Colin Holmes must feel like the proverbial child in the sweet shop. After all, as the new chief executive officer of T&S Stores, Holmes has landed what is arguably one of the most exciting jobs in convenience store retailing. And as he walks around the confectionery aisle of one of his c-stores, chatting about his plans for the business, it is clear the Tesco man is loving every minute of his new role.
At first, it seems a little odd hearing him outline his ideas for the future of the business, if only because until now any talk about the future of the One Stop brand has inevitably been overshadowed by the fact Tesco is about to sell off a chunk of the T&S business the Supercigs and Dillons chains and convert a sizeable part of the remaining operation over to the Tesco Express format.
Despite these plans, Holmes is at pains to stress that Tesco did not buy T&S simply to let the One Stop brand wither. That is not the Tesco way, says Holmes. And as our news story shows this week, Britain's top retailer appears to be deadly serious about growing its newest division.
To be fair, Tesco made it clear from the start it intended to run T&S as a standalone business, retaining its head office at Brownhills. Holmes says that decision was made for very practical reasons: "Having a separate business allows clarity and the right decisions to be made for what is a different business operating different sized stores on different ranging and different pricing. If we tried to run it as part of the Tesco corporate office we would inevitably have got things wrong."
Holmes adds: "We have bought T&S because it is a great convenience store operator and there's lots that Tesco can learn from it. Equally, there are lots of things that T&S can learn from Tesco."
Clearly such two-way learnings will be vital as stores are converted to the Express format, after which they will be run by a Tesco team headed by Keith Macauley. That process could ultimately see about half the T&S estate of 850 c-stores being converted over the next three or four years. Although Holmes says the target may shift as Tesco digests the results of its first batch of conversions, he reckons about 100 stores will be changed in the first year.
For most rival c-store retailers, the prospect of a Tesco Express appearing around the corner will be pretty daunting which is why so much attention has been paid to this aspect of the T&S deal. However, those retailers pitched against a One Stop should not relax, as they too will start seeing major differences as Tesco looks to "drive forward an already strong business".
Put simply, Holmes sees Express stores as local food shops, and they will be sited accordingly, while One Stop stores are neighbourhood shops that are strong on what he calls the heritage categories of news, tobacco and impulse.
Holmes makes no secret of the fact he's impressed by the way T&S has operated particularly in the way it focused on promotions and driving volumes. "They do a really good job. Probably the best in the industry," he says, "Talk to suppliers, and they will tell you there's not a convenience retailer that gets anywhere near to what One Stop delivers."
Blend all of that expertise together with Tesco's strength in its own heritage categories fresh foods and grocery and you can quickly grasp how the One Stop offer is going to be reshaped. Holmes adds: "Fresh and grocery are not part of its history. That is where we can add value."
But it will not stop there. As well as trying to trade fresh and grocery ranges much harder, Holmes believes T&S will be able to leverage the Tesco ties in other areas too. He immediately points to the video rental section at the front of the store. "That's a premium selling space. I am very confident we can put in a different offer to drive more sales and please more customers than video rental."
The superstore operators are great at getting food shoppers to buy other things. Applying that knowledge to the convenience sector to increase the average spend in One Stop stores will be key to its growth. Holmes has plenty of ideas for doing that.
Take home entertainment products such as DVDs. "If they are given the choice of buying, say, the new Harry Potter DVD, many consumers would rather buy it locally than schlep into town," says Holmes. "T&S would not have had the access to sell that on its launch date, but we will."
At the same time, he is keen to maximise the opportunities offered through event marketing by linking with Tesco initiatives to bring across activity that will add value for One Stop customers. "After all," he says, "why should we develop Mother's Day in isolation from the Tesco business?"
Or how about BBQ products? "These are bought as a convenience product in our supermarkets so we are working to leverage the Tesco knowledge to bring a BBQ range to One Stop," he says.
Although Holmes says the range on offer in T&S stores will be enhanced significantly, the one thing you will not see in One Stop is Tesco branded products "That would confuse customers," he explains.
However, there will be "significantly less" buying carried out within T&S as negotiations are concentrated at the point where the volume is generated as he says, there is little point in buying Mars bars in two different places. The T&S team will instead focus on "understanding the customer and reflecting that in store". All of which meant a "common sense" restructuring at T&S HQ.
Holmes has had a busy time since officially taking over at Brownhills as CEO just eight weeks ago. But you can see he is already pleased at the way things are taking shape. It helps that Tesco and T&S were such a good fit, he says, not only in retail terms but also culturally with both businesses having a very pragmatic, can do' approach.
It also helps that the foundations of the T&S c-store operation were already solid. The trick is to ensure Tesco can build on that. And Holmes, for one, is certain they will: "This is a great business that we can make into a fantastic business."
{{ANALYSIS }}
At first, it seems a little odd hearing him outline his ideas for the future of the business, if only because until now any talk about the future of the One Stop brand has inevitably been overshadowed by the fact Tesco is about to sell off a chunk of the T&S business the Supercigs and Dillons chains and convert a sizeable part of the remaining operation over to the Tesco Express format.
Despite these plans, Holmes is at pains to stress that Tesco did not buy T&S simply to let the One Stop brand wither. That is not the Tesco way, says Holmes. And as our news story shows this week, Britain's top retailer appears to be deadly serious about growing its newest division.
To be fair, Tesco made it clear from the start it intended to run T&S as a standalone business, retaining its head office at Brownhills. Holmes says that decision was made for very practical reasons: "Having a separate business allows clarity and the right decisions to be made for what is a different business operating different sized stores on different ranging and different pricing. If we tried to run it as part of the Tesco corporate office we would inevitably have got things wrong."
Holmes adds: "We have bought T&S because it is a great convenience store operator and there's lots that Tesco can learn from it. Equally, there are lots of things that T&S can learn from Tesco."
Clearly such two-way learnings will be vital as stores are converted to the Express format, after which they will be run by a Tesco team headed by Keith Macauley. That process could ultimately see about half the T&S estate of 850 c-stores being converted over the next three or four years. Although Holmes says the target may shift as Tesco digests the results of its first batch of conversions, he reckons about 100 stores will be changed in the first year.
For most rival c-store retailers, the prospect of a Tesco Express appearing around the corner will be pretty daunting which is why so much attention has been paid to this aspect of the T&S deal. However, those retailers pitched against a One Stop should not relax, as they too will start seeing major differences as Tesco looks to "drive forward an already strong business".
Put simply, Holmes sees Express stores as local food shops, and they will be sited accordingly, while One Stop stores are neighbourhood shops that are strong on what he calls the heritage categories of news, tobacco and impulse.
Holmes makes no secret of the fact he's impressed by the way T&S has operated particularly in the way it focused on promotions and driving volumes. "They do a really good job. Probably the best in the industry," he says, "Talk to suppliers, and they will tell you there's not a convenience retailer that gets anywhere near to what One Stop delivers."
Blend all of that expertise together with Tesco's strength in its own heritage categories fresh foods and grocery and you can quickly grasp how the One Stop offer is going to be reshaped. Holmes adds: "Fresh and grocery are not part of its history. That is where we can add value."
But it will not stop there. As well as trying to trade fresh and grocery ranges much harder, Holmes believes T&S will be able to leverage the Tesco ties in other areas too. He immediately points to the video rental section at the front of the store. "That's a premium selling space. I am very confident we can put in a different offer to drive more sales and please more customers than video rental."
The superstore operators are great at getting food shoppers to buy other things. Applying that knowledge to the convenience sector to increase the average spend in One Stop stores will be key to its growth. Holmes has plenty of ideas for doing that.
Take home entertainment products such as DVDs. "If they are given the choice of buying, say, the new Harry Potter DVD, many consumers would rather buy it locally than schlep into town," says Holmes. "T&S would not have had the access to sell that on its launch date, but we will."
At the same time, he is keen to maximise the opportunities offered through event marketing by linking with Tesco initiatives to bring across activity that will add value for One Stop customers. "After all," he says, "why should we develop Mother's Day in isolation from the Tesco business?"
Or how about BBQ products? "These are bought as a convenience product in our supermarkets so we are working to leverage the Tesco knowledge to bring a BBQ range to One Stop," he says.
Although Holmes says the range on offer in T&S stores will be enhanced significantly, the one thing you will not see in One Stop is Tesco branded products "That would confuse customers," he explains.
However, there will be "significantly less" buying carried out within T&S as negotiations are concentrated at the point where the volume is generated as he says, there is little point in buying Mars bars in two different places. The T&S team will instead focus on "understanding the customer and reflecting that in store". All of which meant a "common sense" restructuring at T&S HQ.
Holmes has had a busy time since officially taking over at Brownhills as CEO just eight weeks ago. But you can see he is already pleased at the way things are taking shape. It helps that Tesco and T&S were such a good fit, he says, not only in retail terms but also culturally with both businesses having a very pragmatic, can do' approach.
It also helps that the foundations of the T&S c-store operation were already solid. The trick is to ensure Tesco can build on that. And Holmes, for one, is certain they will: "This is a great business that we can make into a fantastic business."
{{ANALYSIS }}
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