British grocery giant Tesco has acquired streaming music service we7 for £10.8m.

Billed as the "Pandora of Europe," we7 decided in September 2011 to discontinue its on-demand offerings in favor a customizable Internet radio service. Its original backers include Peter Gabriel (RAIN coverage here and here).

The question you may be asking at this point, as TechCrunch asks in its headline, is: "What the heck is a grocery store doing buying a music streaming service?" 

The Guardian reports Tesco is one of the UK's largest CD retailers, so the company may be trying to stay one step ahead of consumers who are increasingly abandoning CDs, as TechCrunch writes. Tesco's digital director said, "This move will help us offer a greater choice for the growing number of customers who want to access music instantly on any device." 

"It’s reminiscent of Amazon’s digital strategy, of which Tesco is now surely a competitor," argues TechCrunch, "and ties in nicely with the retailer’s purchase last year of another UK startup, Blinkbox, which lets users stream Hollywood movies on-demand on the same day as their DVD release."

We7 gains potential exposure to a huge audience. "Not only is Tesco the UK’s largest retailer, it has around 5,000 stores worldwide, and operates in 14 countries, with a decent online presence too," writes TechCrunch.

You can find more coverage from the Guardian here and TechCrunch here.