Tesco plc (LON:TSCO) adds another independent chain to its portfolio.
Warren Buffett may be on the lookout for elephants, but Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US) is on a safari of its own. The retail giant announced the acquisition of Giraffe -- a family owned chain of 49 restaurants -- for just under £49 million.
After the recent hoopla about Tesco's investment in coffee chain Harris + Hoole, critics will likely see this as another dastardly attempt to fool shoppers into giving more money unsuspectingly to the behemoth.
Another way to look at it, however, is that Tesco is taking its next step in retail evolution. The company has innovated many of the standards of the retail industry but it -- and its competitors -- will need to continue to innovate if they are to survive the cutthroat nature of low-margin retail.
We've seen Wm. Morrison -- the fourth of the UK's top four grocers -- report declining like-for-like sales recently, in part because it lacks convenience stores and an online offering -- the two fastest growing areas in grocery.
With a strong presence in both convenience and online, this acquisition is an early move in Tesco's latest efforts to differentiate itself from Sainsbury's and ASDA, and at the same time possibly rejuvenate sales at some of its hypermarts.
By bringing companies like Harris + Hoole and Giraffe into its stores, not only does Tesco improve the shopping experience on offer -- Giraffe is a popular place to families dining out, and mum can pop in with the kiddies for lunch before filling up the trolley -- it could create a revenue source to replace the non-food items it is pushing to online.
It is far too early to tell if this acquisition -- or the roll out of Harris + Hoole stores -- will have its desired effect, but it is a bold move by an industry leader to maintain relevance as the world of retail evolves.
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> Both Nate and The Motley Fool own shares of Tesco.