Garvey Group, Tesco’s strategy just seems totally wrong”.

Empty counters at Tesco - grocery mid-market
Tesco fresh counters. Image courtesy of Matthew Brown

While we agree that much of the activity in the grocery landscape appears to centre around the low and high-end fringes, we believe that the grocery mid-market isn’t all doom and gloom. In fact, the grocery middle market is on the up, posturing for a fight with disruptive discounters and techy mega corps.

Tesco

Tesco has joined with Carrefour in a buying alliance that has enabled their respective businesses to be more price competitive. However, while Tesco has lost some ground in the fight for UK market share, Dave Lewis’s real legacy as outgoing CEO is to have turned the business from sinking ship to jewel of the British business world.

Using a back to basics approach to retail that brought focus back to the grocer’s domestic market, and attention to detail on merchandising, pricing and availability, Lewis has turned Tesco’s fortunes around. From an innovation perspective, loyalty is a key driver, with the business launching a subscription service charging customers £7.99 a month, entitling them to up to £40 a month off two big shops and 10% off every time they shop from a yet-to-be-announced list of own-label Tesco products.  

Jack's - Tesco moves out of grocery mid-market
Jack’s. Image courtesy of The Grocer

Don’t forget the launch of Jack’s, too, Tesco’s own entry into the discounter space. It’s not really grown since it launched and there are rumblings that it might be a bit of a failed experiment, waiting to be canned by the next CEO.

On the B2B front, Lewis has renewed partnerships and built trust with old suppliers. In January 2019, Tesco has announced their strongest Christmas period in a decade.

Sainsbury’s

After its failed merger with Asda, blocked by the Competition and Markets Authority, Sainsbury’s is working on a new plan that sees it “investing heavily in new supermarkets”, according to CEO Mike Coupe. Meanwhile, it’s closing around 15 supermarkets and 40 convenience stores, as well as shutting 60-70 standalone Argos stores to bring them into existing Sainsbury’s stores to create greater portfolio efficiencies. 120 new convenience stores are planned.

Instore Argos at Sainsbury's adapting space for grocery mid-market
Sainsbury’s in-store Argos. Image courtesy of Internet Retailing

Sainsbury’s is hoping to generate an additional £20m a year in operating profit with the overhaul of its store estate, and its refocus on a more targeted customer experience. For example, growing the to-go offer in Local stores.   

M&S

Stuart Machin and his team in the Food business have started to roll out the first of the new look formats, starting in Hempstead Valley Shopping Centre. The next store to be selected for transformation was an old general M&S in Clapham/Battersea that was earmarked for closure.

According to The Grocer, Aldi had their eye on the store, but instead, M&S turned it into brand spanking new food-only store, featuring a whole load of new ideas.

Infarm at M&S in Clapham for grocery mid-market
Infarm system. Image courtesy of Infarm

These include a wine sampling and single-origin coffee sampling station, accessible from your Sparks loyalty card, sparkling disco ball pizza oven, and living farm, courtesy of M&S’s new collaboration with Berlin’s Infarm. The store also takes risks with departmental layout, with wine in the middle of the store, while the ready meal section is at the back, which turns convention on its head.

New approach to grocery mid-market at M&S in Clapham
M&S Clapham. Image courtesy of The Grocer

Price cuts to essentials like milk, as well as costs, and introducing new talent to the business, are taking M&S toward growth.

There’s a lot happening in the grocery mid-market. Across the board, these hardy grocers are becoming more robust and stable, while centring their attention on the customer while transforming their estates. And remember, while discounters and the top-tier grocers are the ones who seem to be visibly enhancing their positions in the market, that’s because they’re more agile and more nimble. The mid-market is far from stale, it’s robust.