UPBEAT MOOD Some think it's a brave decision. Others think it's foolish. But as far as Paul Griffiths is concerned, United Norwest's decision to keep its food operation independent of the rest of the Co-operative movement makes perfect business sense. "We value our independence highly," says Griffiths, general manager of the society's food business. "And our view is that provided we are able to continue to improve our profit performance, we will continue to be independent because there's good reason for it. "If we saw performance elsewhere that was much better than ours, then we would be in a different situation. But we don't. Crucially, we focus a lot on benchmarking, not just against other Co-op societies, but against the industry. And we are stretching ourselves to be as good, and then better than, the competition." It's hard not to be swept along by the enthusiasm of the ex Asda man. But the harsh reality for Griffiths and his colleagues is that just as they decided to take control of their own buying ­ by pulling out of the CIC buying group and refusing to join the rival CRTG operation ­ competition in the food industry started to intensify. As prices continue to tumble, and the big players target the convenience sector, can an operator the size of United Norwest really compete effectively on its own? Sure it can, says Griffiths. He explains that the society's food division has undergone massive change in the past three years; change that has left it in better shape to cope with the pressures currently facing all retailers. Griffiths goes on to detail what he believes are the qualities of the transformed business. It has installed a strong management team that is flexible and able to respond quickly to changes in the market. It is far more customer focused than it ever was and is trying to develop an open culture and an entrepreneurial spirit throughout. It is investing heavily in new stores and technology. It has made a deliberate decision to concentrate on the convenience shopper ­ while reinforcing its position as the community retailer. And there's the sheer density of its stores ­ 330 crammed into the north midlands and north west ­ which gives the society massive strength in its chosen trading area. That regional power will continue to grow, because the society is keen to boost its c-store business and is making no secret of the fact it is extremely acquisitive. Regional c-store chains Hanburys and Nevins have been snapped up by United Norwest, along with 26 Dawn til Dusk stores bought from receivers, 16 stores owned by Spar retailer Alfred Jones, plus a bundle of outlets sold by individual independent retailers. "The convenience business today has more than 300 stores and accounts for more than 65% of our food division turnover," says Griffiths. "And we continue to look for more stores. We have a programme this year to buy 26 individual c-store businesses as well as group acquisitions. "It's very important that we are so acquisitive because under the umbrella of being a community retailer it's quite right and proper that we invest our money in providing services to people in communities ­ while making absolutely sure we do that profitably." The signs are that this strategy is paying off: in the past year, the society's convenience stores saw turnover leap 12% on the back of its aggressive expansion programme. United Norwest's large stores group is also in expansive mood ­ although the focus is very much on mid-size supermarkets serving local neighbourhoods. A new Food Market opened in Ramsbottom last year, and two more are in the pipeline. Griffiths says: "We can make these work really well for us because we are meeting the needs of consumers in a slightly different way." As far as superstores go, the society admits some of its biggest outlets have struggled to compete in the brutal environment in which they operate. The strategy here is simple, says Griffiths. "We have shown we can make difficult decisions in terms of stores. If they are not profitable, and we can't see a sensible future for them, then we have closed them and have reinvested money in other parts of the business." Last year that meant the closure or sale of three stores. But Griffiths says this recycling of resources is vital: "The biggest challenge for the food division is to make sure we do obtain the return on our investments so that we get a bang for our buck. We also need to make sure that our implementation of any new initiatives works very well and we are increasingly doing a better job on those." For evidence of that, you need look no further than United Norwest's new Late Shop c-store format. It was unveiled at Offerton, near Stockport, last year, and is being rolled out progressively across the society's estate. Griffiths says: "At Offerton we said to customers: Tell us what you want, we will give it to you.' The result is sales up 40% year on year ­ which is great. We can do with more of that." Stores that have already been converted are showing an average sales increase of 14% year on year. "Wherever we have undertaken a refit of that kind ­ whether it's a major or mini refit ­ we have very positive sales gains and the key for us is to make sure those sales gains feed through to a better profit as well, and we are focused very much on that," says Griffiths. But what really excites him most about the new format ­ apart from the fact it marks a radical departure from the old style, and frankly quite dated, Late Shop look ­ is that it shows how United Norwest is using its new found marketing nous to good effect. Everything about the store ­ from its looks to its products ­ is based on solid consumer research, says Griffiths. "You should never have the tail wagging the dog. Marketing should lead the way. We all have our role to play within the food division, but the marketing team plays a pivotal role. They are the voice of the customer. We were historically more buying led than marketing led. That meant we often ended up with products that were cheap rather than products our consumers wanted to buy," he explains. Today all of the society's stores have been put into clusters so that it can provide shoppers in each of those areas with products it knows they want and in the right sort of store format. "We don't tailor our offer to combat individual competitors," says Griffiths. "We just make sure we know what our customers in each area want and then deliver it better than anybody else. "We don't worry too much about what any one competitor is doing but focus on getting our offer right and making sure it's the best in the market. That way, it's our competitors who have to worry about us and not the other way around." And as more of the society's stores ­ both on the convenience and supermarket front ­ are revamped, Griffiths believes the society will continue to grow despite the heat of competition. A key issue going forward is making sure suppliers realise that while United Norwest is a regional player, its food division turns over £459m, which gives it plenty of clout and makes it a business worth backing. "We are increasingly persuading suppliers that we are regionally important and after two successful sales conferences they are looking at us through different eyes," says Griffiths. "They are taking notice that we are a professionally run organisation which will not put up with mediocrity ­ because we cannot afford to. "And they realise that from a branded manufacturing point of view we are perfect because of our store profile. "We have flexibility and can do deals with suppliers that larger retailers maybe cannot accommodate. And we are regionally concentrated. The Granada TV area replicates our trading area, which is helpful from a marketing perspective and for test marketing purposes." With suppliers on board, sales on the up and up, new look stores popping up all over the place, plus an ambitious acquisition plan, you can understand why Griffiths is so upbeat about prospects for the business. And who can blame him? {{Z SUPPLEMENTS }}