Sean McAllister identifies five retailers showing a resourcefulness that could make them tomorrow’s stars of grocery

Compared to the multiples these companies are minute. Even compared to many in The Grocer’s Top 50 independent retailers, they’re pretty small. And in the increasingly competitive grocery market, if they’re not big, then they must be clever.
They are the contenders for The Grocer Top 50 of the future. Each has shrewdly carved out a niche in the market and delivered what marketers term a USP. Hudson’s, for example, has a unique selling point in the level of personal service it gives to its customers - between them the staff really do know every one.
Jeroboams not only sells groceries, but is a purveyor of fine foods and wines from around the world and the size of its customer base has grown with its reputation.
But surely Cook, Cooltrader and Eismann all sell bogstandard frozen food? Wrong. Cook’s shops resemble family-run delis and its frozen meals have created a new super-premium category. Cooltrader has developed in the opposite direction and claims to be cheaper than Tesco.
Eismann is able to deliver to its customers’ doorsteps - its 100 shops have engines and four wheels.
The uniqueness of their offerings should ensure they will continue to thrive. Even though Jeroboams could find some shops flanked by a Tesco Express if it buys Adminstore, its clearly differentiated offer should ensure its survival.
Cooltrader and Eismann are strong contenders for The Grocer Top 50 next year, and surely it is only a matter of time before Cook, Jeroboams and Hudson’s join them.
And the future? The opportunities are endless. As managing director Andy Pritchard says of Cooltrader: “We don’t know where we’ll end up.”
Read on, because these retailers really are ones to watch.
It may not sound like the archetypal name for a UK independent, but MD Karl Schneider is keen to stress that Eismann UK isn’t a traditional retailer.
He prefers to describe the business as a ‘shop on wheels’ and its 100 temperature-controlled trucks sell its range of frozen foods on doorsteps in the south, the Midlands and Wales.
Eismann has been selling frozen food in the UK for over 18 years under the auspices of Eismann International, owned by the German ice cream giant Schoeller - hence the name - until it was acquired by Nestlé in October 2002. But it became an independent company in July 2003, when its six directors, led by Schneider, bought the UK arm of the business from Nestlé.
Most trucks are run under a franchise partnership. Eismann UK provides the branded truck, training and marketing support and supplies the stock from one of its 10 depots, while the franchisees visit 60,000 households on a fortnightly cycle. Since the MBO, it has stripped out costs and exceeded profit targets.
And Schneider is intent on growing the £12m business and is looking for franchisees. He also hopes to expand the business to Bristol and northwards to Lancashire and Yorkshire. There are three years to run on an option to start up in Ireland and he is seeking franchisees to run up to 15 vans in Scotland.
If you thought frozen food was dull take a look at Cook. Brothers Edward and James Perry, Cook’s retail director and MD, offer homemade-style meals like mum used to make for the freezer.
But, with its stainless steal freezers, large foodie photo boards, terracotta flooring and wood finishes, there’s nothing mumsy about Cook’s shops. In fact, they threaten to do for frozen food what Kylie did for hot
pants - make it sexy. And lucrative. The brothers predict sales of £7m this year and in Cook’s eighth and ninth shops in Oxted and Henley they believe they’ve hit on the right models to expand by five or six shops a year.
Edward admits it has taken six years of learning to perfect its offering. Opening a shop is easy, says Edward. The challenge is scaling up production.
The key to the business is its kitchens in Sittingbourne, Kent. Cook makes its own frozen meals, which represent 75% of sales, and the company’s growth will be defined by its ability to expand its kitchen operation. James says: “We’ve potential to be a national chain of shops. But our growth will be dictated by our kitchens.”
That said, it won’t be looking to venture capitalists to support growth, he insists. “We’re passionate about retaining our independence. Food needs integrity and we don’t want to compromise, so money must not be the main objective.”
Nick Cooper is unlikely to be troubled when he hears one particular Dionne Warwick hit song on the radio. Why? Because in general not many people walk on by his stores: both stores are located in private residential communities.
The first opened in Bow, east London in October 2000. It has a captive audience of 1,500 residents in its apartments and has performed particularly well and is very profitable, says Cooper, Hudson’s managing director. So two years later a second opened, in Wandsworth, south London.
Despite the finite number of potential customers, the two locations have one great benefit - the residents are mostly professional workers with high disposable incomes. So Cooper runs the stores on a B2B model. “Each customer is a revenue opportunity. As there is no other passing trade we must increase their basket sizes in order to increase turnover,” says Cooper.
To do this Hudson’s provides ‘community retailing’, which means in essence offering each customer a bespoke service. Services, such as dry cleaning, DVD and video rental and house and carpet cleaning, have been added to the mix.
“We must have a clear differentiation from the multiples,” says Cooper. “We must keep an eye on the competition and on top of what our customers want.
“What they want today won’t necessarily be what they want tomorrow.”
Since three ex-Iceland directors, Andy Pritchard, Andy Errington and former chairman and group executive Malcolm Walker, formed Cooltrader in April 2001, the freezer centre chain has kept a low profile.
Cooltrader’s md, the former finance director for Iceland Andy Pritchard, says: “Many customers and suppliers say ‘we’ve never heard of you, you’re the best kept secret’.” All that should change with the
appointment of a new marketing director. They will certainly have a lot to shout about. Cooltrader has 10 outlets (1,500 sq ft to 3,500 sq ft) in and around Manchester, Liverpool and north Wales and is achieving double-digit like-for-like sales growth.
The stores sell predominantly frozen food, which represents 65% of sales, plus some grocery, chilled and fresh products. And Pritchard says it uses an EDLP strategy to differentiate itself from the high/low strategies used by some other frozen retailers. Cooltrader even claims to be cheaper than Tesco as it stocks just 800 volume lines, reinvests marketing support from suppliers into reducing prices, keeps margins to a minimum and sometimes sources from the secondary market.
It recently recruited Big Food Group’s property director Tim Yates to help expand the business. The infrastructure to service up to 60 stores is already in place and the plan is to open 10 new stores a year over the next five years.
If Lewis Carroll had a grocery shop then this would be it - a Wonderland of fine wine and speciality foods served to upmarket customers at some of the most exclusive addresses in the country.
Peter Rich opened the first Jeroboams in South Kensington, London, in 1985. The first shop stocked an eclectic range of speciality foods including charcuterie, oils and foie gras as well as a selection of fine wines and champagnes.
The service is a cut above usual as well. For instance, Jeroboams employs two affineurs - a cheese ager to you and me - who ensure all the cheeses are individually matured and brought to perfection.
If you order Camembert in one of the shops, you will be asked when you intend to eat it so you’re supplied with a cheese that will be in peak condition at the moment of consumption.
This is what its customers expect, says marketing director Crispin Russell. “They know they pay a premium but they also know they get the best and a great choice. So we set extremely high standards to maintain our reputation.”
Jeroboams has eight shops - seven in central London and one in Cirencester. The hunt is on for more sites, says Russell, in areas such as Fulham, Highgate and Wimbledon villages. “We’d be disappointed if we didn’t add two more shops in central London before the end of 2004,” he says.
Mobile shops break with tradition >>Eismann - MD Karl Schneider
Fortune to be made or lost in a kitchen>>Cook - Managing director james perry, retail director edward perry
Where trading runs on a B2B model>>Hudson’s - MD Nick cooper
Chain with a low profile and low prices >>Cooltrader - MD andy Pritchard
Expansion rests on great expectations>>Jeroboams - marketing director Crispin Russell