Closing-down poster at Newgate Street Co-op, Newcastle (2 Dec 2011)

Newcastle city centre’s Co-op supermarket is to close down this month, bringing to an end nearly a century-and-a-half of Co-operative presence in Newgate Street. Posters in the windows and instore – which I spotted while passing by yesterday – reveal that the store will ‘cease trading as a Co-operative’ at 6pm on New Year’s Eve (31 December).

Former Co-op department store, Newgate Street (16 Feb 2010)

The food hall is the last remaining part of the former Co-op department store, which closed in 2007, and there has been speculation about its long-term future ever since – both in terms of its competitive position and the expected redevelopment of the building in which it sits.

For many years, the Co-op was one of a handful of supermarkets in Newcastle city centre – alongside Marks & Spencer’s food hall and the now-demolished Safeway (previously Presto) in Clayton Street – and had the advantage of the biggest range and longest opening hours of the lot.

Sainsbury's Local, Gallowgate, Newcastle (10 May 2011)

More recently, however, competition has intensified, with Waitrose opening in nearby Eldon Square and Tesco Metro taking a unit roughly where Safeway used to be in the redeveloped Eldon Square South. Reflecting the national trend of big grocers moving into convenience, the city has also seen a proliferation of smaller supermarkets, including two Sainsbury’s Locals (in nearby Gallowgate and at Central Station) and a Tesco Express (Eldon Garden), as well as a recently opened Londis Metro in Grainger Street.

While the environment around it has shifted, the Newgate Street Co-op has failed to keep up. Even two years ago, I described the rump supermarket as feeling “unloved and behind the times”, noting the “bored-looking staff, long queues (as usual), and numerous broken light fittings that create an overall feeling of gloom.”

Old 'Food Hall' signage, Co-op, Newgate St, Newcastle (9 Nov 2009)

Despite the apparent lack of investment or attention to detail inside the store, last year’s replacement of the old ‘Food Hall’ signs with ones bearing the new ‘Co-operative Food’ identity suggested that the Co-op might, in fact, be planning on staying around for a while. Indeed, even when long-awaited plans for the building’s re-use for retail, hotel and leisure were approved earlier this month, it was stated that the Co-op’s food store would be retained as part of the scheme, despite plans for a new (but much smaller) Co-operative Food store, in the old Envy unit in Market Street, having come to light a week earlier.

New Co-operative Food signage (20 May 2010)

Nevertheless, the Co-op food hall’s surprise closure in Newgate Street is likely to facilitate the Redbox-designed plans to revamp the iconic building that it occupies. The shop’s strange position within the property – largely the result of having to screen it off from the abandoned department store and stair towers – would always have necessitated some reconfiguration and resulting disruption to business.

So, what of the redevelopment itself? First of all, it’s important to appreciate the extent and interest of the existing property. While the Grade II-Listed Art Deco section facing Newgate Street – built from 1931-32 to replace the original 1870s premises, and extended by three bays in 1959 – is the most familiar part of the old Co-op department store, there are also some noteworthy Grade II-Listed buildings around the corner in St Andrew’s Street.

St Andrew's Street buildings, former Co-op, Newcastle (9 Nov 2009)

As David Lovie notes in his useful (but now quite old) ‘The Buildings of Grainger Town’ book, these were built in 1902 as an extension to the original 1870s Co-op store, so are the oldest surviving part of the property. Happily, these will be given a new purpose as the entrance to the 231-bedroom Travelodge that is set to occupy the upper-floor space within the 150,000 sq ft scheme.

St Andrew's Street buildings, former Co-op, Newcastle (9 Nov 2009)

According to the useful project update on the architects’ website, a gym is expected to occupy the basement, while the ground floor will house six retail or restaurant units. Interestingly, the piece – which also assumed, at the time, that the Co-op supermarket would remain in place – states that “all tenants but one have already committed to the scheme”, which will no doubt prompt all sorts of speculation about who might occupy the space.

The property’s location next to The Gate leisure complex means that restaurants or bars are an obvious choice, but its position in relation to recently opened big-name stores - opposite Debenhams and New Look, and close to Next – makes fashion retail a possibility.

All in all, then, it’s difficult not to be positive about the plans for the property. A historic building is going to be brought back into use after five years of near-vacancy, while the promised ground-floor uses should help generate street-level activity and footfall in Newgate Street. Meanwhile, any loyal Co-op shoppers look set to be catered for by a small store elsewhere in the city centre.

For all that the present Co-op supermarket is unlikely to be widely missed, I hope that the rather clinical head-office posters announcing the store’s closure will be replaced in due course by something more bespoke. After all, when a business has traded from the same site since the 1870s – supported by generations of Newcastle families – shoppers surely deserve a warmer expression of gratitude than a passing ’Thank you for your custom’.

Tesco in Eger, Hungary (15 Jul 2006)

Today’s release of fairly weak UK trading figures from Tesco – where like-for-like sales, excluding petrol and VAT, fell by 0.5% in the first half of the year – has unsurprisingly prompted much media discussion, both about Tesco specifically and the state of the UK economy more generally.

Tesco’s coverage hasn’t been helped by rival grocer Sainsbury’s revealing that its own like-for-like sales, excluding petrol but not VAT, rose by 1.9% in the first six months of the financial year (a measure for which the equivalent at Tesco was a 0.5% rise).

As new Tesco boss Philip Clarke noted, there’s no doubt that retailers across the spectrum are having to eke every penny of spend out of cautious shoppers at the moment, with further gloomy figures on household consumption released today. The big question, however, is why the UK performance of Tesco – a retailer that has long been the behemoth of the British supermarket sector – is seemingly lagging behind that of major rivals such as Sainsbury’s.

Tesco Express, Lyme Regis (4 Sep 2011)

Before trying to answer that question, it’s worth reminding ourselves that Tesco as a whole remains a phenomenally successful business. Today’s figures showed that the company made a profit of £1.9bn in the first half of the year, on group sales of £35.5bn – a performance that most retailers can only dream of. Tesco’s store estate comprises more than 5,300 shops – half of those overseas – and it is now the third biggest retailer in the world, with a strong presence in Ireland, eastern Europe, Asia and the US. And for all that its UK performance is below par, Tesco’s market share remains more than that of Asda and Morrisons combined – thanks in no small part to the efforts of its 200,000 UK staff. As a homegrown international success story, Tesco has given the UK much to be proud of.

Tesco in Košice, Slovakia (2 Sep 2008)

However, it’s the business’s very immensity that also contributes to some of its present challenges. The perception that Tesco is simply too big – and too powerful – is widely held, not least here in the North East where it owns much of Gateshead town centre and holds the key to the centre’s long-awaited regeneration. There are clearly some shoppers who refuse to shop at Tesco for that reason.

In the UK, a significant chunk of Tesco’s growth in recent years has been built on expansion in non-food. This served the business well in the good times, but has arguably left it more exposed than its rivals now that discretionary spend is under pressure. There is also, I would suggest, some sense that Tesco’s expansion into new categories – whether that’s non-food, banking or used cars – has allowed others, such as Waitrose and the hard discounters, to up their game and become the innovators in the core grocery business.

Tesco-owned One Stop, Crewkerne (10 Sep 2011)

I touched upon some of Tesco’s challenges in grocery when I recently blogged about the Asda Price Guarantee, and Tesco, like Asda, is having to fend off rivals at both the premium and value ends of the market. For all its investment in price – including the eyecatching Price Drop campaign announced last month – my reckoning is that Tesco still faces an uphill struggle to be perceived as cheaper than Aldi, Lidl or even Asda. The proliferation of higher-priced Tesco Express stores – and the growth of the supposedly even dearer One Stop ‘stealth fascia’ – surely don’t help this perception. In contrast, Asda’s clear message about charging the same prices in its smaller stores as in the larger ones helps to cement its own value credentials.

What about quality? Here too, Tesco arguably has work to do. Just among my own circles of friends, I often hear perceptions of Morrisons being better than Tesco in fresh produce; Sainsbury’s as being a more ‘upmarket’ shop in general; and Waitrose – still a relatively recent entrant to ‘the North’ – as excelling in speciality products and treats. In contrast, Tesco’s dalliance with being ‘Britain’s biggest discounter’ and its recent launch of ‘venture brands’ – its own in-house products, but without a Tesco branding – overlaid with the familiar Value, mid-tier and Finest ranges, arguably create a confused picture of what Tesco stands for.

One of Tesco's discount brands

The one area where Tesco beats all its rivals is its long-established loyalty scheme, Tesco Clubcard. Reportedly boasting 15 million active cardholders, Clubcard provides the retailer with an unrivalled snapshot of UK consumers’ shopping habits, as well as a means of communicating targeted news and offers to its customers. Given the importance of Clubcard, the decision last week to scrap the Double Points promotion – and invest the money saved in immediate Price Drop reductions – is a bold if risky one. Tesco’s reckoning, perhaps, is that investing in loyalty is only worthwhile if shoppers are actually loyal – and don’t go off to Aldi, Lidl, Morrisons or Waitrose instead.

Back in the days when Prunella Scales’ Dotty was the face of Tesco’s TV advertising, there was a warmth and clarity about the Tesco brand – and even an affection for it – that has got rather lost in the intervening years. Today, Tesco’s rather cold and soulless stores seem like a metaphor for the brand.

Whether the recently announced initiatives will clarify what Tesco stands for – and win back those customers who have started to establish new shopping habits elsewhere – remains to be seen. However, given Tesco’s deep pockets, immense experience as a retailer, and past record of success, only a brave observer would write off its present efforts to bring the UK business back on track.

Tesco Metro, Clayton Street (30 Jan 2010)

Heavy overnight snow provided a good excuse to take a walk into Newcastle today, rather than trying to drive anywhere further afield. It was also an opportunity to see what was happening with Newcastle’s two new city centre Tescos.

The internal fit-out of the Tesco Metro in Clayton Street – part of the St Andrew’s Way extension of Eldon Square – looks to be progressing well, ahead of it’s scheduled opening in a couple of weeks’ time. The hoardings have now been taken down, and it’s possible to see inside, with the signage, shelves and checkouts all in place.

View inside Tesco Metro, Clayton Street (30 Jan 2010)

In contrast, work seems to have barely started on the Tesco Express at Eldon Garden, in the former Sony Centre unit facing Percy Street, though there is a poster up advertising its impending arrival.

Tesco Express, Eldon Garden (30 Jan 2010)

Taking the escalator that runs from ground level in Percy Street (in front of the new Tesco) to the side entrance of Lakeland within Eldon Garden shopping centre, I was again puzzled by the empty mezzanine floor that sits above the new Tesco, and underneath Lakeland. It was built as part of the extension to Eldon Garden a few years ago, and is only really visible from the escalator.

It has quite a large floor area but has never been used – perhaps because there doesn’t seem to be any way of actually getting into it, other than if it were made accessible from one of the retail units above or below. If anyone can shed any light on why the shopping centre extension was designed this way, and what the mezzanine floor is supposed to be for, I’d be interested to hear!

Debenhams, Eldon Square South

A few interesting titbits of Newcastle retail news ahead of the opening of Eldon Square South – St Andrew’s Way – on 16 February. Anchored by a new Debenhams store, Eldon Square South is of interest beyond Tyneside as one of only a handful of major retail developments to be opening in the UK during 2010. 

I recently blogged about Abercrombie & Fitch’s sister brand Hollister having Meadowhall and the Trafford Centre as its “most northerly outposts”. Now it seems that we’re going to be getting our own Hollister in Eldon Square, meaning that the shopping centre’s extension will – impressively – be fully let when it opens next month. 

In an earlier post about Eldon Square’s extension, I noted that “the real test… will be ensuring that the large and prominent units being vacated by New Look, River Island, Topshop, et al do not stay empty for long”. The word at SkyscraperCity is that Next is going to be taking over the soon-to-be-former Topshop/Topman site, though it’s not yet clear whether this will be in addition or instead of the retailer’s existing Northumberland Street store. The existing Next store is very cramped, but given that it had an interior makeover not too long ago my guess is that it will be retained alongside the new store. Either way, I hope something will be done to improve the current Topshop/Topman unit’s ugly brick walls, which present such a blank and unappealing face onto Blackett and Newgate Streets.

Existing Topshop, Newcastle

We’ve known for some time that Tesco Metro is coming to the Eldon Square extension; now it seems that a Tesco Express is opening up at nearby Eldon Garden as well. That begins to explain the Sony Centre’s move into one floor of the former Pier store, freeing up the prominent unit facing Percy Street for Tesco. It still seems curious, however, that having had no city centre Tesco store until now, there will soon be two within a few hundred metres of each other.

Equally, with M&S, Waitrose, Sainsbury’s Local, Tesco Metro, Tesco Express and The Co-operative Food all operating in the Percy Street / Newgate Street area, it will be interesting to see whether all of them are able to thrive. When I walked by last week, ‘Store Closed’ signs in the windows indicated that the Food Co supermarket in the soon-to-be-redeveloped Newgate Centre had already succumbed.

Food Co, Newgate Street, Newcastle (11 Jan 2010)

Expect more musical shops over the coming months as, with the opening of Eldon Square South, Newcastle city centre adapts to the biggest geographical shift in its retail focus for more than thirty years. Interesting times!