Will Tesco’s Kelly’s Market concession prove a worthy replacement for food counters?

Since Covid, Tesco, Sainsbury’s and Asda have closed many meat, fish and delicatessen counters in a move towards prepacked range. There is debate about whether this is the right thing to do.

Is it a way to cut costs, in the battle versus Aldi and Lidl? Yes. Does it remove what could have been a key point of difference versus Aldi and Lidl? Probably. Does it leave the field open for Morrisons and Waitrose, to differentiate more clearly? Yes.

Whatever you think, the fact is many large supermarkets now have a decision to make: what do they do with the space where counters used to be?

One of Tesco’s responses is Kelly’s Market, a new concession that I visited last week in Wokingham.

It sits at the back of the store where meat and deli counters would have been. There are four world food concepts on offer from one long counter: CKN + BAO, BamTuk (noodle and rice dishes), My Little Dim Sum and Dos Mexicanas.

Food is available cooked to order, stored in ‘hot hold’ or to heat at home. There are also snacks, sauces and soft drinks, and a well-presented freezer of Little Moons mochi ice cream. Shoppers pay at the Tesco tills, along with their grocery items. You can’t order on Deliveroo, but I expect this will change.

So what stands out when you visit this ‘store within a store’? Three things struck me.

First, Kelly’s Market is offering something properly different. Yes, similar hot food might be assembled from ‘the normal grocery aisles’, but very few shoppers would think to do this, or even know how. And the Japanese and Korean snacks, sauces and drinks will be totally new to most. So, for most shoppers, this will feel like something new.

Second, the design, upkeep and presentation of the area is exciting and has aspirational appeal. The counter is smart, modern and spotlessly clean. Staff are well turned out. The menu screen has good food photography. The food looks high quality and fresh. The overall impression is similar to what you’d get at a successful independent Asian outlet in an upmarket urban area, or a food market.

Third, Kelly’s Market prices are significantly higher than what shoppers pay in the rest of the store: £7 for a quesadilla, £5.70 for a Duck Waffle, over £2 for an individual soft drink. Yes, this is a different meal occasion, with a different competitive set versus the rest of the store, but will shoppers feel a natural temptation to compare what they could get a few aisles away?

Supermarkets have periodically tried to bring more foodservice business into their stores. Look at the number of sushi concessions in Sainsbury’s and Waitrose. And Tesco has to do something with the space. It will be interesting to see if Kelly’s Market can attract a local fanbase, retain its high standards and justify the price premium.