Tesco (Spicer Haart) are back with £999 Agency Offering

Apologies for once again writing about a challenger to the traditional estate agency service, but they're coming out thick and fast at the moment and I think there are important lessons for us all to learn from these new approaches.

After months of speculation as to how they would do it, Spicer Haart have sort of unveiled their new estate agency service using the Tesco brand. iSold.com offers a fixed price estate agency service for £999 and is being launched in Bristol this weekend. A curious decision to launch it under a new brand name with the Tesco name merely being used in association, but probably more to do with branding rights than marketing strategy. However, unlike when Tesco launched Tesco Property Market, I think it is probably the right call to launch it in one area where marketing and PR efforts can be focused and delivery can be managed rather than nationally where they end up with a couple of instructions here and there. The Foxtons approach to new offices was always to divide and conquer one town at a time and I would expect iSold to adopt a similar strategy. The price is a likely to be a crowd puller and their tech is also going to be quite slick by the looks of things. I registered on the site this morning for updates and within moments, I received my fully personalised update...

EA Today had comments from some this morning mocking Spicer Haart for undermining their own business model. I don't think any of their brands operate in Bristol itself anyway, but on the basis that iSold will go national at some point, is there any merit in this criticism? Who better to set up an Estate Agency business that can operate more efficiently at lower margins than the established players in the industry than one of it's biggest players?

If you are able to run a very tight ship on the estate agency front; low office costs and massive discounts from suppliers; newspaper advertising, fleet vehicles not to mention portal listings, then you can operate on much tighter margins than the good, local agent with higher relative overheads. What's more, SpicerHaart have profitable operations in many areas relating to the core business; Mortgages, Conveyancing, Surveyors and can make plenty of money on referral services without worrying too much about the profitability of the estate agency operation on its own.

Under the Haart brand, they opened a 'super office' last year in Milton Keynes which very much adopted the Tesco model of an out of town location with plenty of parking serving a large catchment area. Open longer hours, it's more convenient for the consumer and cheaper than running several high street locations that nobody visits through fear of being ticketed or towed. iSold appears at first glance to be further refinement of this concept; eliminating unnecessary cost without compromising the customer experience.

They also seem to be taking another leaf out of the Tesco business manual by launching with "Essential", "Premium" and "Premium Plus" levels of service. Echoes of Tesco's own structure of offering a Value range, Normal (this one is just called Tesco I think) and Finest. 

Many other industries adopt similar models: Airlines have Economy, Business Class and First Class. Car manufacturers have S, SE, GTi and various other iterations on the same theme. Depending on what you are buying and the importance that you place on it, you choose a level of service, but most importantly, your choice is between different levels of service from the same company. Traditionally, to choose between estate agency services has meant choosing between agents. The trick is to ensure that the most popular tier (usually the middle one) is also the most profitable. Does the difference in service and legroom for Business Class travel really justify the extra expense?

I also wonder if those that enquire to sell through iSold would be offered an upgraded service provided by Haart or Spicer McColl at some point in the process once they go national? Maybe after they've been on the market a few weeks? Maybe straight away? Different levels of service can just as easily be offered by one company using different core brands instead of sub-brands. This is the tactic which has brought success to the Fine & Country brand in the last few years, giving middle market operators access to those plum instructions at the top end that their core brand never had any presence with.

I am sure that if you can afford it, there is only one way to fly; First Class, but not all of us can and in these times of enforced austerity we may choose to compromise. There is a world of difference between Value and Cheap though and I cannot see Tesco allowing their name to be associated with anything that provides poor customer service. I would expect they have planned this carefully to ensure they can provide a very decent basic service for £999. In Bristol at least, continuing to be a reassuringly expensive agent just got a little bit trickier.

Comments

[Martin Smith]

Great minds Dan :o) I just blogged "Tesco versus the knowledgeable local estate agent" @ http://bit.ly/9g2Ofu

It's a good follow-up to a previous comment I posted on the increasing number of agents looking to provide more modern pricing.

Martin