On Tuesday Tesco edged that little bit further into the realm of the specialised OP supplier. The UK retail giant announced plans to extend its range of computers to include laptops and top-of-the range WiFi products in 50 of its Extra hypermarkets.
The household consumer — as well as the burgeoning small office/home office (SOHO) market segment — is the retailer’s obvious target. Matt Roberts, PC buyer at Tesco, explained to OPI+: "This significant new range of PCs and notebooks offers affordable computing packages to suit all our customer needs, from first time buyers through to tech-savvy upgraders, and positions Tesco Extra stores as a true destination choice for the world’s latest technology.
"This is a credible move into a very competitive market that has been driven by increased customer demand for personal computing," he added. "In the region of 58 per cent of UK households now own home computers so this sector presents a real opportunity of growth for us."
UK supermarkets such as Wal-Mart’s Asda, Tesco and Sainsbury’s (to a lesser extent) have been moving into electronics — and specifically PCs — for a number of years, eager to grab a piece of the increasingly lucrative pie characterised by high margins and steep consumer demand. In the high street, Argos and Woolworths have also woken up to the trend.
But Nick Gladding, senior retailer analyst at Verdict Research believes there will not be much of a crossover between the target customers of the supermarkets and the high street, and the OP superstores such as Staples. "Tesco is gearing its PC range towards its existing customer base, the home consumer," he told OPI+. "I think the impact on OP superstores likes Staples, which are attracting companies rather than consumers, would be limited. Traditional electrical specialists in the UK like Comet and PC World will feel it more."
Are smaller UK supermarkets such as Sainsbury’s, Morrisons, Safeway and Waitrose likely to follow Tesco and Asda’s lead in PCs? Gladding thinks not. This is largely because they do not have sufficient retail space to move into many specialised, non-food product areas, he said.
Tesco, meanwhile, is considering extending the PC range into more stores by the end of the year. The offering includes brands such as Samsung, Toshiba and Acer, with prices starting at less than £300 ($523), rising to £800. And selling them separately, rather than as part of a bundle, will make the price appear lower to customers and help to boost sales still further.
"Offering our monitor range separately, as opposed to part of a bundle offer, is our way of providing greater flexibility and choice for customers even if it means shaking up the current market," explained Roberts. "Some customers want to upgrade their PC but retain their existing monitor. These packages make that possible."