Tesco is rightly backing the innovation agenda

You can’t have been on LinkedIn over the past few weeks without seeing countless ‘challenger’ brands announcing launches into Tesco. So even if we hadn’t been in on it, we probably would have guessed something was afoot in Welwyn Garden City.

Cue a press release announcing the launch of the ‘Tesco Accelerator Scheme’ last Wednesday.

As some of the only people in the room not from the retailer or one of their suppliers, we were grateful to be invited to the big launch day as an industry partner.

And it’s fair to say the buzz in the Heart Building at Tesco HQ was palpable. In the room were 27 passionate and excitable brands showcasing their ranges to the equally passionate and excitable Tesco team. And understandably so – the accelerator programme is bigger and more supportive than anything we have seen from the retailer to date.

Since then, we have been asked by brands, investors and other retailers for our insight on the scheme. Details aside, we see three criteria as being key to success: internal sponsorship and engagement, meaningful resource investment, and thoughtful sourcing and merchandising.

The sponsorship is there – every level of the Tesco organisation was in the room and part of it. And engagement was there – the buzz from the colleagues was all the statement needed of internal buy-in.

Resource investment is also there – I see the growing team sitting behind the programme and the way in which they are leaning on organisations like ours to get it right the first time. I see the financial investment sitting behind the programme, and more will be released on that.

When it comes to the sourcing of the brands, they vary hugely in scale and growth stages. From one-man-bands like Jamaica Rum Vibes, to fairly established Tesco suppliers like Crosta & Mollica, programme participants span multiple categories and need states, and there is a clear DEI strategy too.

Even with that, you could see the golden thread of sourcing leading back to Tesco’s pillars: customer, communities and planet.

So, we have ticks against sponsorship, investment and thoughtful sourcing.

Now the devil is in the detail: how it comes to life in store, how the brands retain priority in the context of a wall of investment coming from big fmcg, the package of support for the brands, and much more. The tricky bit now for the Tesco team is to adopt the challenger mindset themselves, and adapt to the needs of a new supplier base. From what I see, they are up for it.

On the flip side, the brands will need to invest to seize this opportunity and ensure they are set up to scale. For all, it’s about keeping momentum so the programme gathers its own pace.

At YF, we are celebrating the biggest retailer in the country seriously backing the innovation agenda we work hard to drive. As partners also close to the Waitrose and Ocado teams on their strategies, we are confident the market is moving at pace in the right direction and we welcome seeing news from Sainsbury’s, Asda and Morrisons this year.

After a challenging few years of trading, with lost confidence from both retailers and investors looking at the challenger fmcg space, this is the bellwether the industry needed. It reminds everyone that, through cost pressures and recessions, through supply chain challenges, through consumer confidence lapses and price sensitivities, shoppers do come first. And they still want to be inspired. They still want new products. They still want to reduce their impact, eat healthier and look after themselves.

That means for retailers and investors, there is still an eye-watering profit opportunity if they give consumers what they want by backing the right horses in the new brand space.

The value equation is unquestionable and we are delighted that Tesco is recognising that.