Indie café or ‘wolf in sheep’s clothing’?

HAVE YOU ever been to a Tesco café? The coffee might as well be instant, the food all tastes of beige and don’t even consider using the toilets. Morrisons isn’t much better. TripAdvisor had a review recently for Morrisons café in Wisbech which about sums it up: “Prices acceptable and food and drink OK. Certainly an improvement on the fast food trailer that used to be in the carpark.”

 

Supermarkets have always struggled to do foodservice. And it baffles me. They have a larder right in front of them and the perfect opportunity to promote it; not the Tesco Value stuff, maybe, but the premium products. Or some of the branded goods. Or perhaps even new products trying to make it onto the shelves. That is something we want to see, isn’t it: supermarkets supporting small suppliers?

 

“We like backing great brands, helping them to grow and to realise their potential,” said the Tesco chief executive, Philip Clarke, recently. “We’ve done it with suppliers for years. Great ideas can find it hard to get backing these days.”

 

And so to a story that has grabbed the attention of the national media in recent weeks: Tesco’s support of Harris + Hoole cafés. Named after coffee-loving characters in Samuel Pepys’s diary, the business is run by three Australian siblings as a “family affair”. According to the website “it’s all about good coffee and happy people”. What it doesn’t say anywhere is that it’s all about Tesco too.

 

Estimates of the supermarket’s share of the business vary but 49% is the widely quoted figure. However, for some 1% seems too much: one Whitstable resident said the operation was akin to “a wolf in sheep’s clothing”. Tesco argues that it and the Tolleys have always been up front about their relationship, but whether they have or not, does it matter?

 

Marketing Week magazine’s retail expert Rosie Baker said Harris + Hoole’s founders “have created a strong brand identity, a good proposition and have an established customer base. The identity of its financiers has no impact on that and it would be a crying shame if the success of a fledgling British brand and business were damaged by misplaced principles.”

 

What’s more, this is a path trodden by other small businesses that have looked to other brands rather than banks to help them grow. Two examples are Coca-Cola taking a majority stake in innocent, and Kraft buying Green & Blacks, but there are many more. Much has been written about whether brands founded on ethics and entrepreneurial spirit will wither within the embrace of corporate giants, but innocent, for one, seems to be doing OK – would it have just launched a £1.1m marketing campaign without its bigger brother?

 

“The deal with Coke has allowed us to set out to do more of the things we wanted to do,” one of the founders, Richard Reed, told the “Today” programme in 2011. “They are a sleeping partner.”

 

Perhaps it is not Tesco, Coca-Cola or Kraft that the “disgruntleds of Whitstable” need to be scrutinising but the banks and the government.

 

The much-vaunted “funding for lending” scheme launched last year, which gave banks £80bn at low interest rates so they could offer small businesses and homeowners better loan deals, doesn’t appear to be working. Confidence in securing bank loans has fallen to an almost three-year low among small and medium enterprises, according to Business Monitor.

 

It’s no surprise that budding entrepreneurs are looking elsewhere for investment. Look at what it’s done for the Tolleys: yes, there has been difficult media coverage but Tesco could be about to put Harris + Hoole cafés into its stores.

 

On the Tesco blog Clarke wrote about “loving the stores we have, making them an appealing destination for customers to come. Dobbies, another Tesco business, does this brilliantly with coffee shops which customers travel to just for the scones. When the Tolleys are ready, we will put them into some of our stores. They will have proved that their brand and their offer work, that customers like it and it will be another reason for customers to shop with us.”

 

Other supermarkets could do worse than follow their lead, but equally many small businesses could do a lot worse than follow the Tolleys, and the likes of Reed before them.

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