Successful graduation from CTN operation to a c-store chain has fired the best of ambitions of Mill's MD, says Elaine Watson.
In ten years' time, says the MD of Mills Group, "we won't be the biggest, but we want to be the best". Nigel Mills is not short of ambition, but as head of a 55-store chain boasting the highest average lottery sales per store in the UK c-store sector and another year of double digit like for like sales growth, he can afford to give himself a pat on the back.
Mills began life in 1986 as a small newsagent, carrying the family ambition that it should become the best CTN chain in the business, says Mills. "But the world started changing." The watershed came in 1994 with the deregulation of the newspaper market, the legalisation of Sunday trading and the launch of the National Lottery. But the writing was on the wall for pure CTN chains long before that, he says. "By 1990, we'd already started moving towards convenience."
Now, 42 of Mills' 55 shops are fully fledged c-stores, with a strong licensed offer and a wide range of chilled and ambient groceries as well as a substantial news and magazine offer reflecting the company's heritage as a newsagent.
Sales topped £35m in 2001 and are forecast to rise to £40.6m in 2002, says Mills, who runs the business with Richard Linsell, MD of the group's east Midlands operation. In 10 years , they are aiming for 100 stores, filling gaps between HQ at Whitley Bay and Leicestershire by looking at locations in Tyne and Wear, Durham, Lincolnshire, Nottinghamshire, south Humberside and Cumbria.
Finding sites, however, is difficult, as everyone is knocking at the same doors and Mills is jostling for space with dedicated site finding teams from national operators such as the Co-op Group and Tesco as well as top class regionals.
It's a costly business too ­ suitable stores are scarce and the company has had to buy sites of 500-700sq ft and extend them for a c-store offer in many cases, he adds. "We've almost been a construction company for the past 10 years."
However, the search for new sites has not deflected management focus from driving sales through the existing estate. Key to growth in this area has been a commitment to driving sales through services, from the lottery, ATMs and 19 sub-post offices, to utility payment and cashback. Three stores offer travel tickets and one even has a sunbed ­ a great moneyspinner if you have the space, says Mills.
A new Hollywood Nights one-stop home entertainment solution offering video and DVD rental plus snacks, booze, chocolates, soft drinks and ice cream is also proving successful at selected stores. More unusual initiatives include ­ a website enabling customers to order specialist magazines not available instore. This drives customer loyalty and provides a significant incremental revenue stream.
Mills does not have its own distribution, and ambient goods are supplied by Leeds based wholesaler WH & HM Youngs, part of the Key Lekkerland Group. Booze comes from P&H subsidiary Winerite and chilled and dairy from Kerry Foods Direct to Store. While this could put Mills in danger of being at one remove from its supply base, the company has been working hard to build closer relationships with suppliers through an annual trade show and a premier supplier scheme giving key suppliers instore advertising opportunities and other benefits.

Closer supplier relationships
There is also a strong promotional programme every four weeks which is publicised through 2.5 million customer leaflets delivered direct.
The next big project is rolling out scanning systems/electronic ordering across the estate and improving staff motivation and skills through the appointment of a new director of training and development.
When it comes to the contentious issue of news distribution, Mills is sanguine. "I don't think the industry has changed to become consumer led, and there is still this power struggle between the retailer, the wholesaler and the distributor," he reflects. "But the distribution and supply chain is evolving. The OFT could accelerate that process but it is going to happen anyway." In the meantime, he says, "we work within the confines of the system rather than whinge about it."