All c-stores look good on their first day of trading.

The shelves have been meticulously stacked, the floor is spotless and all the lights are positioned perfectly to show off the delights within at their absolute Sunday best. So it’s not always easy to judge just how impressive a new store actually is.

Having said that, Morrisons’ first venture in the world of the convenience store – M-local – does appear to be a genuine new take on convenience retailing as we know it. The Bradford-based retailer may be a bit of a ‘Johnny come lately’ to the sector but it could possibly have got one over its more established big-box rivals. Indeed, its biggest problem might actually be rolling out quickly enough before they plunder all of its bright ideas.

There are a number of factors, which set M-local apart, but Morrisons’ main boast is that it is able to offer a much wider range of fresh food, and that for these products there is no mark-up on the prices charged at its superstores – unlike its rivals’ smaller format operations.

When CEO Dalton Philips announced last year that it would be making the move into convenience, he promised that Morrisons would be looking to bring something truly different to the format and suggested this would be with regard to fresh food. For years, independents have struggled with the issue, wanting to offer a better range of fresh and chilled foods but having to balance this against the risk of high levels of wastage. The problem remained largely unsolved even when the likes of Tesco and Sainsbury’s arrived on the scene with their sophisticated supply chains. Today most c-stores still pay little more than lip service to the idea that small stores can really do fresh.

In Ilkley, Morrisons is tackling the problem head on and seeking to turn it into a major opportunity by employing a new fulfilment model. The 2,946 sq ft store’s slower-moving ambient lines will be delivered via the normal methods from the nearest DC, but its fresh produce, meat, fish and bread will come via five daily deliveries put together at Morrisons’ 40,000 sq ft superstore in nearby Keighley.

This hub-and-spoke model will help the retailer keep a close eye on demand while enabling it to avoid the equally destructive pitfalls of extreme wastage or empty shelves. Morrisons’ claim that it can run this apparently high-maintenance model and yet still offer cheaper prices than any other c-store in the market is the real masterstroke, though. Shoppers coming into the store for the first time will all no doubt be impressed by how it looks – as good if not better than any M&S Simply Food, Little Waitrose or high-end independent – but they would not keep coming back if the price were seriously out of kilter with what regular Morrisons shoppers would expect.

Morrisons says it can keep prices low thanks to the fact that the store is stocked with a much higher ratio of fresh food and own-label products, which are sourced through its vertically integrated supply chain. Two fifths (40%) of the store’s 2,270 products are fresh foods, a figure that Philips claims is 30% higher than any of its convenience rivals can boast. This will be made up of a minimum of 100 lines of fresh fruit and vegetables as well as a strong presence for fresh meat, fish and bakery.

The ‘tilt’ is not as high
Because of its unique supply chain, Morrisons claims to have significantly higher margins on these lines than other supermarkets and so is able to run this model without increasing prices.

Not all products in the Ilkley store are the same price as in its bigger outlets – about 25% of the general grocery lines, a mixture of branded and own-label, are more expensive, but, according to group finance director Richard Pennycook, the “tilt” is not as high as at its rivals.

Of course there is more to life than price and there is much to admire in M-local. The bakery section is stocked with fresh loaves baked daily from scratch in Keighley, while the cuts of fresh meat and fish are also prepared daily by Keighley’s butchers and fishmongers. What stands out here is the breadth of range – which even includes fresh King scallops. “You just won’t find that in other convenience stores,” claims group commercial director Richard Hodgson.

The store also has the feel of an independent in that, unlike some of its big box competitors, Morrisons is attempting to offer real customer service. “If you were thinking of cooking a couple of steaks for an evening meal but wanted one cut thicker than the other, if you tell us before 11am we can have it delivered to Ilkley for you to pick up before six,” says Hodgson.

Equally, shoppers can order meat or fish not stocked in the store but available in Keighley to be picked in Ilkley for no extra charge.

‘A good offer, well delivered’
Other innovations include a fresh salad bar, freshly squeezed orange juice and a grind-your-own-coffee terminal, where shoppers can bag up their own fresh filter coffee.

The whole package has certainly impressed c-store experts. “A good new store,” said Nisa-Today’s group symbol director John Heagney. “This will trade well as the first foray into proper convenience trading. Morrisons has opened a store with a good offer that is well delivered.”

Nisa chief executive Neil Turton also thought the format would be a success. “This has real potential as they do fresh food and in-store prep so well,” he said. “They have some good convenience talent working for them these days.”

This is, of course, still the trial phase. Two more stores are scheduled to open in the next couple of months in the North West, but Morrisons is not expected to give any indication of a wider rollout until next March.

Questions have been raised as to whether the model can work on a national level considering the dependence on the proximity of a large superstore and Morrisons’ current geographical restrictions. That is an issue for further down the line – first Morrisons needs to find out whether this new model works on a small scale.

The early signs are good, though – and M-local is certainly something new and not just another me-too convenience store.

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