Editor's Journal Part III: Brilliant Retailing

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Editor's Journal Part III: Brilliant Retailing

By Don Longo, Convenience Store News - 01/14/2008
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 Parts I and II, and visits to SPAR, Tesco Extra, One Stop, Marks & Spencer Simply Food, Budgens and more, see CSNews' Nov. 19 and Dec. 10 issues, or visit www.csnews.com.)

Produced by U.K.-based Insight Conferences in association with NACS, the study tour journal continues with visits to Tesco Express, Sainsbury Local, Harrods 102 and the first Whole Foods store in London. (Insights' 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, go to http://www.insightreport.co.uk/conferences/gcb2008/.)

Wednesday, Sept. 26, 2007

From Crouch End, we go to Wood Green to see another, different-looking Tesco Express. This one has a parking lot and is clearly merchandised to a less-affluent consumer with lots of promotional pricing offers. Many of the signs promote the price cuts that Tesco Express made on 300 items earlier this year. Even in this less-affluent area, this store does an amazing amount of business (pushing close to 90,000 pounds per week in sales, according to the store manager).

Because of the car park, basket sizes are bigger in this 4-year-old Express store, which was recently refurbished. Unlike Crouch End, this store has a Coffee Nation vending machine (you'd think with Starbucks popping up all over England that British c-stores would have a better coffee presentation). In-store bakeries are big at most c-stores here. This one has a secondary bakery fixture that is replenished multiple times during the day. Like Budgens, Tesco Express lets its shoppers know where its meat comes from.

By midafternoon, we are in upscale Knightsbridge. J. Sainsbury is the third largest supermarket retailer in the U.K. It also has a convenience store division called Sainsbury's Local. The one we visit is on Brompton Road, adjacent to the company's modern, glass-enclosed headquarters offices.

The 3,000-square-foot store is open from 7 a.m. to 11 p.m. and is especially busy at lunchtime due to the many office workers in the vicinity. The store manager tells me that sometimes the checkout line winds its way entirely around the perimeter of the store despite having nine tills in operation, as well as separate lottery and PayPoint kiosks. "We have 32,000 customers a week, which is a massive flow of customers," he said. Sainsbury operates 170 Local c-store units in the U.K., he added.

The store is busy when we visit, yet compared to the M&S Simply Food and the Tesco Express, Sainsbury Local is pretty unimaginative. The most interesting offer is the gift card fixture. Although this is standard in the U.S., Sainsbury's was the first U.K. retailer to roll out the gift card category with a program from InComm, according to the folks at Insight. The average spend for gift cards in Sainsbury's is 20 pounds.

Upon my return to New York, I find out that Sainsbury appointed a senior Tesco executive (Dido Harding) as director of its convenience stores -- so I expect some updating will happen with the Sainsbury c-store look.

Our next stop is a trip from the mundane to the sublime as the bus pulls up in front of Harrods 102, the "luxury" convenience concept operated by Harrods, the largest upscale department store in the country. Opened in March 2006, Harrods 102 features an in-store bakery, a full-service dry cleaner, a Chinese herbal bar, a traditional pharmacy, a fresh-food department, a grocery section, a juice bar, a florist, a sushi restaurant and a concierge desk for home delivery.

Interestingly, 60 percent of the product lines in the store are unique to Harrods 102 and not sold by the larger department store. The store has been remodeled once since its opening, with more low-height merchandising units added and a greater emphasis on fresh food. Looking out of place among all the upscale offerings is a Krispy Kreme doughnut fixture.

The most unusual site of the entire trip, by far, is watching several conference delegates sitting at the OxySpaBar, breathing pure oxygen through nose tubes while sipping a beverage.

The final stop on our London tour is at the first Whole Foods store in the U.K. Located in Kensington -- one of the city's most upscale shopping districts -- the store occupies three floors of a historic building and features eye-popping displays of organic produce, prepared hot and cold food to go, towers of cheeses and a huge wine section. This Whole Foods store is to traditional supermarkets what the giant Toys "R" Us store in New York's Times Square is to traditional toy stores.

I have to admit, though, that after spending 45 minutes wandering the cavernous aisles of this giant natural food store -- with its tons of organic vegetables, grains and fruit -- I start to get cravings for a nice, big greasy cheeseburger smothered in onions.

According to reports in Retail Week, Whole Foods is considering opening its second U.K. store in London's most affluent business district, Canary Wharf. The chain is also eyeing areas outside of London and has pinpointed Bristol and Manchester as possible locations for stores.

Thursday, Sept. 27, 2007

The day will start and end at The British Library, a modern facility adjacent to the King's Cross rail station. The national library of the United Kingdom, it holds more than 150 million items in all known languages and formats, including 25 million books as well as manuscripts and historical items dating to 300 B.C. In this historical setting, more than 170 delegates gather to hear and discuss the Future of International Convenience Retailing.

The first speaker, Neill Sherrell, managing director of consulting firm srcg Ltd., presents five global consumer trends that retailers are seizing upon to differentiate their businesses. The five themes are experiential (examples -- Sheetz, Wawa, Trader Joe's), individualism (Nike's design your own sneakers, Tesco's use of customer loyalty card data), eco-establishment (McDonald's converting all of its U.K. trucks to biofuel from its own used shortening), well-being (Whole Foods' in-store health advisers) and back-to-basics (renewed emphasis on family values, expanding demand for locally grown food, farmers' markets).

"The challenge is to align your strategy to the trend or trends that resonate most with your shoppers," Sherrell said.

Jill Bruce, head of Marks & Spencer's c-store concept, Simply Food, gives a brief history of how in just five years, the venerable British department store chain took an idea that started in the food halls in the basement of its stores and created a chain of more than 270 Simply Food c-stores throughout the U.K. and Ireland.

"We used to be a clothing retailer with food halls -- now half our total sales come from food," said Bruce, and 30 percent of Marks & Spencer's food sales come from Simply Food. Bruce also said that M&S is opening two to three Simply Food stores per week.

The key to the concept's growth is its flexibility, ability to work profitably out of 1,500- to 2,000-square-foot units at train stations to 7,000-square-foot freestanding locations to large 3,000- to 15,000-square-foot city center office locations. Or, it can fit into 2,000 square feet of a 4,000-square-foot combo store cohabitated by Simply Food and BP Connect.

"We started the chilled prepared food market in the U.K. Now, everyone's doing it, but we still feel we are the innovators," Bruce said. "Customers want fresh food on tap when they want, where they want it."

Andy Davis, trading director for BP U.K., elaborates on the rollout of the BP Connect/M&S Simply Food sites. There are currently about 75 combined stores with the target of growing the count to 150 by the end of 2008. Davis relates that one of the biggest challenges for the company is that customers have higher expectations due to the M&S brand. "Are we delivering on those expectations and are customers happy? Can we keep our traditional customers and please new ones? We ask these questions every day," Davis said.

Other retailer speakers are Leo Crawford, BWG (SPAR Ireland) CEO; David Johnson, Wawa (U.S.) executive VP and COO; Garth Greyling, Engen South America retail strategist convenience; and Debbie Robinson, Co-operative Group director of food retail marketing.

For more photos of innovative British c-stores, visit www.csnews.com and view our Future of International Convenience Retailing slide show.