However, although the acquisitions helped boost turnover by 21% to £357m for the year to January 29, there was no bottom-line growth. To make matters worse, competition is fiercer than ever, he says. “The big boys are everywhere and even the small boys in the symbol groups are spreading. There is certainly advertising from Spar and Costcutters in the Scottish media and press to a degree that we’ve never seen before. That’s bound to have an effect on us, but we have to concentrate on dealing with the impact by making sure our business is as effective as possible and working harder than ever.”
Brodie has already initiated a systems review. Scotmid has invested heavily in technology over the past few years, but he says that many store managers have failed to move with the times.“We introduced sales-based ordering about three years ago, but people are still not managing the systems properly. We need to get them to understand what this system can deliver.”
The past six months have been exhausting for Scotmid boss John Brodie. Since becoming chief executive of the Scottish co-operative, he has been in the unenviable position of having to juggle his new job with his old one as finance director.
“It’s been a hectic six months, trying to do two jobs, and it’s not allowed me to get out and about as much as I would have liked,” he says in an interview with The Grocer at Scotmid’s Fountainbridge head office.
“Getting the right people in place has been very important. It’s very much the foundations and we can now start adding the building blocks.”
Fortunately, the people are now in place, he says, pointing to the appointment of a chief financial officer - John Dalley from Scottish & Newcastle - and a chief operating officer - former MD of Boots Services Colin McLean. Having completed stage one of his turnaround plans by forming his senior management team, Brodie has now turned his full attention to the challenge of modernising the business.
Scotmid has been under-performing ever since it nearly doubled the size of its retail chain with acquisitions of the nine-store SCS chain and 50 Morning Noon & Night stores a year ago. Brodie admits that the acquisitions were not part of the co-op’s long term strategy, but says that when the opportunity arose it was impossible to turn it down.
The only plus is that a tough retail environment concentrates the mind, says Brodie. “Scotmid has work to do, regardless of the hard economic climate. Perhaps the current situation will help us focus more on our issues and make us a stronger retailer. When the market is buoyant there is a danger that you can think you are trading well and major issues can be missed.”
Making sure the integration of the new businesses runs as smoothly as possible remains a key focus.“I cannot understate the scale of the job of integrating last year’s acquisitions,” says Brodie.
However, Scotmid faces a more fundamental challenge. Its grocery retail business still delivers the biggest proportion of sales for the society, which also includes Semi-Chem, M&S Toiletries and a travel and funeral business. But an overhaul is needed.
“We need to take the business right back to basics and have a proper look at our performance. We’ll be doing a full strategic review over the next few months - that’s something that has not been done for quite some time.
“We’ve got to go through the process and look at what’s best in the market and then figure out how to achieve what’s best for Scotmid. We have to look at our offer, format and how we run our business day to day.”
Brodie has also split the grocery business into two parts and the 87 c-stores and 44 supermarkets in the Scotmid portfolio are to be run as separate divisions.
“Our acquisitions last year tipped the balance away from the traditional supermarkets over to c-stores,” he says.
“All SCS stores have been rebranded and have Scotmid systems. The MN&N stores still do not have the look or feel of Scotmid, but the integration is under way in terms of range and systems; and in the run-up to autumn we will convert the supply chain.
“The previous owners have done a good job, but we have to invest to bring the stores up to the standard of the Scotmid portfolio.”
In time, the MN&N stores will be refurbished with the co-op logo. But Scottish prudence means that Brodie is in no rush to carry out the conversions with a forthcoming re-branding and modernisation of the entire co-operative movement afoot.
One Scotmid store will soon be taking part in piloting the new image, alongside four other societies, including The Co-operative Group and United Co-operatives.
Plans are under wraps but Brodie says: “I can definitely see the logic of having one common branding for the co-ops. We can reap the benefits of coming together under one brand, just as the individually owned businesses have under the Spar banner.”
Owing to the acquisition activity of 2004, there are now only a couple of independent chains left to buy in the Scottish market, so the routes to growth are limited.
Scotmid will therefore continue to assess all opportunities, says Brodie. “Last year we accelerated our business way beyond our business plans and strategies, so now we are playing catch-up. However, that doesn’t mean to say that if the right opportunity at the right price comes along, we won’t take it.”
Meanwhile, staff are preparing for another change. In November, Scotmid will be moving to Newbridge after 146 years in Fountainbridge. Brodie concedes it will be a culture shock. “Moving will be a huge emotional wrench for some people. There are quite a number of people who have never worked anywhere else, but I believe the move can be positive for us.
“This year will be difficult for Scotmid with new people coming up with new ideas and various changes along the way. Hopefully our new modern environment will help us through that process and can act as another building block.”
Brodie is excited about his plans for the future, but he is under no illusions about the task ahead. “We have increased business significantly in terms of sales and invested more than ever before, but we have made less money than previously. Scotmid is a business that has a long way to go, but it can be built up and it will be improved.”