Former financier Nick Blades has a gentleman's agreement not to compete with the Londis next door and is making his premium grocery store work by selling high-end local produce. He has even managed to unlock the 'sarnie code'...

I am sure Nick Blades, owner of Fruit Cakes, won't mind if I describe him as an accidental grocer. I only mention it because I'm convinced his background away from the retail trade is the root of his success. Nick was a financial high-flyer who left the cut and thrust of corporate high finance to become a property developer in the pretty Cotswold town of Northleach. Ten years ago he bought his final set of buildings. One housed a Chinese takeaway, another a grocery business that had been trading some eight years under the name of Fruit Cakes. He kept the takeaway on as a tenant but, looking for a new challenge, decided to take on the grocer himself.

Running a shop using your instincts is all very well, but only if your instincts are as good as someone like Nick's. If I asked most battle-scarred professional grocers what their reaction would be if they walked into a business they had just acquired, it probably wouldn't be "What! No pesto?" But that's pretty much what Nick did. He has followed his desire for quality goods ever since, with his financial background giving him the instinct to make money from it.

All the stock is there simply because Nick likes it and thinks it a good product. The Walkers crisps have disappeared, to be replaced by Tyrrells, "because they taste nicer", says Nick. Ice cream? He used to only sell a handmade one made with local clotted cream, but has expanded this to include a recent discovery called Just Rachel. This is no cheap tertiary brand it is handmade in Hereford.

While part of this focus on quality goods is down to Nick's personal tastes, it is also vital to help differentiate himself from his next door neighbour: a Londis c-store. Nick has reached an agreement with his rival not to tread on each other's toes and, as such, targets a different market prepared to pay more for high-end groceries.

"There are no other shops within 10 miles, so there's enough local trade for us both," he explains.

But while the shelves are stocked with premium goods, it is the bakery side of the business where Fruit Cakes has really boomed. The previous owner used to make the sandwiches up in the morning and, to avoid waste, kept quantities small. But Nick has, with a little trial and error, cracked the 'sarnie' code and sells "thousands" of sandwiches each day. He was just putting together an order of 90 sandwiches for someone's buffet when I arrived.

Nick's plan, on taking over, was nothing less than sandwich world domination (well North Gloucestershire anyway). So he created flavours such as brie & couscous, squid & olive, quail & wild boar. Then he found he had to chuck the whole lot away because he discovered the mystic truth of all sandwich retailing: people want ham, beef, cheese, egg, and chicken made to a high standard on quality bread. He makes his sandwiches fresh to order and is able to do so because his bread and rolls are part-baked for him by a local bakery. This saves him time but still allows him to serve fresh-baked bread.

Adding to the bakery range are pizza slices, pasties, cakes (also made by the local baker to Nick's specification "using the best ingredients") and coffee, all looking fresh and homemade.

The rest of the shop reflects Nick's desire for quality, with huge baskets of loose seeds and nuts, unusual premium snacks and tonnes of lovely local fruit and veg. When I asked about the shelf life of the fruit and veg, Nick said, "it was picked from the farm 200 yards down the road this morning. It hasn't really got time to go off."
Of course there is the usual range of cash and carry-bought staples which, according to Nick, turn over smartly enough to be very profitable.

So, dubious name aside (Nick winces when I mention it. "I hate twee names too," he admits, "but it's been part of the store's identity for 18 years now"), is Fruit Cakes the perfect grocery store? Nothing run on such a personal feel could be completely right. Some of the stock that clearly doesn't interest the owner has got a bit dusty some of the tins and wine bottles. Outside, the well-designed interior is let down by a very battered handwritten fruit and vegetable price list board. Nick should splash out on a new one as it really lets things down.

But these niggles aside, Nick has been smart about what the local shoppers want and quick to spot an opportunity. He discovered the local paper shop had stopped selling newspapers so started to stock them himself. People can be seen leaving with the daily paper, a lump of celeriac, and a French stick under one arm.

Fruit Cakes is still going strong 10 years after Nick took over, turning over up to £25,000 a month in a 600 sq ft shop selling expensive goods despite having a c-store next door.