Creating a multi-million-pound impact from unused parking
British multinational grocery retailer, Tesco pl,c was founded in 1919 by Jack Cohen, who began selling surplus groceries from a stall in the East End of London after the war. Fast-forward more than a century and Tesco is now the third-largest retailer in the world. This is measured by gross revenues, amplified by selling surplus parking through the YourParkingSpace marketplace.
Over recent years, Tesco car parks have been under the close scrutiny, due to being the company’s second-largest asset and an untapped revenue source. Historically, Tesco parking has only been available to direct customers with some locations enforcing a maximum-stay parking period (typically 2-3 hours depending on the store) to deter non-shoppers from using bays intended for customers. These two key restrictions resulted in surplus parking and presented Tesco with an opportunity. Similar to that in which the foundations for Tesco were built back in 1919, to unlock value from these underutilised assets.
Total Cars Parked & bookings
Revenue generated in store from pre-bookings
At the time when the Tesco parking portfolio was considered for a revenue generation solution, the only options available were traditional management providers with a single-tariff drive-up model. Their limitations of being unable to charge different tariffs to different customer segments meant that in order to generate revenue from underutilised parking bays, Tesco would have to charge all users of the car park, including their customers. This was a deal-breaker and the ultimate reason the project was benched for a number of years.
In early 2019, Tesco partnered with YourParkingSpace to generate revenue from excess parking spaces through our online marketplace. With a model capable of facilitating multiple customer segments at differing tariffs, direct shoppers were able to continue to benefit from free parking (in some cases limited to 3 hours) with uninterrupted space availability. Tesco uses YourParkingSpace Pre-Book to dynamically collect occupancy data and generate meaningful revenue from surplus parking on a short-term and long-term rolling monthly basis.
The Tesco parking portfolio presented significant commercial opportunities off the back of rich occupancy analysis and predictive availability mapping. We gathered a controlled number of excess parking bays at qualifying Tesco stores and marketed them using a multi-term strategy (daily and monthly) to our online audience of drivers searching to pre-book parking at an optimised market rate. Through this new channel, Tesco was able to monetise their otherwise free car parks with zero complaints logged by store management or direct shoppers to date.
By the end of 2020, we had secured circa £600,000 annualised revenue via YourParkingSpace Pre-Book for Tesco. For the partnerships team at Tesco, translating what this revenue meant in terms of in-store spend was a valuable perspective. Tesco’s average profit margins are 3.8%, meaning our £600,000 annual pre-book revenue equates to £15.4 million in in-store spend.
First time visiting the store booked
Made a purchase from the store booked
Now more likely to shop in Tesco:
With brick-and-mortar stores competing with the speed and convenience of e-commerce, Tesco has been able to create convenient shopping experiences through connecting a necessary task like parking with a daily errand like food shopping.
A 2020 survey of pre-book customers that parked at a Tesco location found that 69% of drivers made a purchase from the store they booked, with 17% spending over £30 in store. Based on YourParkingSpace booking numbers, we’ve been able to calculate that the average in-store spend per pre-book customer at the end of 2020 was £12.20. This equated to a staggering £438,773 of instore revenue generated from pre-book customers, pure profit for Tesco plc.
The same 2020 survey identified that 50% of Pre-Book customers had never previously visited the Tesco store they had booked. The visibility achieved through the YourParkingSpace online marketplace highlights the marketing power available to asset owners and the opportunity to tap into an alternative online audience to generate revenue not just from parking, but from core products and services that can be experienced through creating a hybrid convenient experience. As a result, 35% of Pre-Book customers are now more likely to shop in Tesco.
The Tesco retail partnerships team are currently reviewing a YourParkingSpace Pay-By-Mobile proposal that will see our partnership expand into a new product beginning with a small trial at 9 qualifying stores.
Tesco recognises there is still commercial opportunity to be leveraged from spare capacity within their car parks. As a sensible next step, surplus parking will be made available to the general public in the local area that wants to pay and park. The YourParkingSpace solution boasts of strict controls to cap the number of available drive-up spaces in line with actual occupancy, creating an additional customer channel without the risk of eating into spaces necessary to serve direct shoppers.