When we selected a group of five up-and-coming retailers as the Ones To Watch a year ago, we didn’t anticipate quite how exciting and successful their year would be.
In the final part in our series, they all report their strongest year to date.
Obviously, our Midas touch has played a part. But the real secret of their success is that they have been able to create a point of difference in a highly competitive market.
For any small retailer to prosper in an environment dominated by large multiples with strong brand and cost advantages, it must differ its offer both in terms of its product and service. Our Ones To Watch all know this is key to success.
Cook is a perfect example. It has managed to make frozen food cool with its deli-style shops. Brothers Edward and James Perry, Cook’s retail director and MD, set up the operation eight years ago but the last year has been the most exciting. As well as expanding the store estate from seven to 14 shops, including its first in London, Cook also made it first profit in the last financial year.
“Everything is very rosy,” says James. “We’re getting very comfortable opening shops regularly - finding sites, fitting out shops, training staff etc.”
The only thing halting expansion is its kitchen. Cook makes all its own frozen meals in a 7,000 sq ft facility in Sittingbourne, Kent.
It is running at near-full capacity, which means further shop expansion is on hold until a new 31,000 sq ft facility is opened in the summer.
This £1.5m facility will enable Cook to supply up to 80 shops and enable it to meet its aim of opening 10 shops during the coming 12 months.
By the end of this year, turnover is projected to hit £10m, which should ensure it breaks into The Grocer Top 50 ranking of independent retailers in 2006. The key criterion for the Top 50 is independence and the Perry brothers have no intention of giving that up. “We are keen to remain independent. We are running the business for the extreme long term, whereas venture capital money wants an exit within five years,” says Perry. Loss of independence could mean we will never see Cooltrader enter the Top 50. Similarly to Cook, the frozen food discount chain has doubled its store estate from 10 to 20 within a year.
Boosted by the acquisition of eight-strong West Midlands chain Poundfreeze in October and funding from private equity house Gresham, which meant it would be able to open 40 stores in four years, Cooltrader was set to be one of the stars of the Top 50.
However, the chain - set up by three ex-Iceland directors, Andy Errington, Andy Pritchard and former chairman Malcolm Walker - looks set to lose its independent status. Walker is returning to head Iceland once the acquisition of the Big Food Group led by Baugur is agreed with shareholders next month. As part of that deal, Cooltrader will be absorbed into Iceland.
Another frozen food outfit, Eismann UK has gone the other way. The shops on wheels business, which runs 110 temperature-controlled trucks serviced through 10 depots, won its independence from Nestlé through a management buy-out. Eismann celebrated its first full year of independence in July, as well as its first profit.
With a turnover of £12m, Eismann is certain this year to enter the new Top 50, published in The Grocer on February 12. MD Karl Schneider predicts turnover will grow 10% over the coming year. What is stopping growth, he says, is people.
“Finding people to raise the flag in uncovered territory is difficult. This business is very particular and unique and people struggle to understand what we’re about,” says Schneider. “If I had the right people, I would open five depots tomorrow.”
Schneider is looking for suitable depot managers to run new territories and expand the business to the south west and the areas around Nottingham, Leeds and Manchester.
But another of our quintet has had little trouble beefing up its portfolio.
Speciality food and wine retailer Jeroboams added five shops to take its total to 13. Four came from the acquisition of drinks retailers and wholesaler La Réserve in June. Integrating the new business was the biggest challenge in 2004, says marketing director Crispin Russell. Once the shops have been assimilated, Jeroboams will seek new opportunities. “We’re now the biggest independent retail wine merchant in London and we plan to get bigger,” says Russell. “There are still affluent areas in London where we are not located. We’re not south of the river yet.”
Jeroboams has defied pressure from the multiples by differentiating its offer. “If you want cheap Champagne, you can get it for £8.95 in the supermarkets,” says Russell. “Our cheapest is £15. People come to us for the quality of our range and advice. They don’t just come to pick something up.”
Hudson’s managing director Nick Cooper is also a stickler for differentiating his stores.
“We have to have a clear difference from the multiples,” says Cooper. “We cannot compete head-on against the likes of Tesco.”
Hudson’s two convenience stores, located in private residential communities in London, are run on the concept of community retailing.
Using his marketing nous, Cooper - who also runs a marketing consultancy - has built up stores that offer each customer a bespoke service. Product ranges and pricing are all tailored to meet residents’ needs. Services such as dry cleaning, DVD rental and house and carpet cleaning have joined the mix. Hudson’s has also invested money in training staff to establish meaningful relationships with their customers rather than just meet and greet them.
No new stores have been added to the portfolio over the past year but Cooper has a target of opening 10 to 12 stores during the next five years. And the Hudson’s store in Wandsworth did pick up the best independent retailer of the year accolade at the Booker Prize for Excellence Awards in July. .
So what’s the lesson we’ve learnt from following our Ones To Watch?
Cook’s James Perry sums it up. “The devil is in the detail,” he says. “My biggest fear is that somehow we manage to lose our personal touch as we grow larger. This is core to our business otherwise we’re like everyone else.”
Ones To Watch
Run by brothers Edward (left) and James Perry, Cook has given frozen food retailing the appeal of a deli. Cook’s estate now stands at 14 shops and it is determined to remain independent.
Last year it went into profit for the first time
Eismann managing director Karl Schneider has celebrated the frozen food delivery operation’s first profit. It now runs 110 trucks. Turnover is set to grow 10% this year and Schneider is keen to find talented managers to run new depots
‘We have to have a clear difference from the multiples,’ says Hudson’s MD Nick Cooper. The two stores, and many more are planned, offer a bespoke community retailing service
Cooltrader has been going from strength to strength, reaching a 20-store total, but now is set to be absorbed into Iceland when the takeover of the Big Food Group is complete
Speciality food and wine retailer Jeroboams now runs 13 stores and is the biggest independent wine retailer
in London. ‘People come to us for the quality of our range and advice,’ says marketing director Crispin Russell. ‘They don’t just come to pick something up.’