Editor's Journal Part 1: Brilliant Retailing

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Editor's Journal Part 1: Brilliant Retailing

By Don Longo, Convenience Store News - 11/19/2007
To say that British convenience store retailers are far more advanced than their U.S. counterparts in foodservice and operations would be inaccurate. However, when it comes to merchandising grab-and-go sandwiches and take-home meals, they are way ahead of most North American c-store chains. They also do what one Londoner termed "a brilliant job of communicating their efforts to sell locally grown product and tout their eco-friendly business practices."

I had the opportunity to see this firsthand during the 2007 Future of International Convenience Retailing study tour and conference, produced by U.K.-based Insight Conferences in association with NACS. In addition to presentations from a spectrum of c-store executives from across the globe, the event included two tours to notable British c-store retailers from the West Midlands to London.

Over the next few issues, Convenience Store News will publish excerpts from the journal of my travels across central England.

Sunday, Sept. 23, 2007

During the cross-Atlantic flight, I read that each person in London gets photographed, on average, 300 times a day by a closed-circuit TV camera. I believe it. I was captured on camera at least three times just on the walk from the jetway to customs.

According to the article, England began an ambitious surveillance program in the 1970s to ward off bombs from the Irish Republican Army. The program became even more comprehensive with the rise of Islamic terrorism. Today, Britain has 4.2 million surveillance cameras, or one for every 14 persons.

Some people might decry this as an invasion of privacy, but I'm pretty sure most people living or working in New York City, Washington and other terrorist targets would find this comforting. The cameras were instrumental in tracking down suspects after the London subway bombings in 2005 as well as July's failed car bomb attacks in London and at Glasgow Airport. So, as far as I'm concerned, they can take all the pictures of me they want. My privacy is not so important that I want to see anybody's life in jeopardy. Unfortunately, this is a tradeoff we'll need to make in today's dangerous world.

We've got some time to kill before checking in at my hotel, so my wife, Susan, and I do some shopping and sightseeing. As usual, I'm exhausted from the overnight flight and can barely keep my eyes open, while Susan is re-energized -- it's either the cool, moist London air or the prospect of visiting some of her old, familiar shopping locales. What am I saying? Of course, it's the shopping.

Tuesday, Sept. 25, 2007, Morning

I catch the 6:36 a.m. train from London's Euston station to Birmingham, spending the hour-and-a-half ride reading the local newspapers, which focus on: new Prime Minister Gordon Brown, who says he may call for new elections less than 100 days after taking over from Tony Blair; Victoria Beckham's botched breast implants; the still-missing little girl, Madelaine McCann; an inquest into the death of Diana, Princess of Wales (10 years late); and the same mortgage and credit default problems as here in the U.S. The train ride is fast and on-time, something that appears to be a foreign concept to Amtrak in the U.S.

In Birmingham, I take a quick taxi ride to The Belfry Golf Club, the departing point for the West Midlands study tour.

The Belfry was the site of the 2007 British Masters, which concluded over the previous weekend, with a win by Lee Westwood of England, who made two big putts on the last three holes to take the tournament. I meet up with the tour group in the hotel lobby and board a bus by 9:30 a.m. for our first stop: the Brakes foodservice warehouse and distribution facility in Tamworth. (There were two buses, each with about 30 people from 20 countries, including representatives from Wawa, Kwik Trip and Petro-Canada in North America, Tesco Express in the U.K. and retailers from Iceland, Denmark and Thailand.)

Brakes is the largest foodservice wholesaler in the United Kingdom, serving 60,000 customers from independent and chain c-stores to hotels and fine-dining establishments or -- as one Brakes' employee referred to them -- "tantrum chefs." (Cantankerous TV chef Gordon Ramsey's restaurant is one of Brake's customers.) On the c-store front, the company services the Country Choice brand, which is a popular in-store bakery program at many retailers.

This 350,000-square-foot site is a 24/7 operation, staffed by 400 people moving 1,700 product lines and 15.8 million items per year on 84 multi-temperature trucks, or lorries, as they are called here.

Our tour takes us through the refrigerated part of the warehouse, where the temperature is kept at minus 22 degrees Centigrade (0 degrees Centigrade is freezing, of course). Shaking off the cold, we are then escorted through the bustling call-center, sales offices and fleet tracking department. Although the entire site runs on an SAP system and executives said they were testing voice pick and satellite navigation technology, I am surprised at how low-tech the facility appeared to be considering Brakes' substantial size.

Soon we are back on the road again with the hills of Wales visible in the distance to our west as we make our way to an innovative new concept, SPAR convenience store in Shrewsbury. SPAR U.K. operates more than 2,500 stores. SPAR is an international retail franchise comprising more than 13,700 stores in 33 countries.

This SPAR has a BP forecourt station. (Many British c-stores do not sell fuel. In fact, most of the ones we visited did not.) The site is located on a traffic island that has 40,000 vehicles a day going past and projected fuel sales of 6 million liters a year. Since 3.79 liters equal a gallon, and gas prices were nearly 1 pound per liter at the time of my visit, gas prices in the London area were almost $8 per gallon. And Americans complain about gas prices? The site also has a car wash.

SPAR Battlefields, as this store is called, is a built-to-suit store of 4,100 square feet with 3,000 square feet of selling space. The store is open 24 hours and has a liquor license. Food-to-go is the main driver of sales and takes up 25 percent of the floor space.

Inside, the store contains the first Treehouse smoothie and juice bar for SPAR in the U.K. (The Treehouse debuted in Irish SPAR stores last year). The store also has low-level fixtures, and new signage, including a Meal Deal promotion providing customers with a preprinted paper bag they can fill with a soft drink, sandwich and candy bar for just 2.50 pounds. It's also one of the few U.K. c-stores with hot foodservice -- in this case, hot ciabatta sandwiches, baguettes and wraps, as well as hot fried chicken meals. The store also has a small dining area and in-store video screens showing news and special promos. Other innovations include an Irish-inspired Simply Coffee station (coffee is so undeveloped here compared to the big islands of coffee pots seen in the U.S.), and a wide range of chilled wines and beers.

Next, we take a short ride over to Tesco Extra, the retailer's large supercenter-type store, also in Shrewsbury. Tesco is to English retailing as Wal-Mart is to the U.S. retail market. The company is huge, operates a variety of store concepts (from supermarkets and hypermarkets to convenience and general merchandise-only stores), and is the target of media scrutiny. And, like Wal-Mart in the U.S., Tesco has decided to take a leadership role in an area where it could garner much better headlines: the environmental movement. This Tesco Extra is the retailer's fourth large "environmental" store. The store features a host of energy-saving systems. An environmental Tesco Express convenience store is slated to open this year.

At the store we are met by Richard Denton, head of environmental design for Tesco. According to Denton, speaking at the 60,000-square-foot store, Tesco -- as the U.K.'s largest retailer -- feels an obligation to take the lead on the environmental front, with the goal being to reduce the company's carbon footprint by 60 percent.

The eco-store pushes engineering ideas to reduce energy usage, sells more recyclable items and engages the customer with loads of in-store messaging about the importance of being Earth-friendly and what Tesco is doing.

Denton insisted that the motivation behind Tesco's environmental efforts wasn't just a media ploy -- even though the store is filled with messages (signs and video screens) explaining the store's eco-friendly features and their impact on reducing the chain's carbon footprint.

On the engineering front: The roof has sun receptors to capture solar energy for use in the store as well as large skylights that reduce the amount of electricity needed for lighting. No electricity is used for lighting during the day, and the back office is naturally lit using light tunnels. Signage is made of recycled wood, printed with natural dyes.

The store frame is made from renewable wood from sustainable forests in Finland -- instead of steel -- and store fixtures are made of wood, instead of traditional laminates. Denton said the exposed timber gives the store a warmer feel that customers prefer.

A cold-air retrieval system takes excess cold air from the refrigerated aisles and pumps it into other areas of the store in lieu of air conditioning, and boreholes beneath the store push natural heat from underground up into the store to heat water in winter and aid in cooling in the summer. Chillers and freezers are lit by low-wattage LCDs and store refrigeration is based upon carbon dioxide instead of chemical CFCs. "A lot of small energy reduction features can result in big savings," Denton said.

The store also has the U.K.'s first fleet of battery-powered, zero-emission home delivery vans for fulfilling orders made online at Tesco.com. Tesco certainly should be commended for its Earth-friendly efforts, although I question some of the company's claims about how much energy it is saving. After all, it takes more energy to recycle some items than to make them from scratch. I've read a lot about global warming and things just aren't that simple. It's very difficult to assess all the environmental consequences of every so-called Earth-friendly effort.

The inside of the store is similar to a Wal-Mart supercenter. Apparel, general merchandise and groceries are all merchandised under one roof, although at the time of our visit -- midday -- there didn't seem to be much action in the apparel and general merchandise side of the store.

One sign of what U.S. retailers can expect to see when Tesco opens its first stores in America -- a banner hanging above an aisle read: "5p Off per Litre of Petro or Diesel When You Spend 50 pounds or more in the Store."

In the next issue, we visit One Stop, BP/Marks & Spencer, M&S Simply Food, Whistlestop, Tesco Express and Budgens.