Jan
26
Musgrave: Apart in a crowd
2010 | Filed under Interview | (0) 
, Make a comment?
For this Yearbook edition, Ulster Grocer has been speaking to Nigel Briggs, managing director of Musgrave Retail Partners, about the challenges of the year just gone and his priorities for the months ahead…
HOW HAS MUSGRAVE RETAIL PARTNERS BEEN PERFORMING IN NORTHERN IRELAND IN THE CONTEXT OF THE CURRENT ECONOMIC DOWNTURN?
Overall we had a strong 2009 with the business performing significantly ahead of target. Whilst each of our three brands – SuperValu, Centra and Mace - recorded good like-for-like sales increases on the previous year, Centra’s year-on-year performance of +7 per cent like-for-likes is of particular note, being well ahead of all known market comparators.
Like pretty much all retail businesses, the recession is bringing significant challenge to us in Musgrave and to our retail partners.
With ‘value’ being even more to the forefront of shoppers’ minds, it’s essential that the retail pricing structures we support remain competitive and that promotions are both sharpened and communicated even more strongly. The collective direct buying power of the Musgrave Group is a key enabler for us to maintain our targeted ‘best in class’ positioning. Historically, we believe our brands to have consistently offered the most competitive pricing and margin combination in the independent sector – and our point of competitive advantage on retail price positioning is being further reinforced, with the ‘sharpening’ of our value offer implemented through last year and continuing into 2010.
Musgrave also invested substantially in the margin element of our model in 2009. Through our ongoing benchmarking, we recognised that our retail partners needed additional support in the current economic climate, and we therefore implemented substantial enhancements to our retailer rebates as well as a number of additional cash flow supports. All in all, these enhancements are worth in excess of an additional £1m to our retail partners in a full year, and were delivered through Musgrave reducing our margins in a considered and structured manner.
This partnership led approach clearly differentiates us from our competitors, with, for example, one of the larger local wholesalers having effectively increased prices/ reduced terms over the same period. Clearly a different definition of partnership to the one which we espouse!
WHAT HAS BEEN YOUR STRATEGY TO ENSURE CONTINUED GROWTH WITHIN THESE CURRENT CONFINES?
We have had two key drivers to delivering growth through the current recession – developing our offer by listening to consumers and supporting our retail partners financially and in delivering the offer.
We continue to invest in consumer research, as we believe having good insight into what consumers are looking for, and their changing needs, is essential for us to effectively position and adapt our offer to reflect changing economic circumstances.
At a top level, for example, these insights have shown that shoppers are more enlightened and ‘savvy’ than ever before, are prepared to ‘hunt out’ value and, if necessary, spread their spend across a greater number of stores to save money. They are also looking for clear and simplified messaging around price and promotions. In Musgrave, we have responded to these specific insights by sharpening our promotional offer, simplifying the pricing mechanics and how they are communicated and introducing new and more effective POS solutions.
In terms of supporting our retail partners, as well as the financial supports I’ve referred to already, we’ve had a particular focus on working with our retail partners to reduce retail costs through a series of initiatives and affinity schemes across just about all elements of the retail cost base. This work, which is particularly timely in the current environment, has included the development and introduction of innovative and value-adding new management tools in the key areas of payroll and shrinkage management.
LOOKING IN PARTICULAR AT THE INTEGRATION OF MACE WITHIN YOUR EXISTING STRUCTURES, HOW HAS THAT GONE?
The full integration of Mace into the Musgrave business was a key business priority for us in 2009. We have now moved all of the Mace warehousing and distribution – encompassing ambient, chill and frozen – from the old J&J Haslett site in Derriaghy to our facility in Belfast Harbour Estate.
Logistics integration was supported by our £1.65 million investment in a new state of the art frozen facility which is now fully operational for our SuperValu, Centra and Mace partners.
All of the transferring J&J Haslett staff have now moved across to our support office in Belfast Harbour Estate, with the Derriaghy office and warehouse complex due to be fully decommissioned by the end of January.
We also continued our work on the development and modernisation of the Mace brand with the new look Mace now implemented in 25 stores, with a further 30 scheduled this year. In this regard, we have been delighted by the response to the brand development work – both from existing Mace retailers and the wider market.
Our overall transformation plan for Mace is now well advanced – in 2009 we had, by necessity, a significantly inward focus on physically moving and integrating the logistics and support structures of the Mace operation. Having now completed this essential foundation work, we are now able to more fully concentrate on developing the Mace commercial offer and retailer supports and this will be a key priority for us in 2010.
Mace has a strong future within our portfolio of brands, and we see significant upside in terms of store numbers and sales, as we progress the ‘new Mace’ and bring it to bear on the market.
DOES YOUR RESEARCH SHOW THAT CONSUMERS WILL FAVOUR ONE SYMBOL BRAND OVER ANOTHER, OR IS IT JUST A CASE OF NEAREST IS BEST?
Location and convenience is clearly a key driver of consumer behaviour, particularly in our sector. However today’s shopper is willing to travel further, if necessary, to seek out a good standard of offer - whether that be price, range, service or hygiene, or anything else which is important to them. So it certainly isn’t a case of ‘nearest is best’ – if ‘nearest’ doesn’t deliver high standards in all aspects of the offer which are important to the shopper, then they’re more than willing to go further afield.
All good brands have equity in that they add value to a business and differentiate it from they’re competitive set. Over a number of years Musgrave has adopted a holistic approach to brand development and management by focusing on the four key quadrants of store environment, products and services, communications and staff behaviours.
We have made significant progress in building equity in, and consumer loyalty to, our brands through this approach; albeit I would be the first to recognise that we still have some way of go, particularly in terms of consistency.
DO YOU BELIEVE THAT THE INDEPENDENT RETAIL SECTOR IN GENERAL HAS BEEN AFFECTED BY ECONOMIC CIRCUMSTANCE AND DO YOU FEEL THAT IT HAS RESPONDED WELL TO THE CHALLENGE LOCALLY?
The independent retail sector has certainly not been immune from the pressures of recession. Overall, I think the sector has responded well to these pressures – with the leading players in the market adopting a strong leadership position and adapting their offer to meet the new economic circumstances. We certainly have a strong independent sector in Northern Ireland – one which is supported by several professional wholesalers and which encompasses a large number of ‘good to exceptional’ independent retailers.
WHAT WERE THE KEY ISSUES FACING MUSGRAVE RETAIL PARTNERS IN 2009 AND HOW DID YOU DEAL WITH THEM?
The key challenge we faced as a business over the past year was balancing the heavy Mace integration workload with the ‘business as usual’ agenda which including adapting our model, developing our brands and supporting our retailers through the challenges of the current economic environment.
Overall I’m satisfied – both with our progress and business performance over the past year – and am looking forward, with enthusiasm and confidence, to the year ahead. We have a number of substantial plans and strategic initiatives which, when implemented, will, I believe, reinforce our position as the partner of choice for progressive independent retailers in the Northern Ireland market.
WHAT WILL BE THE KEY PRIORITIES IN THE NEW YEAR FOR THE CONVENIENCE RETAIL SECTOR GENERALLY, AND MUSGRAVE RETAIL PARTNERS NI SPECIFICALLY?
The key priority for the overall sector is to ensure the offer is contemporary and competitive and that it is delivered effectively and consistently to the end consumer.
In Musgrave, our focus in Northern Ireland, as it is across the wider Group, is about positioning ourselves to emerge stronger from the recession. We are focusing on our ways of working – by looking at how we can operate more simply and efficiently – internally as well as with our retail partners and suppliers. We are working on a number of strategic initiatives under this umbrella – all of which are designed to enable us to improve pricing competitiveness and/ or margins, by more closely aligning the needs of our retail partners with those of our suppliers, and by improving and simplifying our processes and thereby reducing costs.
ARE YOU CONCERNED BY THE CONTINUED EFFORTS OF THE MULTIPLES TO INCREASE THEIR SHARE OF THE CONVENIENCE MARKET AND HOW WILL YOU BE SECURING THE FUTURE OF MUSGRAVE IN THAT REGARD?
We already operate in a very crowded market place – in simple terms, too many shops chasing too few consumers. In this context, the potential for more multiple stores is of course concerning.
However our focus has to be on our own offer and on ensuring it remains both different and better in the convenient supermarket/ convenience store sectors. The retail partnership model which is at the heart of our business, has coupled the commitment, ingenuity and local knowledge of our retail partners, with the scale, experience, innovation and systems of Musgrave. It is an extremely potent offering and has a number of key differentiating factors and advantages versus any multiple offering.
From the perspective of the wider sector, whilst we shouldn’t be complacent in the context of the scale and expertise which the multiples can leverage, we should be optimistic, providing we remain wedded to an agenda of continuous improvement – something which Musgrave has been and will remain committed to.
AND WHAT WOULD YOUR MESSAGE BE TO YOUR RETAILERS AT THIS TIME?
The Musgrave business model is sound and proven. Musgrave has been in existence for over 130 years as a family business, and has the scale and experience to whether tough times, and to emerge stronger at the end of the recession.
We are creating a platform for sustainable growth for Musgrave and our retail partners in SuperValu, Centra, and Mace, and have clear strategies in place to drive price competitiveness, margins and returns over the medium to longer term.
WHAT IS YOUR VISION FOR MUSGRAVE RETAIL PARTNERS IN NI, FIVE YEARS FROM NOW?
Five years from now, I would like to see Musgrave Retail Partners having reinforced our position as the number one supporter of independent retailers in the market, and leading a vibrant, independent retail sector which provides real choice to consumers and underpins a properly balanced food retail market in Northern Ireland.
This is only part of a full article. For full access you can SUBSCRIBE TO ULSTER GROCER MAGAZINE
Don't forget to subscribe to our RSS feed for post updates.
