The Grocer

What should we make of Tesco’s new Kelly’s Market concept?

What should we make of Tesco’s new Kelly’s Market concept?

During and since Covid, Tesco, Sainsbury’s and Asda closed many meat, fish and delicatessen counters, moving their offer in those categories to pre-packed only.  There is debate about this.  Is it a way to cut costs in the battle vs Aldi and Lidl?  Yes.  Does it remove what could have been a key point of difference vs Aldi and Lidl?  Probably.  Does it leave the field open for Morrisons and Waitrose to differentiate more clearly?  Yes.

Whatever you think, the fact is that many large supermarkets now have a decision to make.  What to do with the space where Counters used to be?

One of Tesco’s responses is Kelly’s Market, a new concession which I visited last week in Wokingham.

Kelly’s Market sits at the back of the store where Meat and Deli Counters would have been.  It offers four World Foods concepts from one long counter – CKN+BAO, BamTuk (noodle and rice dishes), My Little Dim Sum and Dos Mexicanas.  Food is available cooked to order, stored in “hot hold” or to heat at home.  There are also snacks, sauces and soft drinks, and a well-presented freezer of Little Moons Mochi Ice Cream.  Shoppers pay at the Tesco tills, along with their grocery items.  You can’t order on Deliveroo, but I expect this will change.

So what stands out when you visit this “store within a store”?  Three things struck me.

First, Kelly’s Market are offering something properly different.  Yes, similar hot food might be assembled from “the normal grocery aisles,” but very few shoppers would think to do this, or even know how.  And the Japanese and Korean snacks, sauces and drinks will be totally new to most. So, for most shoppers this will feel like something new that they did not already have.

Second, the design, upkeep and presentation of the area is exciting and has aspirational appeal.  The counter is smart, modern and spotlessly clean.  Staff are well turned out.  The menu screen has good food photography.  The food looks high quality and fresh.  The overall impression is like you’d get at a successful independent Asian outlet in an upmarket urban area, or a food market.

Third, Kelly’s Market, prices are significantly higher than what shoppers will pay in the rest of the store.  £7 for a Quesadilla, £5.70 for a Duck Waffle, over £2 for an individual soft drink.  Yes – this is a different meal occasion, with a different competitive set versus the rest of the store, but will shoppers feel a natural temptation to compare what they could get a few aisles away?

Supermarkets have periodically tried to bring more foodservice business into their stores.  Look at the number of Sushi concessions in Sainsbury’s and Waitrose.  And Tesco have to do something with the space.  It will be interesting to see if Kelly’s Market can attract a local fan base, retain its high standards, and justify the price premium.

​Jeremy Garlick is a Partner of Insight Traction, consulting with FMCG and Retail companies. He was formerly Head of Insight at Sainsbury’s, Waitrose and Premier Foods.

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