A big spend on refurbishments is helping Tates achieve 4% growth as it aims for 250 stores by 2005 says Elaine Watson
When Geoff Hallam joined Spar wholesaler AF Blakemore, it had 12 company-owned stores, and they weren't making much money. Just over a decade later, he's standing at the helm of Tates, a 187-strong c-store empire stretching from Southend to the Welsh coast and chasing the number one slot in The Grocer Top 50.
Back in 1989, Hallam's first task was to pull Blakemore's 12 stores back into the black. Once this was complete, he headed down the acquisition trail, taking store numbers up to 35 in less than five years. January 1994 saw the acquisition of Tates ­ a 70-strong chain of c-stores based in Grimsby ­ followed by a tranche of 65 Lo Cost stores from Argyll in the spring, taking Blakemore up to 170 stores.
Hallam, by then operations director at Tates, the new name for the entire company-owned estate, suddenly got the challenge he was looking for ­ to convert the best part of 135 stores to Spar and switch distribution from dedicated facilities at Grimsby and Chesterfield to Blakemore's central distribution centre at Willenhall, Wolverhampton.
The 70 Tates stores had had a reasonable amount of investment, notes Hallam. "I couldn't say the same for Lo Cost. Everything was different. The range, the opening hours, no Sunday trading."
Although a few disposals ­ "hangovers from acquisitions" ­ are on the cards, he is targeting about 15 new stores a year, net, or 250 stores by April 2005. Funds are also available for a group acquisition.
Cash is also being pumped into refurbishments ­ £2.7m last year and at least that amount this year, says Hallam. Quantifying the sales uplift from refurbished stores is almost impossible because the cash spent varies so widely in each case ­ from a few thousand to £250,000 per refit ­ but with like-for-like sales growth running at over 4%, Tates is clearly doing something right. Food to go is another big opportunity for driving higher margin sales in the right locations, says Hallam. "We have about 50 stores with some sort of food to go and another 50 are probably suitable."
ATMs are also being rolled out wherever possible, while Tates has also agreed for stores to act as pick-up points for parts for service engineers in a tie-up with Texaco's RelayStar parcel delivery service.
The second strand to the four-year strategy for growth is improving net margins through driving operational efficiency at stores level. A new sales-based ordering system will improve availability and reduce leakage.
Ask Hallam what keeps him awake at night, however, and it's not the threat of Tesco Express or a reinvigorated Alldays, but crime. "The most depressing thing we have to put up with is the level of crime, abuse, assaults, shoplifting, and the poor response from police forces. The number of times we get the police saying effectively, well, if you didn't open so late, or if you had more security guards­' We've spent over a million on security guards. But we are a c-store chain, for goodness' sake."
Every store has CCTV and the company is now looking at a new remote monitoring system so management can tap into troublespots immediately when staff press a panic button.
Surprisingly, given the size of Tates' trading area, there are very few locations where it is competing directly with a One Stop or an Alldays, says Hallam, who sees pluses and minuses to the latest round of consolidation in the sector. "There's no doubt it will put pressure on the weaker independents, but if they want to co-exist in that environment, joining Spar is the best solution." As for fears that suppliers will pass on the costs of bringing T&S's terms into line with Tesco's to customers like Spar, he refuses to speculate. But one thing is clear, he suggests. "We need better cost prices, not worse."
n The Grocer's 2003 Top 50 survey launches on February 15.