Editor's Journal Part II: Brilliant Retailing

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Editor's Journal Part II: Brilliant Retailing

By Don Longo, Convenience Store News - 12/10/2007
Convenience Store News ' Editor-in-Chief Don Longo's travels across central England during the 2007 Future of International Convenience Retailing study tour and conference are further chronicled. (For Part I and visits to Brakes, SPAR and Tesco Extra, see CSNews' Nov. 19 issue or visit www.csnews.com.)

Produced by U.K.-based Insight Conferences in association with NACS, the study tour continues with visits to One Stop, the BP/Marks & Spencer joint venture, the London Bridge station and other stores in the greater London area. (Insight's next study tour and conference will be March 9 to 13 in Cork, Dublin and Belfast, Ireland, where some very innovative c-stores are located. For more information, visit http://www.insightreport.co.uk/conferences/gcb2008.

Tuesday, Sept. 25, 2007, Afternoon

After the visit to the environmental Extra store, we head to another Tesco-owned operation, called One Stop. Tesco acquired One Stop in 2003, but operates it as a separate neighbor-focused, promotional retail chain. There's no Tesco branding or signage anywhere to be seen.

However, Tesco has upgraded 300 of One Stop's 500-plus locations over the past two years and has introduced new fresh-food products to the stores' mix of traditional convenience items. Fresh fruit and vegetables have quadrupled in sales since their introduction last year and new sandwich and food-to-go assortments have been added. The company also introduced its own One Stop private-label brand in select categories recently. Canned baked beans are the stores' largest seller within its private label.

The store we visited in Pye Green is a 3,000-square-foot unit -- one of the largest in the chain. It is located in a residential neighborhood near an elementary school. The store's promotional strategy is illustrated with numerous "buy one, get one free" signs and customers appeared to be doing more than just fill-in grocery shopping at the store.

Regional manager Carol Ward, who is responsible for about 130 stores, takes us on a back-room tour. The manager's office is intentionally small and cramped to encourage him or her to be on the sales floor. Hand-held devices provide the manager with most of the information he or she needs at any time. The crew room is filled with reminders of seasonal promotions, a CD-ROM training schedule and lists of key performance indicators. The stock room is also tiny, ensuring that product received at the back door is quickly brought to the store floor.

Wednesday, Sept. 26, 2007, Morning

It's a balmy morning for London (60 degrees and headed up to the mid-70s) as we board the bus for our London-area store tour. First stop, London Bridge.

Both British Rail and the Underground are located at London Bridge station, one of the busiest spots in the city and the site of some of the highest volume convenience stores and kiosks in the country.

Our first stop is at M&S Simply Food. Marks & Spencer has approximately 280 Simply Food stores, including company-owned and franchised travel locations like this one at London Bridge station. The concept ranges from 1,500 square feet to 15,000 square feet. The famous British department store company also has launched a partnership with BP to open 150 jointly branded BP Connect-Wild Bean Cafe-M&S Simply Food stores across the country.

This 1,950-square-foot store opened last October. It is the second busiest Simply Food store in the U.K. in terms of sales per square foot, after the M&S Simply Food at Waterloo Station. Store manager Trevor Johnson tells me this London Bridge store does 200,000 pounds in sales per week (approximately $400,000)!

The store is staffed for M&S by SSP, a company that specializes in operating travel (train and airport) locations. There are between 70 and 80 workers.

The store originally had two 300-square-foot cold rooms, but to cope with the massive traffic, it recently expanded one to 900 square feet, for a total of 1,200 square feet of chilled product storage.

This store is merchandised with food-to-go on the right, followed by drinks, dairy, desserts, cheese, meats, poultry and wine. On the left side, there's fruit, salad, vegetables and deli. The checkout queue is lined with grab bags that can be filled with confectionery items, a practice that is being widely copied by other U.K. retailers. More than 37,000 customers per week pass through the tills. Twelve checkouts help keep maximum waiting time to four minutes. (Four checkouts would be a lot for most U.S. convenience stores.)

In my view, the most impressive display in the store is the wide selection of color-coded grab-and-go sandwiches, marked from green (vegetarian) to orange (chicken), blue (fish), red (beef) and purple (mixed). This is one area where U.K. retailers appear to be far ahead of their U.S. counterparts.

Another area where British retailers are seemingly taking the lead is on the issues of the environment and sustainability. Like Tesco, M&S also opened an environmental store recently. Retail Week, a British business magazine, reported that the first M&S eco-store, in Bournemouth, England, will use 25 percent less energy and have a carbon footprint 92 percent lower than a conventional store of the same size. Energy-saving features include lobbies at the entrances to cut heat loss and a green roof, using plants to capture airborne pollutants. M&S will open two more green stores before the end of this month: in Galashiels in the Scottish border region and at Pollok in Glasgow, Scotland, according to Retail Week.

After M&S, we tour two other SSP concepts: Whistlestop and Panopolis, both at London Bridge. SSP operates in 26 countries, with the U.K. accounting for half of its global sales.

Whistletop and Panopolis are complementary concepts, with the former focused on speed and grab-and-go foods like chilled drinks, prepared sandwiches, fruits, nuts and wine. Panopolis makes "inspiring sandwiches" with breads from around the world ("our passion is bread," reads a sign). It is more of a takeout foodservice operation than Whistlestop.

From the bustling urban center of London Bridge, the bus next winds its way north to Crouch End, a busy, affluent area. Here on the High Street (British term for downtown shopping center), we visit a Tesco Express and a Budgens (adjacent to one another).

The Tesco Express is a category C store, meaning it does more than 100,000 pounds (approximately $200,000) of business per week. Because of the affluence of area residents, this Tesco Express does not have as much price promotion signage as a category A Express store (less than 80,000 pounds per week) or even the Tesco One Stop store we saw in Pye Green.

Tesco's zero tolerance policy on queuing means that all staff is trained to work at the checkout. If more than three customers are in a line, a bell rings, sending all available staff, including the manager, racing to the front checkout to serve customers. Tesco advertises this efficient service blatantly with a clear window strategy that allows prospective customers outside the store to see the large, quickly moving queue area. Two of this store's tills are devoted to self-checkout.

Interestingly, while organics are just starting to make a splash at mainstream U.S. supermarkets, Tesco has incorporated organic products into the mix -- eliminating separate "organic" sections that were in the stores as recently as earlier this year. Also, this store features the new line of premium To Cook private-label brand prepared meals that are only available at "affluent" area Tesco stores.

Right next door to Tesco Express is Budgens, an independently owned store within the Musgrave Budgens Londis distributor group. Andrew Thornton, the owner, was an independent consultant before he started his own c-store and put into practice the things he was telling his clients to do. He said he's been so successful that he plans to soon open his second Budgens store.

Budgens are located in more than 25 countries, with stores ranging from 2,000 square feet to 10,000 square feet. Thornton's store is at the high end of the range, featuring signature departments, like its Fresh Market Street, and a c-store-within-a-store at the front end.

Signage throughout the store highlights the local source of many of the products, going so far as to indicate the name of the producer, where it is located and the number of miles from the store. The store signage also promotes the traceability of its meat and produce, and reminds shoppers that Budgens is a family-run independent business.

An innovative "personal" touch that U.S. retailers might want to try is the line of COOK ready-made frozen meals. Each COOK meal is packaged in cardboard and plastic wrap with a label that identifies the name of the person who assembled the meal. For example, "Salmon & Asparagus Gratin, Cooked by Robin McIntosh" lends a home-cooked touch compared to the mass-produced, microwaveable alternatives.

Around the corner from the Tesco Express and Budgens is another M&S Simply Food. This store is quite a bit different from the one we saw at London Bridge. At 3,000 square feet, it's bigger, and with a great-looking grocery presentation including lots of organic and natural products, it looks like more of a neighborhood market than a commuter-focused c-store like the other M&S. None of these stores in Crouch End have a parking lot, so they do a lot of walk-in business because of limited parking on the street.

M&S, like the Tesco Extra and the Budgens, does a brilliant job with informational signage throughout the store. The British retailers are really good at effectively communicating information about the quality and source of their products.

Next issue, we visit more Tesco Express and M&S Simply Food, Sainsbury Local, Harrods 102 and the first Whole Foods in England. For an online slide show of more photos, visit www.csnews.com.