No-one has more c-stores than Spar, but rivals are rapidly closing the gap – not that MD Jerry Marwood minds. If anyone can keep Spar on top, says Peter Cripps, Marwood is the man
Think the outlook is rosy for c-stores? Think again, says Jerry Marwood - at least when it comes to certain formats.
"One-trick ponies don't stand a chance," says the Spar managing director. "CTNs are doomed. Off-licences, unless they have a real point of difference to the mults, are doomed too."
Fortunately for Marwood, Spar is no one-trick pony. Indeed, it's playing the multiples at their own game and helping drive the sector's 6.3% growth [IGD] unlike others.
"A lot of retailers think we can get away with just being convenient, but fair price is the number one concern of our customers," he says in an exclusive interview with The Grocer. "Our job is to have a wide range of goods and to try to be all things to all people."
It is not, he stresses, to simply keep adding more and more stores to your estate. The big-box multiples aren't the only ones with bold c-store expansion plans. Booker's Premier predicts it will have more stores than Spar within the next three years, and it means business: its store numbers increased by 9.1% to 2,478 stores in 2009, whereas Spar's store numbers increased by just 0.7% to 2,577.
But for Marwood the space race is little more than a sideshow. "I don't care if we get overtaken in store numbers by Premier," he claims. "We are not always chasing store numbers. The value of our business is almost twice that of our nearest symbol group competitors. If they were overtaking us on volume sales, then I'd be quite upset."
Sales growth is what counts, says Marwood, and on that score you can't argue with the numbers. Though the official figures for Spar's performance for the 12 months to 31 March are still to be finalised, Marwood puts its sales growth for the period at 6.6% a figure Tesco would be proud of. He also cites Verdict figures showing sales at Spar stores average £19,714 a week, compared with £12,120 at Premier and £13,165 at Londis.
And Spar's sales are likely to grow further as the average floorspace increases and the number of smaller stores falls, he adds. This trend is illustrated by the growing number of Eurospars a small supermarket format over the past year. The first eight Eurospars on the British mainland have opened in the past year, and there are 14 trading in Northern Ireland.
Increased shelf space, of course, allows for a wider product offer and, while Spar continues to be competitive on the classic CTN lines, in recent years it has significantly broadened its offer and customised it to suit local community needs.
In 2004, it identified five 'shopper missions' tonight's tea, food for now, entertainment, daily life and top-up for groceries. Spar continues to adapt its offer depending on the location and size of the store and the nature of the local demographic. Of all the five shopper missions it is 'tonight's tea' that most excites Marwood. "Tonight's tea is a big opportunity for us," he says. "The key is to get consumers to shop more often with us rather than at the supermarket. There are inroads we can make into bigger shopping baskets by having more appropriate ranges at better prices. That's where the real growth will come from."
To this end, Spar has improved the quality of its ready meals by working with suppliers on making the meals more healthy. It has also introduced more fresh meat, replacing frozen burgers with fresh ones, for instance.
In fact, where Spar shied away from fresh in the past for fear of high levels of wastage, it has now expanded and improved its offer. "Fresh meat and vegetables are high up the priority list," says Marwood. "All our regional businesses are investing big-time in fresh food distribution to build a platform so we can push ranges and get critical mass."
That way Spar meets the consumer's needs, the consumer buys more, items don't overstay their welcome on shelf and the wastage issue is addressed, he says.
Spar is already reaping the rewards. Sales of prepared salads and dips are up 28% year-on-year, while fresh meat is up 8%, says Marwood. And so confident is Spar in the quality of its fresh own label, it introduced a money-back guarantee a year ago.
The goal, says Marwood, is to encourage shoppers to visit their local c-store more often, rather than jump in the car and head to the supermarket.
"Most people spend £4 or £5 with us but £90 or £100 in the majors," he reasons. "There's a lot of convenience shopping going on in the supermarkets because consumers don't have as much confidence in c-stores as they need. There's a lot of headroom to win from the supermarkets."
Another category in which Spar has raised its game to take on the multiples is alcohol, particularly wine. In May 2009 it appointed its first Master of Wine, Laura Jewell, to oversee a revamp of its wine range and wine sales have leapt 11% over the past year as a result.
Because she's an expert, the consumer doesn't have to be, says Marwood. "We've taken the position of being wine enthusiasts rather than experts," he says. "If you were to go back five or six years, you wouldn't expect to see that level of commitment in the convenience sector."
The opportunity to sell more wine increased with the demise of Threshers-owner First Quench Retailing in October but Marwood suggests that Spar and other convenience stores were already stealing share from FQR stores before its demise.
"I'm not gloating about it but c-stores, more than supermarkets, put the nail in their coffin," he believes.
Another area Spar is working hard to address is pricing. Marwood accepts the chain needs to improve its price perception. Its strategy has been twofold: to introduce more value and own-label lines and increase the number of promotions it runs.
It introduced its Extra Value own-label range a year ago and has bolstered the overall number of own-label SKUs to more than 1,000. Having increased the depth and quality of its Real Deal offers, it has boosted sales of product on deal 17% year-on-year in value, says Marwood, and it also runs three 'deep-cut promotions' to deliberately undercut Tesco.
Buying power is also important, of course, and some 40 or 50 of its core grocery items, such as fusilli pasta, are sourced through Spar's international business to ensure better prices. Marwood claims his prices are in line with Tesco's for offers such as multibuy deals on these items.
Spar is also flexing its muscles when it comes to marketing, an area that has been very much its forté. It is spending £5m this year on a campaign aimed at pushing the trinity of convenience, availability and value. Marwood describes the campaign, which was launched for the World Cup and is the first to include a digital media element, as "Spar's most compelling yet".
Its recently revamped website features recipes to highlight its increasing food offer, and it has signed a deal to stock cuddly toys from the Shrek movies to give its retailers a point of difference over their competitors.
CTNS may or may not be doomed, but Spar with its unique model and distinctive marketing has found a convincing blueprint for c-store growth and is certainly giving the mults a run for their money.
Jerry Marwood snapshot
Age: 51
Family status: Married to Kate and has a five-year old boy, George
Home: Wedmore, Somerset
CV: 2002-present: Managing director, Spar UK. He is responsible for all central office activity, which includes the marketing and trading functions.
1999-2002 Managing director, Newshops, where he initiated a programme that saw the segmenting of stores, the conversion of many CTNs into c-stores and the rebranding of stores under the Smile fascia.
1996-1999 Retail director, Spar, before becoming deputy managing director of Spar after 18 months. Marwood has been in retailing all his working life, having started as a trainee manager with Gateway. He is the former chairman of the Association of Convenience Stores and an influential voice in the UK in support of independent retailers.
Think the outlook is rosy for c-stores? Think again, says Jerry Marwood - at least when it comes to certain formats.
"One-trick ponies don't stand a chance," says the Spar managing director. "CTNs are doomed. Off-licences, unless they have a real point of difference to the mults, are doomed too."
Fortunately for Marwood, Spar is no one-trick pony. Indeed, it's playing the multiples at their own game and helping drive the sector's 6.3% growth [IGD] unlike others.
"A lot of retailers think we can get away with just being convenient, but fair price is the number one concern of our customers," he says in an exclusive interview with The Grocer. "Our job is to have a wide range of goods and to try to be all things to all people."
It is not, he stresses, to simply keep adding more and more stores to your estate. The big-box multiples aren't the only ones with bold c-store expansion plans. Booker's Premier predicts it will have more stores than Spar within the next three years, and it means business: its store numbers increased by 9.1% to 2,478 stores in 2009, whereas Spar's store numbers increased by just 0.7% to 2,577.
But for Marwood the space race is little more than a sideshow. "I don't care if we get overtaken in store numbers by Premier," he claims. "We are not always chasing store numbers. The value of our business is almost twice that of our nearest symbol group competitors. If they were overtaking us on volume sales, then I'd be quite upset."
Sales growth is what counts, says Marwood, and on that score you can't argue with the numbers. Though the official figures for Spar's performance for the 12 months to 31 March are still to be finalised, Marwood puts its sales growth for the period at 6.6% a figure Tesco would be proud of. He also cites Verdict figures showing sales at Spar stores average £19,714 a week, compared with £12,120 at Premier and £13,165 at Londis.
And Spar's sales are likely to grow further as the average floorspace increases and the number of smaller stores falls, he adds. This trend is illustrated by the growing number of Eurospars a small supermarket format over the past year. The first eight Eurospars on the British mainland have opened in the past year, and there are 14 trading in Northern Ireland.
Increased shelf space, of course, allows for a wider product offer and, while Spar continues to be competitive on the classic CTN lines, in recent years it has significantly broadened its offer and customised it to suit local community needs.
In 2004, it identified five 'shopper missions' tonight's tea, food for now, entertainment, daily life and top-up for groceries. Spar continues to adapt its offer depending on the location and size of the store and the nature of the local demographic. Of all the five shopper missions it is 'tonight's tea' that most excites Marwood. "Tonight's tea is a big opportunity for us," he says. "The key is to get consumers to shop more often with us rather than at the supermarket. There are inroads we can make into bigger shopping baskets by having more appropriate ranges at better prices. That's where the real growth will come from."
To this end, Spar has improved the quality of its ready meals by working with suppliers on making the meals more healthy. It has also introduced more fresh meat, replacing frozen burgers with fresh ones, for instance.
In fact, where Spar shied away from fresh in the past for fear of high levels of wastage, it has now expanded and improved its offer. "Fresh meat and vegetables are high up the priority list," says Marwood. "All our regional businesses are investing big-time in fresh food distribution to build a platform so we can push ranges and get critical mass."
That way Spar meets the consumer's needs, the consumer buys more, items don't overstay their welcome on shelf and the wastage issue is addressed, he says.
Spar is already reaping the rewards. Sales of prepared salads and dips are up 28% year-on-year, while fresh meat is up 8%, says Marwood. And so confident is Spar in the quality of its fresh own label, it introduced a money-back guarantee a year ago.
The goal, says Marwood, is to encourage shoppers to visit their local c-store more often, rather than jump in the car and head to the supermarket.
"Most people spend £4 or £5 with us but £90 or £100 in the majors," he reasons. "There's a lot of convenience shopping going on in the supermarkets because consumers don't have as much confidence in c-stores as they need. There's a lot of headroom to win from the supermarkets."
Another category in which Spar has raised its game to take on the multiples is alcohol, particularly wine. In May 2009 it appointed its first Master of Wine, Laura Jewell, to oversee a revamp of its wine range and wine sales have leapt 11% over the past year as a result.
Because she's an expert, the consumer doesn't have to be, says Marwood. "We've taken the position of being wine enthusiasts rather than experts," he says. "If you were to go back five or six years, you wouldn't expect to see that level of commitment in the convenience sector."
The opportunity to sell more wine increased with the demise of Threshers-owner First Quench Retailing in October but Marwood suggests that Spar and other convenience stores were already stealing share from FQR stores before its demise.
"I'm not gloating about it but c-stores, more than supermarkets, put the nail in their coffin," he believes.
Another area Spar is working hard to address is pricing. Marwood accepts the chain needs to improve its price perception. Its strategy has been twofold: to introduce more value and own-label lines and increase the number of promotions it runs.
It introduced its Extra Value own-label range a year ago and has bolstered the overall number of own-label SKUs to more than 1,000. Having increased the depth and quality of its Real Deal offers, it has boosted sales of product on deal 17% year-on-year in value, says Marwood, and it also runs three 'deep-cut promotions' to deliberately undercut Tesco.
Buying power is also important, of course, and some 40 or 50 of its core grocery items, such as fusilli pasta, are sourced through Spar's international business to ensure better prices. Marwood claims his prices are in line with Tesco's for offers such as multibuy deals on these items.
Spar is also flexing its muscles when it comes to marketing, an area that has been very much its forté. It is spending £5m this year on a campaign aimed at pushing the trinity of convenience, availability and value. Marwood describes the campaign, which was launched for the World Cup and is the first to include a digital media element, as "Spar's most compelling yet".
Its recently revamped website features recipes to highlight its increasing food offer, and it has signed a deal to stock cuddly toys from the Shrek movies to give its retailers a point of difference over their competitors.
CTNS may or may not be doomed, but Spar with its unique model and distinctive marketing has found a convincing blueprint for c-store growth and is certainly giving the mults a run for their money.
Jerry Marwood snapshot
Age: 51
Family status: Married to Kate and has a five-year old boy, George
Home: Wedmore, Somerset
CV: 2002-present: Managing director, Spar UK. He is responsible for all central office activity, which includes the marketing and trading functions.
1999-2002 Managing director, Newshops, where he initiated a programme that saw the segmenting of stores, the conversion of many CTNs into c-stores and the rebranding of stores under the Smile fascia.
1996-1999 Retail director, Spar, before becoming deputy managing director of Spar after 18 months. Marwood has been in retailing all his working life, having started as a trainee manager with Gateway. He is the former chairman of the Association of Convenience Stores and an influential voice in the UK in support of independent retailers.
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