Tesco Launches Antiques Goldshow with Pawnbroker Brand Extension

With every passing day it seems the future envisioned by the 2006 film Idiocracy becomes more possible. In the not-so-distant future of Idiocracy, retail brand Costco has come to service nearly every human need, even law school.

Brit retail giant Tesco, with its plethora of businesses, seems to be vying with Virgin for that one-brand-fits-all title in the UK. With banking, fashion, fuel, filmmaking, insurance, optical, pharmacy, residential communities and a record label under its vast retail umbrella, Tesco's latest move sees it expand into the pawn business.

In partnership with UK pawn brokerage Ramsdens, Tesco will be offering a gold exchange to pay cash for customers' gilded valuables. Could this be a genius brand leveraging move — or a brand embarrassment in the making?

Of its new cash-for-gold service, Tesco is "vowing to raise standards in the industry with a competitive pricing scheme." It's certainly chosen a good time to make the promise, as the "cash for gold" industry has been plagued by anecdotes of unfair pricing and near outright thievery.

Tesco's name recognition and brand foundation will automatically translate to some degree of consumer trust. Gold trading itself is also an excellent brand loss leader, a simple customer service offer that puts boots on stores at little expense. Costco has already gotten to the business of undercutting the competition, offering £7.81 a gram against market-leading offers of £6.50 a gram.

The gold craze has manifested itself in odd marriages in America as well. The first gold vending machine in the US last year launched in (where else?) Florida by Gold to Go of Germany, which has plans to see 30 gold-dispensing ATMs nationwide this year.

The true risk for Tesco is gold itself. While the precious metal remains more precious than ever, and analysts predict little change in 2011, gold won't fly so high forever. If the retailer develops its gold service with as little infrastructure investment as possible, it will put itself in a good position to quickly close up shop when prices no longer make giving cash for gold a profitable enterprise.

Also, while its planned foray into mortgage brokering is delayed by a UK review, we have an idea for its next business: Tesco Security, to escort all those customers trading their family jewels for gold back to the parking lot.