North East leads the space change as Tesco adds gyms to Extra stores

New Tesco Extra, Sunderland (6 Jul 2013)

Tesco Extra branches in Stockton-on-Tees and Sunderland are to see surplus space converted into gyms, as the retail giant looks to ‘repurpose’ excess square footage within some of its largest stores.

Plans to shrink some oversized Extra stores were first mentioned back in October, as constrained consumer spending and a shift to online shopping impact on the amount of physical floorspace that Tesco needs for product lines such as homewares, electricals and entertainment. This was followed, in April, by the news that 100 sites bought at the high point of the property cycle – many intended for Extra stores – would not now be developed.

Evening view of Tesco Extra Gateshead from Trinity Square (4 Jul 2013)

As I noted before, it seems unlikely, in the light of these strategic changes, that there will be many new store openings as massive as the 103,000 sq ft Tesco Extra that opened in Gateshead in May, or the 80,000 sq ft shop that opens in West Bromwich this Thursday (11 July), both of which anchor wider town centre redevelopments by Tesco’s regeneration arm Spenhill.

Opening day at Tesco Extra Gateshead (23 May 2013)

As it is, the Tesco within West Bromwich’s New Square scheme – which will sit alongside high-profile lettings such as Primark, Next, JD and Odeon – is somewhat smaller than the 139,000 sq ft that had been originally mooted, while the space dedicated to non-food at Gateshead is markedly less than in established North East stores such as Kingston Park.

New Square, West Bromwich, photographed a week ago (29 Jun 2013)

It’s an interesting turnaround from the time, not so long ago, when Tesco, Asda and others were inserting mezzanine floors into established stores in order to increase the available floorspace. Indeed, the new gym at the 130,000 sq ft store in Stockton’s Durham Road – which will be run by the budget gym operator Xercise4Less – will take over the mezzanine level of the existing Tesco store, with electricals and clothing being reorganised and housed on the ground floor alongside food, presumably in a similar configuration to Gateshead. The gym is expected to open in October.

Xercise4Less MD, Jon Wright, outside Tesco Stockton. Photograph courtesy of Tesco

In Sunderland, the planned gym will occupy 30,000 sq ft of space within the brand new Tesco Extra building that opened at Sunderland Retail Park in Roker on 24 June. Here, the size of the actual Tesco store was shrunk prior to opening, with 30,000 sq ft of the original 100,000 sq ft building carved off for alternative uses, leaving a smaller – but still large – 70,000 sq ft supermarket.

Sunderland coverage on Pure Gym website (7 Jul 2013)

The name of the Sunderland gym operator is expected to be officially announced this week, though the fact that Pure Gym’s website is already plugging the ‘Autumn 2013’ opening of its new Sunderland branch – with the address given as ‘Tesco Extra, Sunderland Retail Park’ – seems a fairly hefty clue! Coincidentally, Pure Gym already operates around the corner from the Gateshead Tesco, occupying first-floor space within the former Co-op department store building.

Visiting the Sunderland Tesco Extra for the first time on Saturday, I was struck by the internal similarities to Gateshead: though more compact overall, the look and feel of the new-look café with its views out, and of the prominent F&F area in front of the tills, is instantly familiar. Externally, however, the wooden-clad store is quite different, due to it being a more traditional standalone supermarket rather than a store that’s integrated into a town centre development.

Undercroft car park of Tesco Extra, Sunderland (6 Jul 2013)

The building is raised on stilts, with parking underneath and travelators that whisk shoppers up to the store level. This means that the front door, in effect, faces inwards to the car park – very different to Gateshead’s public square frontage – making arriving at the store on foot a slightly curious experience, despite its proximity to the Stadium of Light Metro station.

Vehicle access to Tesco Extra, Sunderland (6 Jul 2013)

So, while Sunderland’s Tesco Extra is certainly a good-looking shop inside and out, it’s a useful reminder of quite how impressive – and unusual – the Gateshead scheme is in integrating a Tesco Extra store with the wider town centre.

Reclad Farmfoods and Blockbuster at Tesco’s Sunderland Retail Park (6 Jul 2013)

As a redevelopment of a tired and underused old retail park, however, the Sunderland scheme is clearly welcome. Sports Direct is already trading from one of the new retail units opposite the Tesco store, while you’d never know that the block housing Farmfoods and Blockbuster was already there before, but has been reclad to match the new development.

Tesco Extra within the redeveloped Sunderland Retail Park (6 Jul 2013)

The PR take on these Tesco gym developments is interesting, too. Though the plans to downsize large stores has been widely publicised, the press release for the Stockton development doesn’t mention this at all.

Instead, it opts to emphasise the convenience to shoppers of “combin[ing] their weekly shop with their weekly workout”, talks about making the store “an even better retail destination for our customers”, and highlights the gym as part of “Tesco’s commitment to ‘helping customers and colleagues live healthier lives.'”

It’s a clever argument, really – instead of surplus space being framed as a problem, it’s turned round into something that helps the stores maintain their destination status amid stiff competition in the grocery market, and also perhaps paints the corporate giant of Tesco in a ‘cuddlier’ light by portraying the company as caring about the wellbeing of its customers and staff.

Ex-Honeysuckle pub in Coatsworth Road, Gateshead, prior to conversion to Tesco Express (15 Mar 2012)

While Tesco is pulling back from expansion of its Extra fascia, it’s clear where it sees future growth: in its Express convenience stores.

Tesco Express, Saville Row, Newcastle (4 Jul 2013)

In Gateshead, Tesco recently opened an Express store in the former Honeysuckle pub in Coatsworth Road – less than a mile from Trinity Square – while at least two others are opening this summer in Newcastle: one as part of the Portland Green student village in Stoddart Street, and another in Saville Row, just off the city’s prime retail thoroughfare of Northumberland Street.

Morrisons M Local, New Street, Birmingham (28 Jun 2013)

Last week, my tweeted photograph of work getting underway in Saville Row prompted quite an incredulous reaction in some parts, with comments ranging from “Who knew we needed yet another Tesco Express in Newcastle?” to “Great cos I really couldn’t be bothered to walk the 2 minutes to the other 2!”

Yet, while many people – rightly or wrongly – perceive Newcastle city centre to be already oversupplied with supermarkets and convenience stores, my recent visits to other big cities such as Glasgow, Birmingham and Manchester have suggested that Newcastle is relatively underserved in comparison. Unlike elsewhere, for example, there are still no Morrisons M Local stores on Tyneside, and no high street Aldi in Newcastle city centre either.

High-street Aldi in Manchester’s prime Market Street (1 Jul 2013)

So, while more of our largest Tesco Extras may yet acquire gyms – or, if reports are to be believed, branches of Sports Direct – there still seems plenty of scope yet for Tesco and its competitors to make their convenience presence felt on Tyneside’s high streets.

My retail consultancy business, CannyInsights.com, provides bespoke place- and sector-specific market intelligence, including detailed coverage of the North East. It also works with retailers nationwide to improve their stores, customer communications and market knowledge. For more information, visit www.cannyinsights.com, drop me an email, or give me a call on (0191) 461 0361.