The arrival of the UK’s biggest retailer on their doorstep is enough to make most convenience operators’ hearts sink, especially when that retailer’s stated intention is to dominate the c-store sector.
But when Tesco opened its first Express in Northern Ireland last month convenience retailers barely raised an eyebrow. They weren’t worried about the newcomer. Why should they be? After operating for years in a highly competitive market dominated by three players - symbol groups J& J Haslett, John Henderson and Musgrave SuperValu-Centra - they’ve already honed their operations into lean mean fighting machines - ones that can easily cope, the three insist, with a bit more healthy competition.
Northern Irish convenience store operators are recognised for their innovation but they have also put their money where their mouths are and pumped vital investment into their businesses.
Take fresh food. Everyone likes to trot out the importance of fresh as a vital element to the modern convenience mix. But following the management buyout this January, Haslett has gone as far as including the word in the name for its new store format.
It has opened three Mace Superfresh stores as part of a redefinition of its retail operations with 3,000 and 8,000 sq ft stores that stock at least 30% fresh food, comprising fruit and veg, chilled lines, dairy and food-to-go compared to the traditional Mace store, which mainly targets top-up shoppers by focusing on big brands. Although the number of Superfresh openings is behind initial forecasts, delivered business director Tom Uprichard says he is satisfied with the progress and confident future development will be more rapid. “We had hoped to have more of the Superfresh stores up and running by now. However, we have been sidetracked by the vagaries of the local planning system,” he says.
“Considering we only took over running the company in January and have developed this project from a standing start, I think we have done well. Many of our planning concerns have been dealt with and we expect to have seven stores up and running by the end of the year and 20 by the end of next year.”
So far the three stores have performed well, says Uprichard. “Turnover at one doubled in the first week of trading as Superfresh while another’s sales rose 60%,” he says. “We try to make these stores real destination shops. We have always been about offering a good range of big brands but Superfresh can offer these and a lot more. As well as the fresh offering we have been careful to include lines that will add value, such as certain chilled and speciality lines.”
In fact, Mace is not the only chain in Northern Ireland trying to pre-empt an onslaught from its multiple rivals by trying to redefine itself as a destination, as opposed to top-up, shop. John Henderson, which operates the Spar, Vivo and VG brand, is trying to adapt its format to attract a different type of shopper. It plans to increase the number of larger Eurospar formats it operates from three to 20 in the next couple of years and is developing a similar format for its Vivo brand which will be called Vivo Xtra. The format will be bigger and place greater emphasis on fresh and food to go. The first will open in Castlederg at the end of the month. Deputy MD Ken McWhinney believes that this new format will allow Henderson’s to offer a more complete range of formats to meet different customer needs.
As well as developing new types of store, Henderson has been at the forefront of driving innovation within its stores. The group is continuing to work with key trade partners to increase footfall and provide destination stores. The most notable examples of these partnerships are the projects it has developed with, Subway and Cuisine de France and BP.
There are three Subway concessions operating in Henderson company-owned Andrew Millar stores and McWhinney hopes to develop more. “A great advantage we have is that we have our own stores in which to test ideas, he says.
“The Subway concessions have been a huge success and a great example of the fact that we are willing to try things that we can then pass on to our retailers.”
Finding the right strategic partner is key, says McWhinney. “We are careful to make sure that the two offers blend well and ultimately increase footfall.”
And there are other ways to create a point of difference. Musgrave SuperValu-Centra encourages retailers to develop off-licences. Off-licences may not sound particularly new, but the strictly controlled licensing system means that selling alcohol is quite a new market for c-store retailers in the province.
Licences are extremely expensive and difficult to come by, although a level of uncertainty exists with a government review looking at whether or not to deregulate.
However, Nigel Briggs, managing director of Musgrave SuperValu-Centra, is a firm believer in the value of the investment. Although alcohol sales would not represent a major proportion of turnover, he says the investment is worthwhile for the footfall it brings. “Around 20 of our retailers have developed off-licences and we hope to have 40 over the next few years,” he says. “We are also working closely with the Northern Ireland Independent Retail Trade Association about the continuing review of licensing laws, but there is still no way of knowing when or if there will be deregulation.
“At the moment our strategy is to continue to seek licences while trying to ensure compensation for those who do invest if the market is suddenly deregulated.”
It is generally accepted that many of the province’s c-store operators have invested more heavily in their businesses than their mainland counterparts. And, significantly, they believe this time, energy and money will also prevent the multiples from gaining the kind of stranglehold on their market that they have in other parts of the UK.
However, there are, undeniably, challenges ahead. Briggs believes the main threat remains the gulf between the pricing policies of the multiples and c-store operators. He argues that this will continue to put pressure on the province’s convenience stores and that, ultimately, only the strongest will survive.
“Deflation in the multiples will continue and so the gap with the convenience store sectors will widen further until some won’t be able to cope. But, with the combined buying power of the group we will not have the same problems,” Briggs says.
With Tesco Express in town, that confidence is about to be tested. The Northern Irish chains have done a great job so far, but they must keep the ideas and money coming to stay ahead of the game.
NI's top symbols
>>Fascias and number of stores
J& J Haslett
Mace - 160
Nearbuy - 33
Spar - 260
Vivo/VG - 140
SuperValu - 36
Centra - 75