Tesco, Virgin and the emergence of the ‘super-brands’

So, Tesco are to open physical bank counters in some stores and we hear of their record profits. But is there something more subtle happening in the emergence of super-brands? Tesco, for example, as well as groceries and consumer durables will also sell you telecoms,broadband, insurance,banking and much more. There seems to be no limit to what we will accept from our trusted brands.

Of course there has always been the principle for retailers to add to the range of products they sell – if you have the premises and the distribution, and it fits with your market strategy it makes a good deal of sense to diversify and maximise floor space revenue. It is the philosophy that gave rise to the department store. Similarly, the ’70s brought us the growth in ‘vertical’ integration.

What is happening now though is something rather different I would suggest, and the catalyst may well be the growth of virtual channels.  The growth of Tesco’s brand offer has not been driven by maximising distribution or floor or shelf space: indeed the expansion has been in services rather than physical product. They are moving the revenue centres away from the shelves. But what is critical is the growth of the brand and brand-trust. The brand has moved beyond food retailing and is exploiting the goodwill, reassurance and trust with which customers have imbued it.

We can see a similar phenomenon, but delivered in a rather different manner from Virgin. A record retailer that now sells telecoms, financial products, rail travel, air flights and even space travel (well, projected). But the foundation that makes this possible is a set of brand values that the public understands and shares across the various products and services on offer.  Virgin is a rather more quirky brand than Tesco and owes a lot to customers of the same generation as Richard Branson.  Somehow the values of a company that started in the music business have left their traces throughout the organisation. Like Tesco, the brand and its intangibles transcend the limitations of physical delivery and creates these opportunities.  The interesting project will now be to observe the growth of the next ‘super-brand’… who will it be?


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