UK Retailers - Insight from the UK Food retail market.

Sainsbury's seem to be trading well from their XL 'big boxes' - Non food first!

2012-01-31T15:10:00.001Z

After hearing a lot about the Sainsbury's XL store format, especially the Crayford store. I decided to arrange a trip to the new expanded Heaton Park store in Manchester. Usually I just arrive at a store and carry out a visit incognito but considering it was a bit of a focus store and it's around an hour away... I decided to formalise the process and my thanks are extended to Sainsbury's HQ and indeed Michael Broadhurst, the store manager at Heaton Park for showing me around.

It really is 'fresh and new'.

The store itself is in an interesting location, it's perhaps one of the easiest ones to find as it's literally just off Jct 19 of the M60, around a roundabout and you're there. It's not an extension as so favoured by the chain in recent times, the store has been flipped and rebuilt at the back of the car park. This went on whilst trading from underneath the mezzanine floor in the interim period which is a lot smaller than the final 97,000 square foot store!

View across the Heaton Park store from the in store cafe.

It's testament to the countless folk who work in retail, their resilience in times of change is often admired, not just Sainsbury's but every retailer has elements of change going on within the business. To take a decent sized store, compress it into a tiny space under a mezzanine floor (housing the cafe) then trade out from that to an enlarged 97,000 square foot store is remarkable.

That's what Heaton Park had to do in order to continue trading, there was a time where stores would close for a while ahead of a refit but with competition on the increase. Especially after the enlarged store reopens with competitors often offering money off coupons to entice customers into their store. You don't want to be losing customers at any time but especially in these times of austerity.

With regard to the austere times, we've seen the Tesco sales slowdown culminating in somewhat of a profit warning and subsequent business turnaround plan in April to be revealed by Phil Clarke. He blames big box stores with people seeming to jump on the bandwagon that is stores laden with non food are now white elephants as online becomes more important. Certainly Morrisons think so and their stores with very little non food now look sleek as the market changes once again.

I'm not convinced it's as simple as that, Sainsbury's are slowly expanding their XL store format where sites allow and crucially - something that Asda and Tesco seem to have missed with their new big stores. There's an attractive enough proposition on the food side of things within Sainsbury's, expanded counters, more open food areas and differing merchandising tactics compared to the usual standard model.

It would be crass to say that big box is over and done with after Tesco's poor performance and indeed the woes of Carrefour across the channel and into Europe. The format does look in decline, especially as online and click & collect become more important for the customer. Sainsbury's say their XL stores aren't 'hypermarkets' per se as they focus more on food (this one does marginally with a 53/47 split) but their focus on food is evident with a real sharpening up on the counters operation and revamped Produce, Wines and Bakery operation.

Maybe retailers just have to work a little harder to capture the non food spend?

Sainsbury's will be hoping the non food boom isn't over and done with as they were relatively late to market only really joining the race in 2004 / 2005. The analysts back then were clamouring for everyone to have 100,000 sq ft stores selling mostly non food (where the profit is after all) and lamenting Morrisons lack of non food and as it was then. Sainsbury's were a distinct 3rd place behind Tesco and Asda in the non food stakes and the thirst to recover profits was necessary after the company's first ever loss was posted in 2004.

Since 2005 they've been quietly expanding their estate and where the store could support an extension it got one and with it a full range of non food. It's not all worked though, Harrogate has been extended and performs very well with a strong range of both food and non food. Monks Cross, York less so and it misses the sales target set when it was extended. The issue with the York store is that you walk directly into non food, which is never a good sign as primarily customers are there for food.

Heaton Park is notably striking in that regard as the remodelled store has the store entrance literally in the middle, it's also the first Sainsbury's store to be on the one level rather than non food being on the mezzanine like at Crayford. Upon entering the store, it's notable that you can see everything and can make instant decisions about where to head in the store.

JS Heaton Park panorama of the entrance.

Upon entering the store you've got a very 'light and airy' feel despite the store being a giant within the Sainsbury's store estate, at 97,000 sq ft it's one of the biggest stores in the estate, It benefits from the largest food range available from Sainsbury's (like all large stores) additionally Heaton park is the first store to be built and traded on one level. The other XL stores like Crayford and Lincoln feature non food on the mezzanine level.

Old style signage - this is an older version of the overhead signage.

Another notable event within the store was the emergence of the new font and in store POS, gone is the Interstate Regular font signage replaced by the new branding and font. The new font is used across the store on both fixed and changing POS

New font upon new signage.

So where to start? We'll take a left turn and go into the clothing department first, since Jeff Banks was 'terminated' early into Justin's reign, the 'TU' label has been a roaring success for Sainsbury's and it's rapidly gaining loyal customers. Admittedly Tesco and in particular Asda are ahead of the pack with their respective labels due to their focus but TU has done a great job of closing the gap in a relatively short space of time.

Almost more M&S than JS.

Focus on 'fashion' with TU - not just functional / formal.

The recent tie up with Gok Wan has helped grow the brand further, especially with women of a certain age! The one thing I noted about clothing as well as the wider non food offer was it was tailored to match that of a specialist non food / clothing outlet, you don't see high long aisles in Next for example, so why should you see them in Sainsbury's? The new Tesco Extra in Bradford makes a decent stab at remodelling the clothing department so it feels more clothing store and less supermarket, however the non food remains the same as food in merchandising and display - there is no differentiation.

A wide range of bags - again you'd perhaps expect a smaller range in a supermarket.

Tie ups with the likes of Gok Wan can only help enhance the brand.

Smarter merchandising aside - price is still vital.

Sainsbury's also have made their TU clothing area feel notably impressive, it's almost like you are not within a supermarket, such is the layout and indeed the accompanying features like mirrors, signage and plastic models displaying the latest fashions. There was a time where you'd happily get socks, underpants and work shirts from a supermarket but it seems Sainsbury's are trying to capture the fashion spend by offering much more than just the functional 'safe' options.

Formal shirts - often functional within supermarkets but JS want more than that for TU.

I recall fondly stories of Morrisons being aghast at inheriting a Safeway warehouse full of 10,000 pairs of jeans as they didn't want to sell non food, then we had the £3 George jeans from Asda... The supermarkets have really pushed the clothing angle, look at the range of jeans available within the TU collection here. It's literally taking the fight right to the likes of Next, Peacocks and the others with this range. Given Peacocks struggles and subsequent tip into administration, it's of little surprise considering the increasing levels of competition.

A wide range of jeans - arranged by fit type as well as size.

Kids clothing is very important, Next and M&S generally do notably well from kids clothing and Asda George have always performed well. Even Morrisons, the anti non food boys have recognised this by tying up with Peacocks for their stores of the future to hold a small kids clothing range. How that will transpire going forward remains to be seen but it shows the opportunity available to retailers selling kids clothing.

A strong range of kids clothing, and note the aisle space for customer flow too.

Another good example of differing merchandising tactics on girls clothing.

The emergence of fancy dress outfits is another development that the mults have cottoned onto.

The store isn't just pure sales floor, there are a few concessions in the store and notably a Clarks concession is sited at the back of clothing near the kids section. An effective footfall driver but also a sensible concession, Clarks still has a lot of resonance with parents and will drive good sales from a busy store. Furthermore it represents an opportunity for Sainsbury's to capture the school uniform spend within store and then Clarks to capture the shoes spend, especially with the preference for one stop shopping trips.

Concessions add to the experience - Timpsons & Dry Cleaning

A dentist too which remains as part of a historic agreement with Sainsbury's

Clarks concession adds to the 'department store' feel of non food / clothing in store.

Kids clothing is an important part of complimentary non food - like on Disney toys for example.

On kids nightwear too - teaming up with Toy Story franchise on the end.

Moving across the back of the store after clothing features even more non food! The clothing department makes up around 35% of the non food area in my estimation but it may well be less than that. It's a vast range and shows TU expanding as a brand in it's own right. It's increasingly clear that a non food section doesn't just sell a few pots and pans, dinnerware and a sparse electricals section anymore. Sainsbury's certainly sell everything to accessorise your latest purchase within electricals whilst offering a good wider variety of homeware with different styles and colours.

Each non food department has this 'tape' around it indicating 'Home' or 'TU'

Looking out from clothing to the rest of non food.

The store is nicely divided up into different areas, as you can see above - Sports & Fitness is on the left from clothing which then flows around to TV and electrical whereas toys are located just after the kids clothing section which represents a good flow for the customer (and indeed the kids!)

Strong Disney theme with backing POS for Toy Story / Cars

More Disney range - a strong range of toys taking JS into market vs. Toys R Us et al.

Sports & Fitness was also surprising - a full end dedicated to cyclists here.

Plus a range of football and rugby merchandise with sports clothing on the back wall

Toys are to be expected within retailers these days, certainly the big sheds seem to sell a vast majority of toys and hold their own toy events these days that are eagerly awaited by parents close to Christmas. What was notable was the merchandising of the toys, backed up by official POS and backing boards made it feel more a Disney store than food store. Especially with the large pillars adorned with the likes of Winnie the Pooh.

Cashing in on the home fitness market with Zumba.

Sports & Fitness is another notable inclusion and I know Tesco have stocked a range of sports goods for some time but it's perhaps a nod to the fact that bar Sports Direct there aren't that many fitness stores left, especially as JJB struggle on. It's a category that has largely gone online but nevertheless I would estimate that it attracts a fair few impulse purchases from those browsing the store. Especially with the specialist range of things that are available, cycle helmets, Zumba kits and footballs.

'cube' signage are bus stops across non food.

Lowered displays give the store a clearly defined divide between food / non food

The signage within Heaton Park was very well done, hanging signage can leave the non food side of the store feeling like a food store, what's clear here is how Sainsbury's have realised retailing non food is markedly different to retailing food. Indeed you could argue that the Tesco model of selling non food from the same height displays as food has contributed (with a number of factors) to a sales slowdown.

Non food requires innovation - Wool and Sewing machines reflect a specialist market.

There is a definite slowdown in non food but I think Tesco need a rethink of how they merchandise their non food assortment, indeed a clothing buyer said to me that 'making Tesco realise that clothing is very different to selling food is part of our battle'. It's probably the same with non food, there'll be a big look at what Tesco need to do in a forthcoming blog but they need a big rethink, especially when you look at stores like this one.

Store foyer has 'feature' lines such as JS 'cook's selection'

What Sainsbury's have also done well is develop good, better, best within non food, rather than calling a premium Pan 'Finest'. They've called it 'cooks collection' but used the same colour scheme as used for Taste the Difference. They also had 'different by design' using the same colour scheme at one stage.

Strong range of cookware within the non food department - note department style merchandising.

A very solid range of pans with own label prevalent.

Cooking is an important part of home life within the UK, perhaps more than ever as customers return to cooking from scratch. The 'bread and butter' of supermarket non food was electrical and elements of cookware, Sainsbury's retain a strong range of cookware here and the merchandising remains strong.

Bed Linen and pillows - you can get everything here.

Lighting - standard line alongside the more decorative light balls on the top shelf.

A lot of photo frames here - is it something that customers will always buy?

Another challenge facing retailers is that customers who would purchase new dinnerware / cookware whenever they had a dinner party will now be cutting back. They won't buy a new frying pan for each fillet steak they purchase anymore and as a result capturing the spend becomes ever the more difficult. It's the same with kettles and kitchen electricals, price is important but durability and quality are also as important.

Note the tape at the base of the shelving indicating 'home' - Basics range of electricals on the end

Ends are lowered for featured items

Another interesting focus area for Sainsbury's is click and collect, it's been very successful with Tesco and Asda, Sainsbury's have also found notable success with the model. Morrisons will hope to utilise that success when they launch their non food site later this year. What's interesting within Heaton Park is that Sainsbury's are promoting items in store that can be then ordered online.

Oak table and chair can only be ordered online - however showcased in store.

It can be ordered online - an order pod would perform nicely here to capture spend.

The featured item above can only be ordered online due to the size of the product and is then delivered to your home, I'm told it has some success and showcasing items like this in stores is far more effective than on a website considering the flow of customers. How long though, before we see an order pod near this product inviting customers to 'order today, pay today, deliver tomorrow?'

Dyson on display - notable shelf edge stripping and POS with 'Dyson' on it adds a dept store feel.

Moving across to the top of non food (yes, there's still more!) and you pass by the items such as vaccum cleaners and irons, taking Sainsbury's into competition with the non food specialists such as Argos, Dixons and even home catalogue giants like Littlewoods. It's great that you can see the product, all too often customers just see the box but each item is on display so customers can touch, feel and see what they're buying.

Ranges such as irons are now a 'necessity' within non food.

The wider, clean, clutter free aisles are evident within Heaton Park, particularly on food (more on that in part 2) but non food has precious few stacks or shippers. This is in stark contrast to Tesco who seem intent on driving sales by parking shippers all over their non food (and food) areas. The clean, clutter free shopping experience is something Sainsbury's hold very true and it's apparent that it continues to be vital to them.

Wide aisles for the sale range - the seasonal space is interchangeable throughout the year.

A staple for non food ranges within supermarkets and arguably 'where it all began' is home entertainment. Cut price CD's were the first encroachment onto HMV's territory and few could have imagined how big the supermarkets would become within the entertainment market and also the wider non food market.

Entertainment as strong as ever - smaller console formats feature on the ends.

Critics, particularly those living in a parallel universe to ourselves blame the supermarkets for being 'too big' and 'powerful'. The fact is that supermarkets offer fairly priced goods and open at convenient times for their customers is irrelevant apparently.

It's no coincidence that supermarkets perform so well, for me there's no wider conspiracy about the fact that HMV are performing poorly, in the mid 90'swith the lack of competition both from supermarkets and Amazon, they had their day in the sun charging £18 for a album when there was nowhere else to go.

Nintendo Wii demo in store along with other consoles available to buy.

It's not just HMV who have suffered, Woolworths disappeared and GAME suffer as the range of computer games is a lot bigger than many other stores. The product range encompasses most of the common formats like Playstation and Xbox, not just the top charted games. Coupled with that is the wider range of accessories such as extra controllers, adaptors and cables.

DVD offers on this aisle alone - driving good value.

It's the accessories of the electrical non food that is perhaps the most impressive, previously you'd be able to get away with buying a TV, laptop or games console from a supermarket but you'd struggle to accessorise it with a HDMI cable for example.

Good range of complimentary non food here like network cables for laptops.

A lot of memory here!

That's where a lot of complimentary purchasing can be driven, parents buying gifts will generally buy extra controllers for a playstation for example. It's the same for TV's or laptops, people want to get their big ticket items home and be able to use them straight away, it can be baffling not knowing what you need to get started.

Extending to TV stands - flat screen TV's can be mounted on a wall so why not sell the stand too?

Accessories for iPod / MP3 players

The opportunity to cross sell isn't missed by Sainsbury's, why not sell complimentary products like network cables, headphones and TV stands? If you don't, then customers will either go to the competition or go to the specialists. It's an easy way to capture additional spend and a good strategy backed up by strong merchandising and is clearly a winner, if you buy a flat screen TV and want to mount it, you'll need a bracket!

All the televisions on - always a winner!

Finishing off non food is the electricals such as Televisions (located on the back wall), and then a separate display housing Apple products (on the end) and sat navs, cameras and MP3 players located on the same display.

Apple products are a winner in any electrical range.

Finally,(Food to follow in the next blog, and that's worth waiting for, it's not all non food in this store!) it's worth looking at books, just located to the right of the wider electrical range before the store goes to the food. Much has been made about the supermarkets encroachment into books, Waterstones ('s) struggle to compete with the 2 for £7 paperback offer that JS promote heavily here and the emergence of supermarkets and Amazon saw the demise of Borders.

Quick moving Paperbacks from the chart mean an ever changing list.

The strategy of Sainsbury's is that they can focus on the fast moving chart paperbacks whereas a book store such as Waterstones will hold more slower moving books to encompass a wider choice for the customer. It's the nature of the beast sadly.

Extra featured space gives the store flexibility to promote different books.

So, that's the mammoth food section at Heaton Park! The food side of the store is to follow and that's notable as there's been a lot of tweaking to the food offer within Sainsbury's too.

The critics will of course point to the slowdown in non food and the struggle of Carrefour, WalMart (US) and Tesco and their big sheds. Sainsbury's only have 5 of these XL stores and Justin King has argued they aren't particularly known as 'hypermarkets' as there is a wider food offer. We'll see that in the next blog but I'm quite confident Sainsbury's can drive a bit of profit through these stores however it's dependent on store location.

As we know, there are still struggles within Sainsbury's to improve the underlying margins and with brand match being succesful, price matching Tesco and Asda will impact margin so growing non food makes sense, especially as Sainsbury's continue to post good growth.

Kantar data out today (31st January) shows Sainsbury's recorded a 5.0% growth to their sales on a like for like basis, this does include store extensions like Heaton Park but nevertheless the business is in good health and looks set for further growth, especially if models and learning from this style of store can be rolled out.

Morrisons 'disappointing' Xmas performance - +0.7%! What about 2012?

2012-01-16T23:00:00.001Z

It was (based on store visits and anecdotal evidence) a remarkable Christmas for Morrisons with a strong fresh food offering seemingly winning customers over, specialist lines such as handmade chocolate Yule logs were available long before Christmas came around to ensure they were in the minds of the customer.

Stories of car parks being full at 7am for store opening and record sales across many stores means surely Morrisons has had a good Christmas, however would it translate into the figures?

I estimated on Twitter that a figure of around 4% lfl increase would be around accurate, however since then RBS analyst Justin Scarborough forecast a rise of only 0.6%, which would be notably below previous Quarterly performances. Since then other analysts have come out stating they feel it will be higher than that with Shore Cap estimating 2%, I then revised to 2.6%. It turned out the house broker was right with a 0.7% hike.

I did fear what could affect the overall figure would be the slow start to Christmas, with the weeks being 'standard' that is Christmas falling on a weekend rather than a weekday, it led to customers holding off their spending until the final days before Christmas. Indeed the feedback was that there was a mexican standoff with customers waiting until the back end of the week before spending.

Profitability wise though, Morrisons not buying sales by offering a ton of promotions like in previous years will have done them no harm. Compare that to Asda giving away £5 up to Christmas and the alleged high volume of Nectar vouchers instantly printing off at Sainsbury's stores up and down the land..

Post Christmas, everywhere has felt the slowdown once more and the swathes of Christmas lines at heavy discounts (70% in Sainsbury's now) shows that the disposable income isn't there even for items on discount. Everyone had a big ask to get the consumer spending for the Christmas period.

Newspaper promotion running in the Mirror and Sun for £5 off when spending £40

Rolling into the new year and the offer packages come thick and fast, 'the great British price crunch' has seen some solid promotions and half price deals to entice customers back into stores. The Morrisons millions promotion must have been successful as it's returned in a similar manner for the 'win free shopping' promotion, the ruse is the same collect receipt numbers and then enter them into a site to win the value of your shopping.

Asda kicked off the new year with a lot of rollbacks

Whether it's had the same impact as the 'millions' promotions remains to be seen, my local store hasn't had many redemption's so I wonder if the promotion has captured the imagination as much as was hoped, either way it's a nice bonus if someone does win but perhaps a consideration should be 'free shopping' immediately makes customers think of 'con'.

Admittedly a quiet branch in Bradford but not many redemption's for 'free shopping'

We were promised a package of promotions to replace the £5 new year voucher that was included in the £25 Christmas collector scheme, the steady raft of initiatives shows that was a wise move with a fuel Britannia promotion running last week offering 6p off a litre of fuel after spending £40.

Disappointingly, the media reverted to type when the Christmas update was released. Clearly they had dined out on stellar rises of 2-3% for a good while so writing their articles became relatively simple. It was disappointing to see so many nearly slating the business for their modest +0.7% hike.

A strong focus on Christmas trading at Morrisons

The Sun ran a story with the Morrisons results being accompanied with a face nearly looking a bit sad, with the headline 'Morrisons Christmas Turkeys'. It was a 0.7% increase in like for like sales, the way some other journalists and analysts carried on you'd have thought Dalton had announced a -7.0% drop in sales.

It was behind expectation true but that was driven by the high expectations considering former good performance in the like for likes. Christmas is a tough trading time and competition is at an all time high, Morrisons (and Sainsbury's) didn't buy sales this year and focused on quality, fresh food and availability so whilst the like for like increase will be modest - profits will be protected.

One of my Twitter followers made a great point that he felt Morrisons may have pushed sales into the previous quarter considering the early arrival of Christmas confectionery (early September) which enabled customers to spread out the cost.

Sainsbury's announced very strong results of 2.1% for Q3 including Christmas but their figures include VAT and also include the store extensions of which they are so fond of. Removing both elements, their results come in around lower than Morrisons at 0.3%. JS confirmed in their analyst call that store extensions equated to 1.0% with VAT accounting for a further 0.8% out of the 2.1% growth.

NOTE: As Sainsbury's have pointed out today, there does need to be a little context applied to the results. JS Q3 is a 14 week period, whereas Morrisons and Tesco only report a 6 week period to to the end of the year. So JS may be a small rise of 0.3% but it's over a longer period.

Compare that to Tesco who announced a -2.3% drop, which was disastrous and saw their shares drop like a stone. Let's not get ahead of ourselves, we're not going to see Tesco closing lots of stores or indeed go into administration but for their stellar performance in the last 15 years, it came as a huge shock, especially since the previous year saw Tesco fall as customers were forced inside by a flurry of snow.

No real shock for readers of this blog or indeed twitter, I've been saying for a while that standards had taken a notable turn for the worse but the level of the drop in the results did surprise me and many others. There'll be a wider blog on Tesco and what they need to do when they do respond - and they will respond.

o2o:

The own label expansion continues with ready meals, bread, morning goods and now Frozen ready meals gaining new ranges. The M Kitchen range expands to the frozen section with the ready meals also carrying the sub brand.

New frozen range of ready meals - using the M Kitchen branding.

The notable addition is the revamp of the value tier - Morrisons Value disappears to be replaced by M Savers, the new value tier range. The new products are a real improvement from the horrendous yellow packaging that was previously seen, not only did it scream 'value' but it also gave the products a poor reputation when in reality the quality wasn't that bad.

M Savers POS - note it's above 'the best' ??

Value > Savers revamp is also evidenced on Frozen.

The Savers range looks far superior to the previous 'value' tier, certainly with Morrisons trying to grow their OL market share it makes sense to revamp this tier, especially in these austere times.

New vs. old on Ice cream - with existing core OL on the right.

Revamping all the own label is the challenge with o2o and with ready meals showing healthy sales increases, the focus naturally turns to other areas. Bakery and morning goods have had the full treatment with 'baked by us' highlighting lines that are made within the M bakeries along with the popular M Kitchen range on fresh ready meals. Savers lines that have arrived into the Bakery or Ready Meals category complete the fixture and offer a choice for every single customer.

Savers and Value on toilet tissue. A marked improvement

The problem within say, Ice Cream or Pet Care is that the wider range hasn't yet been developed so the risk is that introducing a revamped 'value' tier will result in customers moving from the standard own label to the new value tier range. Whereas in Bread / Morning Goods and ready meals, there is the full range for customers to pick from thus driving better purchases, there isn't necessarily that clear distinction in other ranges.

Range development - 'baked by us' White Rolls look more appealing for a mid tier product.

Whereas Savers look smart but within a developed range - value tier

Developed own label means sub brands carrying 'Wm Morrison' are also evident - premium tier.

There have been three category revamps now which have seen 'the best' disappear and sub brands such as M Kitchen, 'baked by us' and 'Wm Morrison' appear within the categories. But what for the remaining ranges? Their offer isn't as compelling hence the revamp of each individual own label product, is it a risk introducing a smarter looking lower priced product before revamping the entire category?

Savers vs. Own label - big price difference but is there a difference in product?

When Sainsbury's commenced their yearly category review programme, they revamped many of the categories, removing poor selling lines and introducing new branded lines and own label lines. The Basics relaunch of the previous 'economy' label came after each category had been reviewed to ensure if complemented the entire store range.

The Savers lines look superb, a marked improvement from Value but against the existing undeveloped own label, they look a better option at a much lower price which isn't necessarily great for business.

Shelf ready packaging increase is welcomed but OL biscuit assortment on bottom (red) - Savers product above.

Branded premium coffee - M Savers has pride of place at the top - surely the base?

Questions also have to be raised over the merchandising of lines, typically the value tier is in the base shelf of any fixture, it doesn't capture the customers attention that way, so customers who are unsure tend to pick the appealing premium tier product (higher priced of course too!)

Key difference in Savers but the own label needs to catch up.

However Morrisons seems a way behind with these merchandising principles, the ceasing of gap filling has helped stores identify where availability problems lie and drive more effective ordering but there still appears to be issues with merchandising principles, driving customer purchases upwards is not just product but also needs to be about placement, with the placement of many Savers products actually on line with or above premium products, there needs to be a consideration that customers may well opt for the newer looking one.

Another sub brand 'deli sauce'?

Savers bottom left sandwiched with higher priced low fat and standard own labels.

The Ready meal / pie category is another good example of where the category has been developed fully and the merchandising principles and layouts make sense. Savers lines live within the base of the shelf with a fully developed category offering choice for each customer, there is the standard M Kitchen label along with a more premium product in Bistro.

Admittedly this a mature category for o2o considering the recent revamp but in my opinion, wider grocery departments should revisit product placement to prevent sales drifting to a lower priced, poorer margin product albeit with a smarter design (and backed up with POS!)

Savers in the base within pies

M Kitchen pies are the mid tier - merchandised in the middle of the bay.

Bistro pies at eye level to offer a premium level product for those wanting it.

M Local

Despite all my sources and contacts, you don't get any figures or indeed much news on M Local stores, a brief comment of trading 'ahead' of expectation is the closest I've got. I think they've been relatively surprised at how well the food 2 go offering has performed, it's an area done very poorly done in many convenience stores so Morrisons using their fresh expertise is a refreshing change.

A festive looking M Local in Ilkley

Fresh and Food 2 go represent excellent margin and the shops are notably better than anything else within the market, far better than the tired Co-Ops for example. The two that are trading at the minute (3rd opened today, Monday in Manchester centre) are in affluent areas, Ilkley and Wilmslow aren't areas that spring to mind as suiting a Morrisons but they've struck a chord with the affluent foodies. They love fresh food and there are tales of customers ordering whole salmon and other strongly priced items out of the Ilkley M Local store, ordering before 11am and picking up that night.

The key question from our lovable analyst friends will be the expansion, naturally analysts will want a 300 store estate to pop up by May 2012 and for there to be an aggressive expansion beyond that. The sites are there in abundance and Dalton has always been relatively confident in that, the property team have pulled some blinders out so far, Ilkley, Wilmslow and the proposed site in Chapel Allerton all look positive.

Despite the proposed store size being 10.000 sqft, there are rumours that this store will become an M Local site, it does makes sense as Morrisons stores tend to have a full 'street' counter offer which take up shop floor space both with counter and back area prep space. By opting to build the store as a M Local, it means that the hub and spoke model can be used thus eliminating the need for counters and meaning they can lean on larger stores for freshly cut meat / fish and focus on a wider range of food.

M Local - coming soon to an area near you?

There are further stores planned in Doncaster, Birmingham New St (former Habitat store) and the enigmatic Upton Rocks, Widnes store is due to open at some stage. It was mentioned as being the 3rd store but it's not even the 4th (Doncaster in March), I heard there were some delays with the building contractors as it's part of a wider development but I'd have thought it'd be near opening by now. Widnes was planned to be the 2nd store to run off Cheadle, this is likely to be the acid test for the hub / spoke model, having more than 1 Local to supply, it therefore makes sense to have Grafton Street supplied by Cheadle too considering the geography.

I'm hoping to visit the Grafton Street branch next Friday (27th) so I'll have some further thoughts beyond that but the flexibility of the fledgling chain is impressive. Naturally it's easy to do so when you've only got 3 stores but they're keen to test everything and have full flexibility to do so. Grafton St retains a wider range of Savers products, a seating area and more food to go than the other two stores.

This makes a lot of commercial sense, namely the food 2 go, it's good profit margin and with the store in student-ville and also near a hospital, there are likely to be many customers wanting fresh food to go. That is fresh food, not a sausage roll that's been in a heated display for 14 hours.

Interestingly, it sounds like the remit of the Convenience directors extends to operational decisions too, with both Ilkley and Wilmslow being run on the SMS system (which is as close as Morrisons get to a modern replenishment system, designed to support the business for 10 years, back in 1987 when it was built...) which relies on counting stock and gap scanning in store and a team at HQ also dipping in to manually allocate where applicable.

With the Grafton St store, the store appears to use the larger store system of manual ordering to drive availability. With it likely to be a very busy, high density store with lines moving extremely quickly (Value Cider and Pot Noodles if it's near the University) manual ordering makes sense to maximise sales, availability and ultimately profit but coming at a cost of extra labour, a price worth paying however.

Scope for the brand continues to be relatively easy, the Northampton correspondent says off site petrol stations could be rebranded as M Local, which will then surely pose questions about a potential bid for petrol stations such as those owned by Total.

Two instances of interest for former Safeway colleagues, the petrol station rumour does sound scarily like the BP/Safeway tie up which was famously broken up when Morrisons took charge in 2004. In addition, the proposed Chapel Allerton store is literally 10 seconds away from a former Safeway store that was sold and wasn't on the divestment list. Who said the more things change, the more they stay the same?

Stores of the future & Online:

There will be much spoke about both of these in March and the city are likely to be twitchy about expansion, particularly with the excitement over stores of the future. After all, since the St Albans store was converted, sales have rocketed and it's been getting rave reviews from all those within the M25.

We knew of the potential with the continuing tweaks to Kirkstall and anecdotal evidence indicates customers were queueing to get into Kirkstall 2 days before Christmas, that is queueing to get into the car park... The store itself carries a lot more fresh lines than their standard store cousins so it's reasonable to expect that profitability will support itself despite the outlay in staff cost.

There is understandable concern within the wider estate though regarding their stores, there are some stores particularly ex Safeway ones that are not showing the best Morrisons has to offer and are in dire need of a refit. The issue is that any refit would encompass the store of the future treatment and I don't think Morrisons are entirely comfortable with the format in the more typical areas that their stores are located.

That's the challenge going forward, the same impact with no hanging POS, adjusted lighting and lowered units would work well and the range can then be tailored for that individual area. There are waste concerns with the store of the future, a greater number of loose lines and open food mean wastage can be higher, when waste is a concern then it impacts profitability. It flies in the face of the history of tight cost control that many of the Morrisons staff have been brought up in but it's a necessary evil to achieve the greater profitability and growth for the business.

The latest batch of stores to get the updated treatment are starting their revamps shortly so it will be interesting to see their performance, I'll be tracking one of the stores closely with a good look at 'before and after' as the store of the future is put into a local relatively small shop that over trades heavily.

Online food remains in development with teams over in the US working with FreshDirect, I don't believe there is a material difference to the timescales promised. Similarly the primary location appears to be London which would make a lot of sense considering the poor geographical spread of stores within the capital. As for further rollout plans beyond that, it's difficult to say.

Morrisons have got to be confident that the model is not only profitable (something we don't actually know from any retailer since we don't get stripped out figures, bar Ocado who's troubles are well documented) but it's also got to highlight the unique nature of the Morrisons business, that is fresh food, directly sourced and the provenance of counter service. A difficult ask to get across in an online package. Marc Bolland thought so with the famous 'I'm not sure you can sell fish online' quote.

Online non food looks set for a rollout shortly, there appears to be a steady influx of people doing various jobs around marketing and online, allied to the oft picked up quote from Dalton about 'non food isn't going to be sold from big box stores, it's increasingly going online', Morrisons look set to use the Kiddicare platform to launch their non food offer shortly.

Kiddicare Kiosk in Wrexham - trial has been succesful.

It's a bold move by Morrisons, they've forseen the slowdown in non food and realise there's little point liberating space for increasing ranges of non food as Tesco have found out, Sainsbury's with their maturing ranges have found more success but they are increasingly strong on the non food side.

Whether it will just be the non food platform that will be used from Kiddicare or if they will use the strength of the brand to move into the vacated Best Buy stores remains to be seen, there was no comment on the conference call with the analysts last week but would you expect one?

Complimentary non food in stores is a huge opportunity - leveraging scale with Kiddicare is one.

It would be an interesting move but I think a smart one, the Kiddicare brand has a strong resonance with customers and the baby market is growing all the time, backing it up with a non food online offer makes sense. I'm less keen on the plan to put Morrisons non food in any potential big box store, the Morrisons label when it comes to non food needs work for it to have resonance with the customer, Morrisons simply aren't known for non food. There isn't that element to be able to 'shout about it' yet by putting it into a standalone Kiddicare store.

So, that's 2012 for Morrisons, there's a lot more to come on the blog as you'd expect but there's a bit more on the other retailers in January - Heaton Park is a new 97k sq ft store from Sainsbury's that houses their brand new XL format, there's a full visit report on the blog next.

Then it's Tesco and their woes, does simply putting the right amount of staff into stores solve their problem? Of course it doesn't and far more needs to be done, I'll look at what I think they need to look at first, and there'll be a report from the new Grafton St M Local.

As ever, thank you for reading and get in touch / leave a comment with suggestions, questions or comments.

Note: Thanks to WillPS who pointed out that I've gone further back in time than anticipated, the Basics tier within JS replaced 'low price' rather than 'economy' which itself was replaced by Low Price.

The end is nigh - what for Sainsbury's, Tesco and the rest?

2011-12-24T17:22:00.000Z

I'd planned to write a piece for each retailer in the run up to Christmas, but I've been a little busy so I'll roll these two together.

The major focus of course will be in the new year where I'll look at how the retailers are coming out of Christmas, Tesco for example seem to be holding onto stock these days, rather than pursue the aggressive markdown, sell, return to working capital strategy that Sainsbury's, Morrisons and Asda adopt to clear their stores of seasonal products.

Indeed the Christmas will prove pretty key for Tesco, their last set of results were quite poor at -0.9% lfl but strangely the analysts didn't seem too concerned, clearly thinking that profits would be fine regardless especially with the growing international side of the business.

It's amazing quite how fickle the City are, and it's becoming a bit like football management where long term planning doesn't appear to be on the agenda, Morrisons were slated for years for their lack of non food and focus on market street. Now after Dalton has adjusted things a bit with 'fresh market' it's suddenly absolutely the right move, 'they're not over exposed on non food, good on them.'

Morrisons always knew it was the right move, where retailers were hammered for not converting to non food space to take advantage of the strong margin, Morrisons continued to stick to their strategy and quietly rebuild their margin which had been damaged after the Safeway integration.

Sainsbury's are one who have aggressively expanded their store estate, then selling and leasing back stores that have no further development opportunity, in order to free up cash to fund further expansions and land.

'taste the difference' this Christmas.

Their additional space by the way of extensions has seen a real improvement in the non food range with TU clothing performing particularly well, of course the slowdown has affected everyone but Sainsbury's are still famous for offering good quality food too. Their own label was recently relaunched as 'by Sainsbury's' and the Taste the Difference brand continues to be a class apart as a premium tier offering.

Taste the Difference is always so important at Christmas

TTD performs very well at Christmas for Sainsbury's, they're perhaps the only chain who can get close to Morrisons for fresh food, whilst they don't have the vertical integration, they do retain a number of in store personnel to prepare fresh food such as Pizza, Fish, Meat and the Bakery.

They are also developing skills with staff able to go to an store based training centre or an external college to learn about the craft skills involved in baking or butchery. Whilst they don't prepare anywhere near as many fresh cream lines as Morrisons, JS do prepare some cream lines store and are expanding their ranges.

In terms of Taste the Difference, for me there is far more resonance with Sainsbury's pushing this angle than Asda currently are. It seems that there's been a step change within Asda from a relentless price message, bad news from the Asda economist, we're the cheapest again for the 14th year to a 2 week long message about Extra Special for Christmas and spending the money.

I just don't understand it, the products seem nice enough but the price points aren't remarkable, £4 for fresh pate is reasonable enough but for value conscious Asda shoppers? It's the classic trade up for Christmas trick that Asda are playing but they've been utterly brutal on price this year. I don't see how a few adverts, hanging POS and in store brochures will convince customers to switch straight across.

Strong branding and ranging for Christmas cakes in Sainsbury

Sainsbury's generally stay out of the price war and their price perception data shows customers still think of them to be more expensive than their rivals, brand match has gone some way to proving that isn't the case and they are comparable on branded goods at least. That's fair enough but their own label has a very good pedigree and is always well thought of when it comes to taste tests and general opinion.

Award winning Taste the Difference cake.

Their availability and store standards are far better than in previous years, the nightmare days of Sir Peter from the Pru and his 7 years progress in 3 led to Sainsbury's being on it's knees come Christmas 2003. Until Justin King rescued them in 2004 with a number of smart moves around improving availability, which is now at record high levels but crucially it's efficiently done too, with the latest move to abandon scanning low levels of stock focussing purely on gaps underlining their confidence in the ordering and forecasting system.

Christmas signage points customers to new lines.

Like Desserts and Christmas Cheese.

For Christmas, Sainsbury's can be seen as a destination for those who want to splash out a bit. The increased ranges on Bakery, Cheese and the increased levels of chilled desserts indicate that Sainsbury's clearly feel confident in their offer. Crucially their key lines weren't in stores until early December with final range not arriving until 20th December which shows a real defensive stance on wastage but then again, to maximise freshness it does make sense.

Late arrivals from Sainsbury's - very strong POS theme too.

Looking at Morrisons who have had their prepackaged lines in stores since early December, but the in store produced lines have been available since early November, it's the polar opposite in terms of strategy. You are gambling on people only going to Sainsbury's for their desserts and not being tempted by anything else beforehand.

Strong theme for Christmas, lots of red and prominent merchandising in the base.

Festive lines such as Rum & Raisin Cheesecake

There is an increasing emergence of a fresh Chocolate Yule Log, Morrisons have been selling theirs (produced in stores) since early November and it's been successful with sales on the rise and indeed it will be within the minds of customers as they entered the final week before Christmas.

Yule Log under the Basics banner seems a strange move.

Sainsbury's have their own Yule log but almost bizarrely, it's marketed under the Basics brand which seems a real error, priced at £5 which isn't really a Basics price point. Considering customers are happy to trade up at Christmas (and move supermarkets to do so) then selling it under the standard own label would make sense.

No POS admittedly but Cake Mixes down to £2

One definite 'non winner' for Christmas is the Christmas cake in a bag, all pre weighed ingredients that you add eggs and butter to before baking in the oven, they started at a remarkably ambitious price of £12.99 in many a store (Waitrose had the Delia one at £15) but they've been reduced everywhere. Sainsbury's are no different with their Taste the Difference bag reduced down to £2 and stock cleared from depots to sell through in stores.

Pre filled shippers are few and far between in Sainsbury's - these are own label ones.

Another thing that's notable about Sainsbury's is their standardisation across the store estate, gondola ends are followed to the plan, process is relatively stellar across the estate and availability is on the rise. They also are remarkably strict on shippers and other secondary siting. Morrisons are very much positive when it comes to sales per square foot and think nothing of siting stacks, pallets and shippers all over the store, indeed the stores of the future focus much more on a clutter free shopping experience with an absence of dump bins and a near absence of pre filled shippers.

Although some pre filled manufacturers shippers exist - they are not plentiful.

Stores have been very well stocked of Christmas confectionery confectionery which will be a concern to margin as markdowns hit in the new year, all the retailers I visited this week (22nd / 23rd) still had a full range of Christmas chocolate tins available. People have bought earlier or taken advantage of other deals, by weight - 1,2kgs of Roses (including packaging) worked out at £3.49 when Morrisons ran a Buy one Get two free on the 400g boxes in early December. The tins are only 850g so it's clear that customers are no longer buying with no thought, the same is true for biscuit tins and boxes which remain very heavy into the peak trading day.

Pyramids of chocolates remain (last weekend) but look at the promotions too!

Another thing that Sainsbury's do very well at Christmas is maintain the additional lines, such as the traditional cheeseboard, which makes another appearance this Christmas. Notably the taste the difference one must attract a great margin considering there isn't 'too' much cheese in it.

Space flexed for Christmas cheese

Strong margin likely on the £20 TTD cheeseboard.

These lines are not without risk, certainly the poor selling Christmas tins of biscuits are indicative of smarter consumers who probably work out that the biscuits inside cost around £3. Why spend an extra £2 on a tin that you don't actually need?

Discounting was evident across the store.

Not far off Christmas (17th Dec) but many decorations remained

Half Price to clear the decks and clear the warehouses.

That aside, there was a strong range on gift sets this year too, Sainsbury's clearly felt things weren't moving as quickly (like everywhere else) so were able to reduce down to half price in order to clear the warehouses. That's the priority, especially since disposable income to get 'bargains' isn't as readily available as in previous years.

Overall, a very solid performance from JS, their consistency of delivery is very good these days. Stores perform well and availability, corporate standards and promotions are generally very well executed. All eyes on 2012 for their developments, the future XL stores will be interesting (the blog visits Heaton Park, Manchester in the new year) especially with the non food woes and the JS strategy of driving non food into new space and extensions. The last thing JS need is stores that over expose on non food like Tesco are.

But what of Tesco? I'll be honest my local store (whilst being a superstore) has all the concessions you'd expect of an Extra but a notably poor food offering, that isn't an excuse for how poorly the store is traded though. Queues at checkouts and poor standards are no excuse even if the build quality of the store isn't there.

A strong confectionery range at Tesco

Their whole package has been uninspiring, the Christmas advert used some more relatively basic marketing that sounds like an over enthusiastic A level Business Studies student getting involved, 'Crackers in Caerphilly' etc is very much like the 'keeping freezers filled' 'mornings moving' and the like. Where is the focus on product? If anything the advert focuses that they are everywhere these days which is often to the char-grain of residents near new superstore developments.

Mary Berry - Do not collect £200, do not pass go. - Christmas cake bags have been marked down everywhere.

Morrisons advert focuses clearly on 'PAN-EH-TONY', Game pie and the Christmas Quiche, despite the questionable shift to premium at Asda, their message is very strong and focusing on product with Leiths.

Several pre filled shippers are the order of the day in Tesco

Sainsbury's ran a similar advert, the last one with Jamie Oliver (wipes tear away) but the food is the central point once again, I'm not really sure what Tesco stand for anymore, their customers don't seem to understand either and with their rivals revamping their own label ranges, surely Tesco will have to switch their focus to food once again and try find some point of difference within the offer.

Their Finest range continues to perform well, but there seemed to be no focus on it this year, I did see an advert for the range today but it's hardly been a relentless message. For the critique of Asda, their message both in store and externally has been relentless and very much in the minds of customers, Tesco don't seem to have put anything into the food offering, adverts for Tesco Direct were plentiful though?

Not much of a look at Tesco admittedly, they've a lot to do in 2012, arresting the sales reverse is a start but are they now too big? Richard Brasher is yet to have any impact certainly the big price drop hasn't done anything for the group and they are in danger of being left behind in the food stakes as the other 3 revamp their ranges and tighten the offer.

Above all else, you want a decent shopping experience Christmas week, with rumours of a few stores having their overtime budgets cut which will lead to stressed staff, empty shelves and long queues. Tesco have to put the customer at the heart of every single thing they do, you could argue the customer has been lost in the midst of step changes to save hours, more massive promotions and more profits. It's no good saying 'we love the customer', that's not enough.

So that's Christmas rounded up, all retailers will have had busy stores but Sainsbury's and Morrisons are my tips to perform particularly well, we never 'quite' get the answers that we want from Asda but their supermarkets appear to have been notably quiet. Tesco are the ones with the most to lose, already losing lfl sales, is there anything to make shoppers return for Christmas?

Mid December... How are Morrisons set for the festive period?

2011-12-16T18:04:00.003Z

Regular readers of the blog will know the blog retains a slight bias towards the fortunes of Morrisons(!), so the Christmas spotlight is turned onto them for this blog looking at their Christmas offer.

Strapline is 'come to us for christmas' with decorations across the shop.

The trading year has been very busy for Morrisons as charted on the blog. More stores of the future, o2o kicking off with a ready meal relaunch, a store of the future as a new build in Wrexham and the launch of the M Local convenience chain with Ilkley and Wilmslow opening. Added to that is a continuing increase in sales, space acquisition for new stores and a share price

Popular Christmas voucher scheme starts 6 weeks before Christmas

With all those positives, it will count for little if the company doesn't have a good Christmas, it's the same for any retailer - the 'golden quarter' of Q4 is the holy grail and a successful Christmas generally results in greater profitability. There are greater margins enjoyed by retailers on products sold, plus in these austere times it's one of the few opportunities for consumers to throw their budgetary shackles to one side and treat themselves.

5th September - Kirkstall displays a full 'run' of Christmas confectionary

Morrisons were the first to market with everything Christmas related this year, their confectionary offer appeared in stores early September, followed by Cream and Chilled ready meals by early November, very early compared with the competition. Clearly their research lead them to the conclusion that customers wanted to spread the cost out of Christmas and would start buying early.

That is not to spend less, but rather keep the treats and enjoy Christmas but rather than spending all of December's wage, or indeed using a credit card. Customers choose to split it over 2-3 months and buy bits for Christmas within their weekly shop.

Also Christmas biscuits available early September, some on deal to entice early buyers.

Underpinning the Christmas offer is the £25 voucher, the ruse is simple; collect 5 receipts on 5 different weeks spending £40 each week, then you are presented with a £25 voucher off your Christmas shop. Cynics point to the fact that of course customers probably spend far more than £25 per week so Morrisons are gaining, however giving vouchers back underlines their strength in the offer.

Promotions feature heavily in each retailers offer - even at Christmas.

Vouchers from schemes such as the Clubcard are not ideally to be spent on food where margins are poorer than say non food, you only have to look at the 4x up on Clubcard vouchers, it's on attractions, vouchers for other stores, non food, clothing, electricals - all things that attract a strong margin. Even Tesco Finest food is included in a double up, but due to higher prices, it offers a better margin than food.

POS and collector cards were in before Halloween.

Morrisons benefit from strong margins despite their low exposure to non food, helped by vertical integration and their focus on fresh foods so a £25 voucher off the Christmas shopping isn't as keenly felt by the chain.
It's generally accepted that consumers with £25 in their pocket will spend more than that when they are buying their shopping, so the chain may gain £40 extra sales for a £25 voucher giveaway for example. The same effect has been seen at Sainsbury's with their brand match scheme, customers don't just spend their voucher amount when redeeming, they spend a little more.

Another new line is fresh cream Yule log supported by hanging POS

To entice that extra spend, the 'elves' on market street have been busy creating many an trifle, cheesecake and gateuax. The Hidden Orange chocolate cake is a bit 'Heston' esque but is notably good value at £3.50, there are the usual plethora of desserts along with the larger versions of sponges, cheesecakes and gateau for parties over the festive period, also backed up by each counter advertising the ordering service for Christmas.

Award winning stollen

Previous favourites such as Stollen and Panettone freshly baked from the Bakery return, also featuring on the tv advert with Freddie, it's clearly been a popular product as Sainsbury's have commenced producing their own in store stollen this year as well. Morrisons won an award for their stollen this year from Delicious magazine, beating the likes of Waitrose, Harrods et al into first place.

POS for promotional bumble bees also has the Christmas theme.

M Local also offering the BOGTF on J20

There was much talk about the promotions of last year with industry leading Buy one get two free's adopted by Tesco and JS too, this year it's been much quieter although Tesco have been busy offering a few different products on BOGTF, Morrisons have launched some over the last two weeks - Pringles, J20 and Pepsi have been on promotion. Dalton and Richard Hodgson discussed their extra investment in promotions for this Christmas recently, It's an effective footfall driver and there is not a danger of it being a Safeway 'mega deals' situation where customers pick up the promotions and go elsewhere, there's too much on offer elsewhere and the fundmentals of the business remain very strong.

Promotional tables were covered in Christmas themed POS

In terms of store environment, little tweaks to add to the festivity have been made covering the display tables (typically selling focus items / promotions) with a red / orange covering in the Christmas colour scheme is one. Whilst not a huge change, it does make things a bit brighter than the usual drab grey, stores were also well decorated this year with bunting and decorations hanging from the ceiling in many stores, adding to the 'come to us for Christmas' theme rather than another shopping trip.

Morrisons stores are well decorated this year.

Like Asda, JS and Tesco, attempts are made by Morrisons to tempt their customers to try their premium offering, I still feel JS get it right with 'taste the difference' and that has a real resonance with customers. Clearly Morrisons don't feel 'the best' sends out the right message so opt for sub brands relevant to the categories, 'Bistro' indicates a decent wine bar / bistro style menu, 'baked by us' is relevant to bread and the Morrisons owned Bakeries.

As 'the best' was only introduced in 2004 (previously Morrisons had no top tier brand), it's hardly got real resonance for the Morrisons customer, especially since it was a Safeway brand. Revamping the range as well as the labels makes more sense in the longer term.

'the best' remains in areas that are yet to receive o2o treatment - additions like Florentines will attract good margin.

'the best' Christmas themed pizza - does it leave customers confused as the brand re-ermerges?

Whilst 'the best' hasn't disappeared across the product range just yet, the first plank of o2o was ready meals / pizza which saw it disappear to be replaced by 'Bistro', initial sales have been well ahead of ambitious expectations, a positive for the category review process which will continue apace into 2012.

Party food carries the 'freeze now for christmas' message on the packaging.

In terms of pace, Morrisons were first to market with everything this year, not just confectionary but chilled party food and an expanded cream / brandy butter offer was also into stores very early, again trying to capture that spend as customers seek to spread the cost of Christmas.

Party food carries the moniker reminding customers to 'freeze now for Christmas' which is printed onto the packaging, showing it was a conscious effort to launch Christmas lines earlier into store. It seems to have been succesful with early sales being positive and the range being markedly improved compared to recent years, lines such as 'Crostini' show a increasing focus by Morrisons to appeal to all demographics.

Savers on the right hand side is asthetically more pleasing than the value yellow.

Morrisons to M - another sign of the rebrand - 'M' Bistro, 'M' Savers, 'M' Local

Another sign of the increased pace in which Morrisons are acting is the emergence of the first 'savers' line, the new value tier offering as part of o2o. It replaces, well Morrisons value and their garish yellow packaging which not only screams poor quality (despite many items being decent quality) but isn't appealing to the customer who is shopping on a budget.

Safeway Savers! - (c) Rich Durge

It seems Morrisons have redressed the balance with 'savers', certainly it's a small roll out so far with only ginger snaps and Veg spring rolls seen in the stores I've been in so far. I'm told frozen fish has appeared and the marketing magazine had a picture of the revamped Lemon curd so it's a small initial launch but interesting that it's another launch ahead of schedule, it wasn't due until January.

Frozen fish appears on promotion in stores at the minute.

The rest of the range will be converted in the new year and products will start to switch over as depots begin to empty of the residual stocks, it's interesting to note that some Value frozen fish is now on promotion as presumably it's ready for conversion to savers but high stocks of Value product remains.

New Morrisons 'savers' ginger biscuits.

It's also interesting that Morrisons have chosen to launch their value tier so close to Christmas, traditionally the focus goes onto pushing customers upmarket to more profitable items like 'the best' rather than value tiers, indeed many a retailer shifts the focus over Christmas so value lines aren't always replenished as quickly as in previous months.

The packaging is far better - very Sainsbury's Basics esque / Waitrose Essentials.

M Local has also been decked up for Christmas with some very smart decorations both externally and internally, as the format is essentially not shackled by corporate 'rules' as it's still in trial mode, there's been some nice additions for Christmas.

M local looking very festive with external Christmas tree decoration

External decorations also include smart looking wreaths

It's the first Christmas for M Local of course, so it will be interesting to see how they perform over the festive period, they are open relatively standard convenience store hours so open boxing day and new years day but it will be interesting to see what product range is available.

Considering that main stores are closed both Christmas day and new years day, it's hard to see how any fresh craft lines will be available, they've already lost a day's shelf life by being closed Christmas day so they may open with some stock suitable for boxing day but then it's hard to see it being replenished with Keighley / Cheadle both being closed Boxing day.

Unless of course there are staff working on Boxing day to replenish the stocks in stores, however once the price labels are printed for fresh cream / meat / bread, then the date is 'stuck' and you've only got a day or two to sell through. So I'd expect craft workers to start early on the 27th to provide availability and freshness however it's likely someone will be in at the hub stores to produce some lines.

Opening hours for M Local, Boxing day this year is the first time a Morrisons store has opened I believe.

Hopefully there will be some aspect of service out of Keighley as there will be opportunities to utilise the ordering service, customers will no doubt forget trifles, gateaux, fresh meat or fish for Boxing Day so it could be quite lucrative if they can optimise the ordering service and have stock in store if ordered by 11am that day.

Of course after Christmas, January then brings the trading update and all eyes will be on how well the tactics of 'getting the gear out early' have worked, considering the low consumer confidence it's a wise move but not without drawbacks. The industry leading £3.99 chocolate tins deal at the end of September led to sales well below expectations, If you recall, it was a bumper week for BBQ's as we experienced summer esque weather!

Their Christmas tactic of focussing on fresh, the Christmas collector cards and subsequent promotional deals will lead the chain to a good Christmas in my opinion. The big winner? For my money it will be Bistro lines and general wider ready meal range, they'll motor as consumers trade up for meals around the festive period.

Early December - how are the retailers set for Christmas? First up - Asda

2011-12-09T09:28:00.000Z

In the next couple of blogs, I'll be taking a look at how the retailers are setting up for Christmas, there's always an abundance of offers, stock, staff and trade in December as everyone starts to go a bit 'mad' for Christmas.

The trade patterns are shifting massively at the minute, there's a real concerted effort by shoppers to spread the cost of Christmas out over a number of months, Morrisons CEO Dalton Philips reckons customers have changed the mantra 'time is money' to 'time saves you money', noticing that customers spend far longer doing their shopping, thus noticing price increases / special offers and more of the range.

Morrisons had their Christmas confectionary range in stores - 5th September

It was an unofficial race to see who could get their Christmas range up and running first, with Morrisons comfortably beating everyone as their Chocolate / gifting range appeared in stores by the first week of September, closely followed by Tesco and Sainsbury.

Sainsbury's were quick to market with a vast gift range - early October.

Asda were miles behind the rest, very surprising considering their lowest price ethos means they're very close to the heartbeat of the customer, surely they'd know customers wanted to buy in September / October to spread the cost of Christmas? Andy Clarke noted that last year that customers were buying tins of chocolates very early, September in some cases.

Halloween has become a major event in the UK retail calendar, Tesco have ramped up their offer.

For Halloween; Monsterville was superbly executed in Asda.

If you wanted tins of chocolates, then you could have got them at Asda but nothing else until early November, with the retailer choosing to focus on Halloween and the baby event. A Halloween focus is understandable considering the Walmart ownership and it's probably fair to say it's an event that Asda excel at, perhaps the only one these days as their rivals sharpen up their act.

The Christmas seasonal aisle didn't 'land' in Asda until early November once Halloween was over and done with. With Asda tending to do phases of launching things into store, for example core assortment will arrive first then you'll see more of the biscuits / chocolates. Phasing ranges in makes sense but I was surprised to see it happen here when they were already two months behind the rest with their Christmas range.

A bay of Extra Special coffee / crisps in early November

The first launch was a remarkably uninspiring range of chocolate, crisps and coffee, of particular note was a whole bay dedicated to Extra special coffee with a further two bays dedicated to giant (larger than usual) sharing bags of crisps. Presumably Chicken / Stuffing flavour to compensate for having no money for a Christmas dinner perhaps?

First variation of seasonal saw lots of sharing crisps.

I jest but the initial range seemed bizarre and almost like something you'd expect to see in late August before the full swathe of confectionary arrives, but for early November it seemed very sparse. Considering that their rivals have had Christmas lines out for two months and subsequently attracted early spend, you'd have expected Asda to be keen to make up for lost time and to go in hard with it.

Working Christmas lights at the top of the aisle with a strong range of trees.

Gift sets and toys were available from early November

The non food range from Asda is strong (as you'd expect) with the Halloween seasonal aisle disappearing to be replaced by Christmas non food, a good range of trees, decorations and gift sets were notable and the merchandising it particularly impressive, trees overhanging the aisle and fully working Christmas lights all add to the glamour of the season.

Shelf edge barkers advertising the latest toys.

A strong range of toys was also evident, despite this supercentre having two aisles of toys downstairs, some core toy offers were placed upstairs with some great shelf edge barker sized video adverts. Pressing play meant a small commercial played advertising the latest toys / game available.

Asda joined many others in an 1st weekend of December price cut.

The season aisle is now far more 'complete' as an offer than it was in November, I recall being told that their strategy of selling Easter eggs notably early three years ago paid dividends and they reached targets well ahead of Easter. It's somewhat surprising they didn't go hard with their offer considering the lost time, but it's all live now, complete with the floor sticker which forms a part of so many seasonal events.

The floor sticker 'game board' plays a part in the Christmas theatre in store.

There is a lot of promotional activity going on within Asda as there is with the rest of retail, many Christmas lines on the seasonal line are on rollback along with promotions on Beer, party food, Christmas decorations and trees.

Lot of pallet space given up for Christmas beer promotions.

A lot of rollback activity - as to be expected in Asda.

The 'action alley' appears to be the Christmas aisle, with the Pudsey supercentre giving up a full aisle for Christmas food with the other two seasonal aisles for Christmas non food, trees, lights, cards etc. It's worth noting that there is a lot more focus on stacks this year in Asda, far more so than before which indicates their determination to drive up the sales per sq ft metric by siting a load of extra displays across the store.

Additional pre filled shippers help to drive sales - and efficiency.

The middle bay in the aisle is given up for Extra Special product which again, using standard merchandising principles seems to be something Asda prefer to do. They went through a phase of merchandising all the organic product together at one stage, before abandoning that particular strategy. They seem to like doing it for Extra Special though despite their rivals ranging bays with the top shelf given up for premium ranges, all biscuits live together with the top shelf being a premium offer.

Leiths plays a major part with the Extra Special range.

Extra Special is the focus for this year but is it right? Asda spends most of it's year telling us how poor we are, the income tracker continually points to a worsening economic picture and everyone is feeling the economic woes, price guarantee is 10% cheaper, we're the cheapest for 13 years etc etc etc.

I do understand the shift to premium as it's a classic tactic used by retailers over Christmas, knowing there will be an element of trading up but Asda have to be careful not to lose customers to rivals who are seen to offer a better food range, Sainsbury's in particular always do so well with the taste the difference range at Christmas.

Equally, if customers decide to stay with Asda then the offer must remain with the core demographic in mind, the recent advert for £4 pate is perhaps pushing things a little too far. It may well be very good pate but pegging it other brands such as Waitrose top label Duchy Originals (£2.99 for 170g) means it doesn't come out particularly well as a comparison.

Andy Clarke said that they'd not done the work on Extra Special range to allow them 'credibility to shout about it' two years ago, have they done enough this time? The Leiths partnership is interesting as it will underline the quality of the food, does it have resonance with customers? Does it mean as much to customers as people like Aldo Zilli, Pierre Koffman, Heston or Delia?

Wrapping up, Asda will be hoping their famed availability problems don't hamper(!) their efforts this Christmas, the core Asda Kantar figures released this week showed industry leading growth, cynics will remain until the Netto effect is annualised and things settle down on that side but it's a positive result.

Nevertheless a good Christmas is key to both Asda and Andy Clarke - it's arguably vital for Clarke considering his key strategic points such as Chosen By You and the Extra Special relaunch will need to bear some fruit, as will the Netto acquisition now supermarket conversions have been completed. However a wise man once said, the last thing you need in Quarter 4 is small shops.....

Next up - we'll have a look at the blog favourites - Morrisons and their Christmas offering,

The future in store, showcased in Wrexham - Part 2

2011-11-29T11:03:00.000Z

Part 1 can be found here and charts the entirety of market square / fresh market and the flower shop, the first half of the store which is the 'fresh' half if you like. I've split the blog into two parts to condense the read and in this one I'll draw some conclusions around Wrexham and the Stores of the future.

The customer service desk is part of the fresh market.

Another element to arrive at Wrexham is the advent of the 'chef', whilst it's seen as gimmicky having a chef cooking away whilst he speaks over the tannoy, it does seem to drive sales as there were a number of people asking the chef questions as he cooked whilst speaking over the tannoy.

The chef cooking away - adding pizzazz to the shopping trip and driving sales.

Associated lines from the chefs demonstration.

The lines he uses are featured in a unit nearby so it can help to drive sales, it does provide theatre and sees customers walk towards that area. It gives them confidence to try new lines too, with Morrisons being able to offer more cuts of meat / fish and indeed the wider vegetable range, it makes sense to have someone there who can explain what to do with the new ranges.

New signage for Chilled Dairy and Juices.

Chilled and Dairy goes down the back wall into the other half of the store.

The second half of the shop after the fresh market contains the rest of the store, that is Grocery, H&B and the core Fresh shop (milk, butter etc). The fresh food space runs along the back wall of the store and there seems to be an absence of gondola ends for fresh with the Safeway 'hotspot' making a re-appearance.

Hotspot in the aisle for chilled dairy.

Frozen foods also has a gondola end but also has a hotspot, that is promotional space within a main aisle rather than on the end. Morrisons have traditionally focused heavily on gondola end promotions and for Grocery (though reduced) this does continue but for fresh and frozen, extra promotional space is driven via the addition of a couple of hotspots. I guess you could argue these aren't typical hotspots, as in in the middle of an aisle but nevertheless these are not typical 'ends'.

Frozen signage. Still an important area of the store

New POS on show and the frozen hotspot.

The main grocery ends remain and the strategy of strong promotions enticing customers into the store looks set to continue, despite the grocery side of the operation being very different to the fresh market. It's still notably important to ensure the grocery offer is strong.

New signage for Grocery

Vital that the Grocery offer remains strong

Core grocery on deal is of increasing importance in today's climate.

Liberate seems to have done a remarkable job of freeing up space in trial stores but as Dalton noted at the half yearly results,areas such as biscuits could have been cut harder whereas they were hit other areas too hard so it's not an exact science and will probably be looked at on a store by store basis. It's vital to free up space whilst not to alienating existing customers, shifting poor selling lines is in everyone's interests though both from a working capital viewpoint as well as a space management viewpoint.

Bulk stacked ends ready for Christmas

What is notable about the store is the lack of non food, whilst Morrisons stores generally don't have vast swathes of non food, certainly not in comparison to Sainsbury's, Asda or Tesco. Wrexham appears to have a notably limited range, rather like St Albans which is another store of the future conversion.

Non food assortment encompasses games, electricals, toys and magazines.

Growth areas like party goodies also indicate a shift in strategy regarding non food.

Whereas Kirkstall does have elements of a range with some homeware lines, Wrexham appears to focus on electrical basics such as microwaves and toasters with bedding and towels also available, not bays upon bays of non food by any stretch but a functional assortment.

Lottery, Cigs and Dry cleaning are placed behind the checkouts.

Magazines also form part of the non food space assortment.

The space mix seems to be reduced against core stores, stores like Kirkstall have a wider range so it's a clear sign that the Liberate programme isn't being used to free up space for non food. Especially with this being a new store and as such having a tighter food range considering the wider fresh food space.

Wrexham has a smaller range of non food than heartland stores or indeed Kirkstall

Dalton indicated in the Sunday (27/11) Times that there is little point having a massive assortment of non food in stores. Not only considering that the market is really struggling at the minute but with their push online to come shortly where they'll sell non food and Wine. It simply makes no sense to give up store space when they've an expanded fresh food offer to find space for and an online platform to utilise for the non food.

Peacocks clothing concession in Wrexham

Jewellery also features within the wider offer

Branded make up displays share space with Peacocks childrenswear

What Liberate does make space for is a kids clothing assortment, clearly research has come through indicating that Morrisons shoppers with families want kids clothing and with pressures on fuel leading people to save money and combine shopping trips, it makes sense to offer as much as possible under one roof without being hugely exposed to a downturn in non food.

Toys and stationery also feature on non food.

It also lends itself to a change in strategy that Morrisons are trying to 'win with families' with the Kirkstall revamped H&B offering tying up the baby offering and the Peacocks kids clothes concession appearing in many of the stores of the future. Interestingly Wrexham is the first store to give space up to Kiddicare products, that is permanent space and not seasonal space where some Kiddicare lines have appeared in the past.

Kiddicare lines in Morrisons Wrexham

Lines will drive extra margin and see customers come to store to purchase.

A small range of baby toys also form part of the range.

The Kiddicare tie up is interesting as it's taken a while for the lines to arrive in a store, and whilst it's non food it's likely to perform well for them considering there is always a need for good value baby product, especially as the financial situation for many continues to worsen.

The margins will be good and as such Morrisons can afford to be price competitive on the range, it's real complimentary non food and will drive people to the stores along with fresh, especially as the word will get around that Morrisons own Kiddicare and discounts are available online.

5% off kiddicare.com orders if you mention 'Morrisons' at the checkout screen (note the shelf ready packaging!).

A solid range of nappies too

The Beers, Wines and Spirits section is modelled on Swinton due to Wrexham having more of a value driven demographic. The Kirkstall layout has Wines are merchandised by flavour and taste rather than country of origin as is typical in many other stores.

Beers, wines and spirits signage

Red Wine under £8

Special offer area for Wine.

Swinton merchandises wine by type and within a price bracket, so there is a display for Red Wines under a £5, under £8 and the same with White wines too. It's a value driven merchandise plan and perhaps more affluent stores will benefit from the wines by taste fixture like Kirkstall with stores with a value focused demographic retaining the price driven plan.

White wines - Under £5 and Under £8

The white / red wine that is over £8 is given less featured space on the aisle, so it's clear that this is a value driven exercise and it will drive purchases. Cost conscious consumers are likely to cut back on 'luxuries' such as wine so offering an option to investigate lower priced wine will help the department be more enticing and force customers to have a look.

Despite all the new elements, traditions such as a strong range of beers remain

As does the wide range of lager

Liberate also sees items such as mixers and tonics live within the Spirits fixture

There is a real faux wine shop feel to the department with unpainted wooden fixtures giving the department a real rustic feel, there are concerns over the durability of such fixtures, especially when clattered with a passing blue pallet for example.

Wine with food type suggestions too.

Tying up the market feel is the emergence of the unit which indicates which wines are ideal with food types, there are suggestions for red meats, seafood and white meat. A very positive move by Morrisons and surely it would help drive sales, although I feel an opportunity has been missed by not finding room for the unit by the butchery and fishmonger, surely that would drive sales and tie up the evening meal market.

The cafe has also been rebranded in Wrexham

The cafe has had a new look, much more coffee house than supermarket caff!

As Morrisons move towards being a real food specialist and offering fresh food in the fresh market, the cafe should follow with a strong offer showcasing the best of the food available, at the minute it's still a relatively functional menu. I'm told that a relaunch is due with the M Kitchen chefs busy at work reformulating the meals and developing new dishes for the cafe.

Full view into the prep areas.

M cafe keeps within the theme of the store and the new look.

A careful balance has to be struck though as the M cafe has gained a reputation throughout the country for good food at a great price, it's a point of difference and remains popular, I hope that any new relaunch of food retains this ethos.

More evidence of the consistent theme throughout - menu board.

The M Kitchen ready meals are a brilliant package, it's come together well in stores but criticisms have remained over price increases, it's a better quality of food admittedly but in the current climate, every penny counts.

Pizza and Sandwiches are also available.

The petrol station also has a rebrand with it now being labelled 'refuel' which covers both the person and the car presumably, additions such as a coffee machine into the petrol station shop certainly add credence to the theory with other lines such as doughnuts and cookies also available.

Petrol station is now 'M Refuel'

The company is coming along quickly under Dalton and they continue to be aggressive in the wider marketplace with their offers and pricing, the new look and feel of the stores of the future is a big positive, in particular the font family, colours and feel of in store signage play a big part.

Signage that sums it all up, local community, history and the future - new fonts and theme.

Local lines in Wrexham - though no Barry tea!

Smaller signage on ready meals

Certainly it was a huge criticism post Safeway that stores went backwards 10 years, not in terms of a business model, but in terms of the feel of the store, replenishment and availability were far better, as was the pricing structure and promotional package but the stores looked dated. Perhaps more so than in the heartland as they replaced far 'fresher' and more modern elements as they were converted to the M format.

No hanging POS in Wrexham advertising M Kitchen.

M Local subtly advertises the M Kitchen range

The M Kitchen ready meals are all ranged within the store but due to the absence of any hanging signage in the new stores, there is no advertising for the new range. It will be interesting to see if there is any effect on sales considering the strong POS push when M Kitchen was launched.

The new signage - nouveau Safeway style rather than Morrisons?

Naturally there are also questions over where the ideas came from for the entire fresh market feel, I understand Weegmans in the US are a source of a lot of the ideas with their fresh offer. Naturally with Dalton's history working for WalMart and Loblaw, there'll be influences from there too.

Wrexham store map

Loblaw trial store in Milton - store map.

The similarities between the two stores are striking, namely that the fresh is grouped together, admittedly there are differences as Morrisons have put the counters in a u shape across the fresh market. Bakery is at the front of the store which is another difference but the similarities such as health being in the middle of the store near checkouts, fresh food being in the first half of the store with Grocery following on.

Dairy going along the back wall is another similarity as is Frozen being tucked away at the bottom of Grocery and it's interesting to see influences coming in from across the pond.

Loblaw annual report - elements in Wrexham? (c) Loblaw Canada

The Loblaw store is bigger than Wrexham so as a result there is more room for non food and 'Joe' which is their clothing range. Dalton has already indicated that non food space doesn't make sense in stores as they're going online with it and to be fair, the market is hardly supporting expansions into non food at the minute.

As for current trading, one of the correspondents was in the area yesterday and said store had done notably good money first week, easily beating target but there were issues developing with availability, fresh food is acceptable (to an extent) as the forecasting system will need time to develop a sales history and whilst the store can be flooded with product, but then wastage could be a concern.

Availability remains an issue in the early days

Bigger concerns will be over grocery availability, with a few gaps being observed and with the manual controls, this will be a concern as customers switching over from other supermarkets need to have the full package in terms of both fresh food and Grocery, especially as core grocery remains such an important part of the store.

The promotional package is important and another interesting point is there appears to be a reduced number of grocery promotional ends as the grocery floorspace is reduced in comparison to a standard new build for example. The fresh strategy is a positive and space has to come from somewhere so Grocery is cut back somewhat, is there enough room for a shelf to hold enough stock for a days worth of sales?

That's the broad logic that WalMart use, providing the shelf is ordered to full capacity (certainly M can do it with their manual control) then the space given up will last for a days sales, naturally if things sell out then you can flex the space and give quick selling lines more room whilst cutting back on the poor sellers.

Whether Wrexham has enough space for the sales it's experiencing remains to be seen, the gaps yesterday may well indicate that space management needs another look, especially if replenishment is required during the day for good selling lines.

It shows that the store has been busy in the first week, it will take time for things to settle down and sales history on both sides be available and used to drive sales, gaps are never a positive but it's very early days for the store of the future. The fresh focus appears to be working and the margins available on that will drive greater profitability across the chain.

The future in store is positive if Wrexham is anything to go by, there may well need to be tweaks for the next store (Royal Tunbridge?) but the store is markedly different and a real store for the future. It's interesting to note elements of Safeway thinking making their way into Wrexham too and a future blog will chart a few comparisons and similarities which will be interesting based on what's been seen here and in Kirkstall.

All eyes on the new year and the rumoured 40 stores to get the update, some tired ex Safeway stores will be pleased!

The future in store, showcased in Wrexham

2011-11-24T20:47:00.002Z

There was a memorable interview with Dalton around Christmas last year in the Telegraph where he discussed a fresh based strategy and how well the company was doing around the snow. He then made a notable comment that gave an indication of where he wanted to take things with Morrisons.

stick to your knitting, thrash everybody in fresh foods, kill them

Dalton Philips, December 2010

Early pic of Kirkstall, POS, display and ice have come a long way since.

Marc Bolland had realised the strength of the potential fresh offer and set about changing perception, since Dalton arrived Morrisons were already differing on fresh by offering a number of extended lines across the market street. Of course, a couple of months before the article the lab stores launched with the Kirkstall store showcasing the new style thinking around fresh foods. Notably fresh Produce was merchandised loose and in some cases on ice to keep it fresh, there were other changes to the market street counters which prepare a lot of fresh food each day.

Kirkstall has a '2 hour pledge' on chickens - if unsold they're disposed.

Since Kirkstall had numerous changes made to it on an almost weekly basis, all eyes were on the rest of the country to see who would get the upgraded store first. An overall 9% rise in sales at Kirkstall doesn't sound much but when you consider the fierce competition both from existing Morrisons stores and the wider retail landscape around Leeds, it's a good result.

Liberate helped to open up space in Kirkstall for kids clothing.

Looking further afield, as Dalton notes in the interview cannibalisation is zero in the south, when Shrewsbury got the lab treatment after successfully trialing liberate, their sales grew with little loss from surrounding stores. Further south still, St Albans (blog due early Dec) and Woking - both ex Safeway stores were given the lab store treatment and as such as are now recording higher sales growth with no cannibalisation, all the sales growth is coming out of competitors in the surrounding areas.

A lot of potential in the model then, especially considering land being at a premium in the areas where Morrisons don't have exposure, the opportunity to enhance their offer in existing stores with the revitalising lab treatment is a huge opportunity.

Wrexham store exterior - (c) Morrisons.co.uk

Naturally the space expansions continue apace with the new store openings, extensions and planning permissions going through all the time, both Woking and St Albans benefited from store extensions whilst they received the updated store layout but this won't be possible in all stores. What is possible is the 'fresh' lab and a liberate programme which will increase the store appeal as well as freeing up space for further concession such as kids clothing where space allows.

Wrexham is an area where Morrisons has been under represented in recent times, with the nearest stores in Saltney, Oswestry and Chester being 15 miles from the new store in Wrexham, it was therefore a priority to fill this gap within the network and have a store within Wrexham itself.

The site for the new store is a former council depot which has drawbacks and benefits in itself, near the store appears to be a number of public sector buildings, a large ambulance station is sited next to the store with a large public housing office further up the road. A captive audience for potential customers experiencing the excellent food to go offering!

Traffic on opening day - Ruthin Road - (c) Wrexham.com

There are traffic concerns admittedly, the road on past the store is a single carriageway that was gridlocked all the way down past the store when I visited, it was opening day so perhaps the level of traffic isn't indicative. Additionally the proximity to the ambulance station did raise concerns but access roads were negotiated as plans had to go via the Welsh assembly for final approval.

So, after negotiating the traffic and managing to park in a side road due to the full car park, it was time to take a look inside. I heard via the drums that Wrexham had been earmarked as a store of the future, the first new build where all the lab learnings were taken and put together for a new opening. Peterborough for example opened as an eco store but retained the old fixtures on produce, it did have the new signage but nothing else from the concept stores. Wrexham being the first to take everything plus some new bits and pieces.

The first major difference - no yellow and 'fresh market' featured on signage.

Externally the store looks great, with a wavy external design no doubt inspired by some eco friendly thinking, it's clad in green, not yellow. In fact there is nothing yellow on any signage both externally and internally, even the opening hours poster traditionally yellow with green writing is replaced by the green / white colour scheme.

An interesting addition to the signage is 'fresh market' which is featured externally for the first time, risky? Fresh market isn't a trading name of a store or a recognised sub brand (like Tesco Metro) but it does tell customers what to expect when they come into store especially as word gets around via Facebook about more stores getting the new Produce department plus the other features.

The flower shop has now become a point of difference in store.

As other retailers have reduced hours on the floral departments, with rivals rolling floral into the wider Produce department and having the man who fills potatoes also filling flowers, the department has been devalued somewhat. Morrisons

Curved flower shop signage.

Very strong range of floral and plants in the flower shop.

Strong offer of plants and Christmas floral - plus strong themed POS, even on the fire door!

With flower world supplying the new range anyway, it made sense to bring them in house to allow Morrisons to benefit from a stronger margin and transfer pricing. The sales increases in Kirkstall topped 40% from the flower shop so it was inevitable that such an increase would see the flower shop expanded across stores. St Albans, Woking and Swinton all have had the new flower shop added and Wrexham is no different, the offer seems to be expanding with the floral ordering service available in Wrexham along with seasonal additions such as Christmas Wreaths and indeed Kirkstall is now selling Christmas Trees!

Christmas Trees available at Kirkstall.

The floral ordering service via Flower World is available in Wrexham.

More of a value focused offer here - 2 for £5 flowers.

The main difference when you walk into the store is the fact that the Market St has become Market Square with deli, cheesemongers, fish and meat forming a square to encompass the fresh market, rather than the street seen in existing stores. A sign of changing the focus?

Welcome to the 'fresh market'.

Previously the aim of the game was to get people to walk around the entire shop, so siting the Butchers at the top of the store would force people to walk around the dumpbins, stacks and tables with Morrisons offers on them. Thus driving up the sales per sq ft metric, however there appears to be a step change with this store, making fresh the real focus. Grocery is still important but a store to align the corporate strategy towards fresh makes sense, especially with the margins it will attract thanks to vertical integration and store crafted products.

The Fresh Market square rather than the Market Street.

Another moot point sure to divide opinion is the lack of a faux ceiling, Dalton targeted this as a saving via project excavate, taking out the faux ceiling saves a significant amount of money when building a store and Wrexham is another store (like Peterborough) to feature the natural roof.

'windows' in the roof area allow natural light to pass through.

There are additional windows within the roof that allow for natural light to pass through and light the store alongside the standard lighting but it's bound to divide opinion. The specific lighting for Produce and the counters works quite well although the lighting unit looks a bit strange as it hangs freely over the fresh 2 go counter.

Natural light via the roof but no ceiling.

Your main shopper wouldn't particularly notice but upon entering I noted the fact it sounded like a Wetherspoons pub, no music and a hubbub of chattering voices all merging together. I don't think comparisons can be drawn to Asda/Tesco ceilings as theirs are usually far higher than the Morrisons one, however it's a salient point that Kirkstall does look smarter than Wrexham from a roofing perspective but then there is more of a rustic market feel to Wrexham with the roofing as it is.

Christmas decorations in an existing store - complete with ceiling.

It all boils down to cost and with all areas of the business targeted to save on cost, then a faux ceiling if eliminated can remove an aspect of cost to a new build. Certainly looking at the expansion plans, if Morrisons can save £x per store by not having a ceiling then I'd wager it's something they'll do. There will be complaints and it will divide opinion but I don't think your main customer would particularly notice it and crucially, will it affect sales?

Fresh 2 go in Wrexham - more curved signage.

Counter is serviced rather than self serviced at Kirkstall - Soup here.

A strong pastry and cake offering too.

There has been many a stab at getting fresh 2 go right since Kirkstall was remodelled with various versions of signage, serve over / self serve drinks, different sandwiches and now the serviced sandwich counter. Indeed a future blog will chart changes in Kirkstall itself so it's interesting to see that they've really tested different variations with the latest going into Wrexham indicating they must be relatively pleased with it.

The popular self serve salad counter remains.

Fresh 2 go offering pre made sandwiches, wraps and salads.

A big difference with Wrexham is the addition of opened up counter areas, existing stores do have some display equipment removed it's been difficult as many of the barriers are determined by building fabric. Wrexham doesn't have that concern so all the areas behind the counters are fully open plan, it's a theme of openness showing where food comes from and adds a bit of theatre to the shopping experience, every area that prepares food has this openness.

With fully opened up back areas to view preparation.

The store is roughly laid out 50% fresh vs 50% ambient with the vast majority of fresh foods in the fresh market area, ready meals, pizza and prepared meat/fish are all sited in the lowered fridges as seen in the lab stores. The in store prepared meat / fish is displayed in fridges near the relevant counter so there's a clear flow throughout the store of associated product, the addition of freezers near fish and meat also drives customers to buy frozen meat / fish should they wish to.

There's that roof again! Plus the lower refrigerated units for fresh food lines.

Lowered refrigeration unit for Fish - sited near the fish counter.

In store prepared fish available next to the counter.

Next to the butchery is frozen meat.

There is the clear display advantage of having lowered refrigeration units which drive the 'halo' effect as you walk into store, seeing right to the back of the store at Kirkstall and indeed seeing right across the fresh market at Wrexham means your interest is captured straight away. There is a myriad of units across the fresh market but it doesn't affect customer flow, the neat tie ins with fish being near the fish counter, cheese near the cheesemonger is likely to drive complimentary sales too and help customer flow with the absence of standard signage and standard aisles for fresh.

The great range of loose fruit & veg entices customers in to look.

A strong range of exotic fruit.

Loose and prepacked vegetables merchandised in the side cabinets.

The main 'wow' aspect of Kirkstall when it opened was the Produce and naturally that's part of the store fittings here, almost a non event these days due to my focus on it in the past! It's a great bit of theatre and customer comments were really positive towards the hydro pipes blowing vapour over the vegetables and the attractive display methods. The Produce department doesn't have lots of display tables like Kirkstall, it appears to have a smaller range akin to the one at Swinton but nevertheless it's a point of difference and markedly different to anything else seen in the UK.

Hydro pipes enable Produce to be kept fresher for longer.

Kirkstall has the space to the merchandise all their loose fruit in the main tables but as its a smaller display at Wrexham, some is displayed in the refrigeration units on the left of the store. Exotic fruit and some vegetables (above) are merchandised in this way and looks smart but lacking a bit of 'wow'. However it's positive that some stores like Swinton and Wrexham have smaller ranges which will add to Morrisons confidence that the model will lend itself to the smaller stores in the estate.

Prepacked Pizza sited next to the Pizza counter.

The Pizza counter is notable in that the popular theatre of seeing colleagues hand make pizzas continues with featured space within the counter for the guys to showcase their pizza making ability, it's interesting that pre packed pizza along with Pizza Express lines are sited next to the pizza counter.

Prepacked Pizza, then the in store produced lines.

Visible pizza production along with in-store prepared pizza on either side.

This keeps with the theme of prepacked cheese being near the cheesemongers and other complimentary lines to drive sales but with the 'liberate' that went on in some stores for the ready meals. Stores lost the pizza space next to the counter and had to move them elsewhere which has resulted a sales decline, whereas ready meals are well ahead of an ambitious forecast.

Oven Fresh features the 2hr guarantee for Chickens. Note the 5 for £1 on rolls.

The bakery features the 'craft' table - as seen in some Safeway megastores!

All of the counters launched in store with Kirkstall learnings, there are new elements with the preparation tables but it's clear that the lab at Kirkstall has worked and worked very well considering Wrexham has launched complete with these elements. The Bakery has recently had a changeover at Kirkstall with the 'table' showcasing the craft skills from the Baker, this has made the move from Kirkstall to Wrexham.

More visibility in the Bakery along with bits of 'wicker' too for the typical Bakery look.

I mentioned in the last blog that there had been a real focus on seasonal lines this year, with the Stollen winning an award in Delicious magazine beating the Harrods variety - not bad for £1.69! Wrexham has a separate table for seasonal lines, presumably it will feature any Easter lines, Hot Cross buns and the like once Christmas is over. It's a good way to drive sales of these extra lines, especially as they represent strong value for money.Consider the fact it's made in store so attracts a good margin and it makes business sense.

Specialist Christmas / Seasonal table - note the improvement in quality of fixture.

Prize Winning Stollen!

Morrisons also showcase the abundance of freshly prepared breads they produce in store, not just the standard loaves and bloomers but real craft lines with the Oktoberfest bread particularly noteworthy. It's real points of difference and backed up by the traditional POS and better quality display fixtures bringing in a touch of class rather than the usual drab bespoke fixtures.

Handcrafted bread - simple production methods = great results.

A relatively large change is the absence of the 'cake shop' from Wrexham... well that's not strictly true. It exists but it's called the 'Patisserie'. Coincidentally what Safeway called their Bakery / Confectioners, as do Waitrose! The range is roughly the same as a standard store but there's a few of the premium lines seen in Kirkstall.

Sweet treats, more specialist cakes available here whereas fresh 2 go sell standard lines.

It's still the Cake shop really with the same strong range of cakes attracting strong margins, the graphics, POS and offer is roughly the same as Kirkstall although there is a total absence of the chocolate fondue so perhaps it's been canned due to space or the jury remains out on it.

The Cake shop in all but the name.

Same signage and 'feel' across the store - extra Patisserie lines merchandised here rather than in ISB.

More display space in the main store - feat pink / peach signage and swirly fonts.

There is a real focus on increasing theatre and whilst the loose Produce, hydro pipes and elements of visibility do that, Wrexham (and Kirkstall recently) have showcased a step up again in theatre and seeing the craft skills on display. It's the most striking element of the store, the sheer amount of craft skills employed and just how much you can see and pushes Morrisons fresh credentials even further forward.

Prep table for the Patisserie - you see everything.

Entrance to the Bakery - full visibility.

Freshly floured bloomers.

The move to focusing on fresh as well as a wider package of strong promotions, pricing and availability means that Morrisons secure the profitability of the business with their excellent margin on all fresh product.

It's a smart move and shows Dalton is pushing along with his bold claim made nearly a year ago about 'thrashing those in fresh foods'. The convenience arm M Local have also capitalised on a market focusing on top ups by offering fresh food created in a main store before being shipped into the smaller store environment.

Freshly prepared cakes attract a great margin and more can be made to capitalise on sales.

The POS theme developed in Kirkstall with elements seen at M Local make an appearance too, a more softer font with departmental variations across the store. The black chalkboard style font appears across Produce as you'd expect but the Cake shop have a 'groovier' front with the POS featuring pink signage in an American diner style.

Pink signage for the doughnuts - American themed.

Market lines feature the black / white chalkboard style.

The Flower shop also features a handwritten style signage.

Continual theme across the counter.

After the Patisserie, there is the option to continue your shopping on past core Fresh such as yoghurts, milk and general dairy or turn around and continue to shop the fresh market which encompasses Cheesemongers, Deli, Meat and Fish counters. In between the deli and meat counter, there is space to walk into grocery with Beers, Wines and kids clothing before core grocery and frozen.

Other half of Fresh Market starts with the cheesemonger

Deli with the space between meat to walk into grocery.

Butchers / Fishmongers together too - curved signage again!

The theme of the counters providing lots of visibility into the back areas continues on the deli, it's something that Morrisons have done notably well in Wrexham. Seeing everything that's going on and with it being opening day there were a number of staff busy wrapping cuts up or serving customers.

Cheese merchandised by strength - note the continuing theme of POS throughout.

Mature cheese.

Mellowing to stronger and medium flavoured cheese.

The cheesemongers flows nicely into the deli - note the Quiche POS on the left!

Deli Express remains offering deli offerings pre packed and priced.

The cheesemongers continues to be popular and offers a wide selection of cheese with much of it pre packed to encourage self service, the merchandising principles of it being done by strength rather than region / country of origin continue. This has proved popular when trying to get customers to try new products - and of course is useful when trying to convert customers to own label produce which will drive the o2o campaign.

Complimentary fresh products near the appropriate counter.

The 'deli meals' have made the transition to Wrexham too, whilst not huge sellers in Kirkstall, it's been re-advertised and given pride of place on the deli, the meals are cooked off site then sent into store. It's simply a case of then re-heating the dish, there are portion prices and the option to buy the full tray (4 portions) for a set price. A bit like Cook! but without the aspect of freezing the food first, it's a nice idea and I wonder if further items could form part of the range as it's a potential winner.

'fresh' deli meals to go available in store.

Within the Deli is an self service Olive bar along with a wide selection of meats and hams, the Deli itself looks notably traditional and more belonging in a higher end store like Selfridges. There is meat hanging from the roof and in displays in the prep area along with a well stocked display area, advertising points towards Parma Ham being matured for 18 months and the focus is on quality and the expertise of the staff.

Great range of cooked meats at Wrexham Deli

Featured advertising on specific lines - pointing to quality and age.

The Olive bar is part of the deli too.

Back of the deli counter - full visibility

The Butchery and fishmongers are sited together in this store which I know Morrisons have wanted to do as it ties together the two prep counters, it also means the 'dinner made easy' can be merged to incorporate both food types. It's been a challenge to grow sales of this deal within Kirkstall as the meat counter is sited at the back of the store, people who shop fresh in Kirkstall have done their meal shopping by the time they reach the counter so the idea is workable but suffers due to location.

Always 100% British Meat.

Great visibility into the meat counter prep area

More theatre at the back of the Butchery.

Handmade sausages on site are another point of difference.

As the Butcher and Fishmongers are sited together within fresh market, there is a higher chance that customers will go for the meal deal as it features in the core shopping experience, it's a good deal with vegetables and meat included for £5 and is sure to be popular as Morrisons tighten up the ready meal category after the launch of M Kitchen in October.

Meal deal incorporates Salmon on the display.

The fish counter is also strong, the counter itself is notably strong and was very well presented. There is a new chiller that has just gone into Kirkstall that features a lower tier for wrapped product with the main counter featuring the actual fish counter, Wrexham doesn't yet have this but St Albans does.

Wide range of fish displayed on ice.

Fish has pre cut / fillets separated from the main counter with smoked at the end.

Strong range of Fish from the counter - Bit Safeway esque!

That concludes the shopping experience in Fresh Market - the market square. I hope you've enjoyed, I've split it as it's a long one anyway and I want to cover H&B / Grocery etc separately along with the Customer cafe and further thoughts. Naturally I'll tackle whether there will be a wider roll out of store of the future too.

Part 2 to arrive Monday!

The futures bright - the futures Wrexham?

2011-11-22T08:48:00.015Z

Ahead of the main blog coming later on today, here are some taster pictures of the new Wrexham store.

Counters not on the perimeter of the store - market square?

Much better visibility into the back areas. Cojoined fish / meat counter.

The Cake shop in all but the name.

Co joined counters in the first 1/3 of the store - No 'street'

Kiddicare products featured in store for the first time.

No Yellow in sight - 'fresh market' now a point of difference

A wider view as you enter the store.

Q3 results are good but what's going on in the stores?

2011-11-17T09:21:00.001Z

As the Q3 results reveal yet another good performance from Morrisons, the share price had climbed above the £3 mark and was peaking at £3.12 until the Italy debt bond crisis pushed most of the shares back south with many listed companies affected. Currently at close of trade (Weds 16/11) they were at £3.19.

Nevertheless, the share price heading over £3 is reason enough to celebrate and underlines what a strong performance Morrisons have delivered in Q3 of this financial year, certainly Kantar till roll data backed up their growth with a 5% increase reported last week, beating Asda (with Netto) growing at just 1.1% Tesco (2.2%) and Sainsbury's (4.5%) as the fastest growing of the 'big four'.

With previous Kantar months showing similar growth of c. 5% it's positive stuff, it's worth noting that for their stock market obligations, Morrisons use a pure method of lfl which excludes fuel and VAT as opposed to Sainsbury's who include VAT in their lfl figure, so their rises are 'pure sales' if you will.

Dalton spoke on the Q3 call and promised updates in March at the interims, I'm led to believe we'll see 40 stores get some aspect of Kirkstall / 'labs' by Easter 2012. There is a cost to this but Morrisons are cash rich at the minute, with a strong balance sheet and a £3bn bond to exercise too however there is the aspect of a potential bid for Iceland.

Loose produce on ice at Kirkstall - striking appearance and a point of difference.

Looking at the lab stores, Kirkstall is a core store so its building fabric is good and the store was of a good size and condition. However ex Safeway stores within the estate are looking tired and will benefit from the lab treatment, certainly Swinton was looking notably tired around 6 years on from the conversion from Safeway.

Swinton pre conversion, a relatively tired store with old refrigeration units.

The Safeway stores inherited were found to be in a poorer condition than was expected, they not only cost more to refit but inevitably required larger remedial work at some stage to bring them up to standard. Stories of Bakery equipment circa 1971 were well founded and you've got a key reason as to why profit warnings were issued, simply the acquired stores were in a far worse than expected.

Swinton with new refrigeration units post refit.

With 40 stores to potentially get elements of the labs by Easter 2012, it's expected that there will be a good spread of carefully selected stores. Some core, some ex Safeway and they'll become lab stores too with things working in one store that then won't work in another, it's a evolving process of change.

The former Safeway stores in the estate will be hoping that they'll be selected as their stores continue to trade well, some over trade in many respects despite tired environments and 'not the best' experience that Morrisons has to offer.

Hydro pipes add theatre and an element of interest as well as freshness.

The sales increases are there to be shot at, especially with Kirkstall recording a 9% rise despite being close to existing Morrisons stores, what about stores further south? St Albans and Woking are not going to be cannibalising sales, the nearest store to St Albans is 10 miles away in Borehamwood that despite being new, doesn't have a compelling offer like St Albans.

In my opinion, they can look to target more than 10% as a like for like sales increase based on what I've seen done in Kirkstall. Especially since the concept will lend itself well to the south with a better range of fresh goods and an expansive premium range likely to appeal to shoppers.

The St Albans lab seems to trial more innovative ways of marketing the store.

The same is true of Woking, their nearest Morrisons store is some 12 miles away in Bracknell, again both stores represent opportunities beyond Morrisons wildest hopes. Stores don't necessarily have to be expanded, rather flipped and adjusted internally to make space for the expanded offer.

St Albans has had an extension but most of the stores in the south will be landlocked thus unable to extend their square footage. With Morrisons relying on liberate in particular along with fresh lab work to revtialise the store environment along with an improving the customer offer.

New Morrisons branding for the petrol station at Albans - thanks to the Northampton correspondent

An interesting aside to the picture above is that the petrol station is renamed 'refuel' which indicates both car and person, there were rumours of petrol stations having an expanded shop offer - certainly standalone stations (those away from store) are allegedly going to re-branded as 'M Local' or 'refuel'.

Further store features are 'fresh market' which appears to be the name for the Produce department and wider features of an enhanced street and revamped fresh 2 go offer. You would never have expected to see Morrisons featuring any elements of clothing, but they keep the pace with a Peacocks kids clothing concession which is a feature of all the stores of the future, bar Swinton as space didn't allow.

'fresh market' features far more loose items and a raft of new lines.

With the lab store at Kirkstall being an ongoing trial store with adjustments made weekly, it was thought that there would be no further changes until Christmas, especially with us entering the 'golden quarter'. However there have been a few changes in recent weeks, Woking is nearly complete and St Albans is now complete. However there were a few problems with contractors which left other stores having to bake and send bread into St Albans.

'fresh 2 go' version 1 at Kirkstall

In Kirkstall, the first change is apparent upon entering the store, Fresh 2 go signage was changed around a week after St Albans opened with their new offer. Kirkstall have had the signage changed from green to dark red along with the backing wall near sandwiches given a 'tiled' effect and the menu boards updated in the new font.

As was pointed out - a very 'pret' style colour scheme

White and dark red faux tile effect.

The key addition to the fresh to go department has been the manned wrap counter, bespoke wraps made freshly in front of you and it does a booming trade. It's not uncommon to be waiting 10 minutes before being served due to the nominated office worker being sent out on a 'run'. Another angle that Morrisons could investigate could be telephone orders for the wraps and salads, they are really that popular and it's a competitive advantage. The freshest sandwiches in the industry?

Colleagues tell me that they get customers who come in just for their lunch and it's getting busier and busier with a lunchtime trade, it's a really compelling offer and will attract customers into the store. The hope is that as more stores get the lab treatment, customers will give the lunch offer a try and then have a walk around the attractive produce department and before you know it, they've got their evening meal and dessert. Both offering attractive margin and with them being suitably impressed, they return to do a full shop.

Naturally this is in an ideal world but no doubt the excellent fresh to go offer will serve as a footfall driver into stores and with the rest of store looking attractive enough for a walk around at least...

Handmade freshly made bespoke wraps - a competitive advantage.

In terms of the increased and better offer in Kirkstall, craft departments such as the Cake Shop and Bakery are vastly improved both in terms of offer and the production aspect. The Cake shop features a number of new products that are driven by the chocolate fondue. Existing lines such as cookies dipped in fresh chocolate both add variety to the product range and stronger margin and profitability to the bottom line.

Prep area for the Cake Shop - literally just behind a clear screen, close to the action!

The fondue has been moved to the shop floor - note clear aisles behind!

Extra SKU's driven by the chocolate fondue - core lines with a fresh chocolate coating

The improved open food prep areas add to the work done by Marc Bolland where he reduced the restrictive counter and shelving to increase visibility into the back of the food prep areas. Kirkstall takes this one step further with bespoke prep tables that are notably closer to the shop floor than before.

Bakers prep table, Panettone was being made - just see them on the rack behind.

Another interesting development is the appearance of the fresh Christmas lines on Market Street, the cake shop and Bakery traditionally do a few extra lines but it seems to have been stepped up this year. The margins are notably strong on freshly prepared product and in particular Panetone - which is featured in the Christmas advert with Aldo Zilli.

Kirkstall sells hand made Christmas Eton Mess

Morrisons seem to have really stepped on the gas this year with their wider Christmas ranges, they've been first to market with confectionery, toys and now chilled Christmas lines have appeared in store. Fresh chocolate yule log, chocolate snow bomb and a hidden orange chocolate gateau are all available along with small seasonal cream lines such as trifles. Perhaps a little early or is it a case of getting the consumers to spend whilst they've got the money?

Christmas cream already available in store.

As is chilled Christmas party food! Remarkably early but can customers be tempted?

Certainly the fresh lines are likely to be popular around Christmas time, perhaps the thinking of getting them out early is for customers to purchase and give them a try, plus the fact they're available puts it into customers minds, especially when plotting where to buy Christmas treats for example, a memory of seeing a fresh chocolate yule log may see the customer return to store to buy it.

Stollen makes a re-appearance - a popular in store line.

There is the re-appearance of freshly baked Stollen and a new addition that is the festive wreath, a Christmas wreath shaped fruited bread with candied orange slices atop. Freshly baked in store and attracting a strong margin no doubt, despite the addition of a small cake board to stabilise the wreath.

New line - festive wreath + cake board - strong margin and point of difference.

Panettone advertising in store - 'as seen on tv'' and increasing perception

In store bakery products are advertised far more effectively than in previous years. Using the red background, 'come to us for christmas' and a picture of the product, it stands out far more than the use of standard POS. Marking a shift upwards in Morrisons customer perception perhaps? People know it's good value, it's fresh, but the argument has often been is the quality there?

Cake Shop features new chilled Christmas lines - Snow bomb, gateau and Yule log.

Sometimes a shift in advertising and in store 'feel' is all you need, very much like the initial advertising introduced by Marc Bolland indicating the availability of freshly cut meat and fish along with freshly baked bread and fresh cream cakes. It'd always been done by Morrisons, they'd always had their own abattoirs and pack-houses they just never told anyone about it via the medium of TV.

Suddenly after the campaign, Morrisons go from being known as a northern retailer with poor quality product to having the freshest food available and leading all research when customers are asked about which stores are fresh.

It's a similar story for ready meals, the recent relaunch got off to a slow start as customers grew accustomed to the wider range and slightly higher price points. However since the advertising campaign started with Freddie and the chefs, it's been notable how many customers are looking at the products, asking for specific lines and then purchasing with a 60% sales rise noted at the Q3 call.

It's interesting to track the ready meal progress considering the scale of the launch, wastage seems to have come under control after the early days with sales growing nicely - there was talk of 3m ready meals being sold on week 4 of the relaunch, a record for Morrisons.

Overhead M Kitchen signage

It's important that availability remains the top priority and sales management seem to have been coping well with the new ranges, however a store on Saturday didn't have one Bistro pizza available, nor did it any of the other varieties of M Kitchen pizza apart from BBQ Chicken. A poor selection and with Saturday night being X Factor night - I fear it's an opportunity missed.

Stores do scan gaps now as well as stock counting so the flow of information is never better between store and head office, I'm not sure how gaps are scanned on pizza, in this instance for example there are no SEL's for Bistro Pizza so how they can be scanned isn't clear.

Good range of in store pizza but not many M Kitchen and no Bistro?

The store did have some Stateside foods pizza available, this is a generic brand and they are only stocked by stores when they are either on BOGOF or half price and it's relatively depressing in appearance. With Morrisons trying to take the brand to new areas and people, do they give a good impression to the customer? Not really, there is always a need for niche one off products that offer a real alternative but in this instance, it's a strong promotion but I'm not convinced on the quality.

Stateside foods pizza - reassuringly telling us they use 100% real cheese...

The investments that Morrisons have made in FreshDirect, Kiddicare and Flower World are yet to be seen in main stores, certainly the scale from Kiddicare hasn't yet found it's way into the main estate. A recent seasonal event saw some Kiddicare lines arrive into store and these were popular and very sharply priced, however there is a reluctance to put them into all stores all the time. The main constraint is space but it's interesting to note the general market shift from food to non food. After analysts pilloried Morrisons for years about their lack of non food, suddenly Tesco and Asda are too exposed having given up vast amounts of space for non food in the boom years and Morrisons have it right... Amazing.

Naturally FreshDirect learnings continue apace and key Morrisons personnel are sited in New York learning from the business and how best to integrate that into the UK. That's a longer term project and we're unlikely to see anything until March but I'd be anticipating a possible Q3 2012 / Q4 2013 launch for online.

Floral 'menu' for special occasions.

Flower World continues as you were, they were responsible for a good chunk of the floral range anyway so Morrisons benefit from transfer pricing now as they've joined the family. As lab stores are rolled out, it's Flower World who supply the additional premium lines, Kirkstall are trialling flowers for special occasions too, naturally there's an order process and a lead time but the flowers are a step up from traditional bouquets with flowers for funerals and weddings, using the Flower World expertise. An interesting aside from the takeover and whether other stores of the future will get the same offer or if it's just a Kirkstall thing remains to be seen.

Back to Kirkstall, the wine department continues to be a real success and bar a complaint or two from those more educated in the wine area, it's proving to be popular with general customers who will stick with their chosen wine choice and be happy with that. Changing the merchandising means customers will hopefully opt for different brands of Wine that echo the taste of their usual tipple.

Fine wine section at Kirkstall, again pushing the perception that Morrisons don't do high end product.

Naturally, the hope is that they'll convert to an own label variety rather than a branded equivalent and it ties in well with the plan to grow own label sales, after all Morrisons have always won awards for their strong wine cellar and whilst not marketed well in the past, it's clearly well thought of by the industry.

Fine wines, a strong price point but it marks the expanding offer from Morrisons

On the topic of growing own label sales, last week (w/c 7th Nov) saw the arrival of 'baked by us' which is the new sub brand for Bread. The own label bread now carries this moniker as (amazingly!) it's baked by Morrisons within the former Rathbones bakery that was purchased by Morrisons in 2005.

Not 'baked by us' but a clear opportunity to range more specialist breads.

There is a definite rise(!) in quality with existing lines re-packaged and the introduction of new lines like Oaty Batched loaf and Tiger batched loaf which take them into direct competition with the existing suppliers such as Warburtons. Whilst these two lines aren't baked by Morrisons, they do fill the range nicely as they were somewhat lacking in specialist bread lines previously.

Bread 'baked by us' which indicates it's from the Rathbones facility owned by Morrisons

Also noteworthy is the introduction of the new 'wm morrison' logo which will adorn most of the products that are not part of a sub brand such as M Kitchen or Bistro. It's been used for a number of years on produce from the Deli and Oven Fresh, it's a nice nod to the history of the chain which isn't forgotten despite the ongoing changes within the business.

New own label lines feature the 'wm morrison' logo.

Some rolls are 'baked by us' - the promo stickers could do with updating?

Another key point of owning the bakery and the supply chain means that there is total control over the ingredients, 100% British flour is a good selling point especially with a lot of customers choosing to buy British where they can.

Vertical integration isn't just a positive from margin / supply viewpoint, it's for quality too.

Further range development has taken place with someone within bread buying clearly taking a look at what Waitrose and M&S offer, the mini batch rolls that sell so well are now available from Morrisons too. It's nothing revolutionary but it's good to see that from a category point of view, the gaps are being filled to offer a stronger range and more universal appeal.

Mini malted batch rolls are a good addition to the range.

The extended range is a marked step up in both quality and assortment, the packaging is improved but as with anything else the proof of the pudding is in the sales. There should be an increase now the range has been expanded and encompasses both vertically integrated lines along with more specialised breads like the Oaty batched loaf and a sliced tiger loaf.

Sourdough part bake roll is part of an expanded bakery range.

In store at Kirkstall again, regular readers of the blog will know that I had a good long look at the various supermarket Bakeries a while ago, I was relatively critical of the Morrisons range. Despite it being vast it's somewhat cluttered with a lot of duplication on rolls for example. Kirkstall has had a few signage changes and layout changes as they try find something that works and provides a point of difference.

With areas like the butchery and Cake Shop, those areas give Morrisons differentiation as other retailers either don't have meat counters in store or if they do, they don't cut up any carcasses in store, rather opening pre cut packets or doing simple cuts for customers.

Range of traditional beef in stores now.

Sainsbury's have bucked the trend and are now putting their staff through butchery college and going down the route of cutting up larger joints into smaller cuts and wrapping them on site, like Morrisons have always done.

Asda and Tesco don't retain butchers in their stores and some stores don't have served counters due to efficiency or space constraints. Despite the fact Asda don't retain butchers in their stores, they are actively selling their 'butchers choice' range of pre packed meat which seems rather idiosyncratic.

Cake Shop offers a point of difference for customers.

The major point of difference for Morrisons is the Cake Shop, with both Asda and Tesco not preparing any cream cakes in store. There is only Sainsbury who prepare cream lines but their range isn't as vast as Morrisons who feature monthly seasonal lines with recent additions such as Toffee Apple tarts along with a number of new lines in the stores of the future too.

Pick & mix rolls are moved from the main fixture into a self serve table

Whilst these features of Market Street are points of difference in their own right, one area that is relatively saturated is the in store bakery, the vast majority of stores across all 4 major retailers have in-store bakeries and those that don't have scratch facilities, are able to bake part baked bread in ovens, thus ensuring they have fresh bread and pastries each day.

The clock indicating bread is baked all day.

Kirkstall have changed the Bakery around a number of times and seem to have settled on the latest guise featuring the preparation table which is seen in this blog. There's more new signage and a clock which shows that the store bakes bread all day rather than in huge batches in the morning. Admittedly not all stores batch bake with some preferring to do it all early in the day.

Relatively simple isn't it?

With both elements of the Bakery getting a revamp in Kirkstall, hopefully this will drive more sales through the category, certainly an in store bakery overhaul is overdue across the company. Especially with the cluttered range which could be streamlined to allow for more craft lines or real points of difference.

It'll be interesting to see what more is done with Bakery, Richard Hodgson has driven a lot of the revamps seen so far clearly building on his learnings at Waitrose, however Waitrose didn't retain scratch bakeries so they were restricted in ranging there. With Morrisons having a wealth of craft skills, I'd expect to see a lot more movement in this area going forward.

The new remodelled H&B department has a stronger focus on baby.

In wider category news, I heard on the jungle drums that there was some new thinking on the Health and Beauty department, Kirkstall debuted a new method of merchandising with a renewed H&B focus on families and baby, nicely tying in with the Peacocks kids concession and of course Kiddicare.

Morrisons.co.uk - Note the Kiddicare direct link at the top right of the site.

I'm led to believe that this is being driven by some new recruits to the Morrisons family who've arrived from Boots (along with some from Asda no doubt). The H&B category has been difficult for Morrisons to tackle for a number of years, they've never really found a model that works for them. Some stores have parallel aisles with Enterprise 5 in particular having angled bays for make up which doesn't really utilise the space particularly well. I'm told there are 4 different merchandising styles for H&B across the estate as Morrisons still have to find the winning formula to take the category onwards.

Before the revamp - baby food and finger foods all together, difficult to shop?

After: Baby Food now merchandised by age bracket with finger foods just in shot.

The new layout introduces new thinking around families and is designed to drive more complimentary sales, parents amongst us will fondly recall their children going wild as you spend too much time on the baby aisle trying to find bottles, formula and Milton steriliser liquid.

Before - swimmers / pull ups in one bay.

A similar story with the myriad of nappies on sale, the interesting thing is like Wine, the principles of merchandising have been flipped. The bays have been merchandised to include cross category complimentary items, usually nappies would be merchandised together with wipes within their own bay for example. Including the potties also drives extra sales and ensures the customer can shop the category easily.

After - Potty training bay - pull ups, wipes, little swimmers, potties - a one stop shop!

Shopping with children can be an absolute joy or indeed, an absolute nightmare if they decide to play up. Whilst older children (certainly mine) can be placated with a trip to Morrisons and a magazine, babies and infants may well get upset so part of the merchandising for 'new arrivals' looks to make it a one stop shop for parents so they can get in and out as quickly as possible.

'new baby' bay - toys, magazines and bits for mum and dad.

There are the usual bits and bobs in the bay above like cotton buds, cotton wool balls and the like but other clever touches like bio oil, new parent / parenting magazines and Munchkin 'first' baby toys. A neat way to merchandise rather than having an almost straight laced approach of each bay must be the same product group. It'll drive extra sales and make the experience of shopping more pleasant plus reducing the risk of someone forgetting something!

Cups, plates, spoons and food - all you need to wean your baby.

The wider department flows a lot better with the focus on baby and a wider assortment of Health and Beauty goods, the range hasn't been expanded or shrunk, the only exceptions have been where store size dictated that categories had too much or too little space so they were adjusted.

A wider oral-care department with revamped signage and clear divisions between sub categories

With any new department or trial within Morrisons, the signage gets an overhaul and as such the departments become much more homely in feel rather than the former utilitarian clinical business like signage employed in other stores. Things will no doubt change and change again but it's a step in the right direction.

Signage on display behind nappies.

Signage for toiletries near baby toys.

'first spoonful' along with milk for babies.

The new layout feeds well into the o2o plan as well, growing own label sales is important and the baby category tends to be dominated by brands, trust is everything in the baby sector and the presence of long standing brands such as Hipp and SMA means the barriers to entry are high. The acquisition of Kiddicare ties into this and makes a lot of sense considering the trust Kiddicare customers retain in the brand.

More complimentary products, bottles, dummies, sterilisers next to Milk and in one bay.

Own label can be driven on the non food side too with complimentary lines such as plates, spoons, bowls and cups available. In turn this drives margin and it's an easy way to do it, with the merchandising set up to include items such as bowls within the weaning bay there's a strong likelihood that customers will buy everything in one go which will drive sales and profitability and prevent customers going to competitors.

More complementary non food alongside Haircare.

Naturally with the focus on baby, you'd expect elements on Kiddicare to be coming into stores and departments like the one at Kirkstall, it's only a matter of time before this becomes the case. At the minute it appears that bar a few seasonal lines for the baby event, it's not going into stores on a wider scale.

Are we likely to see more Kiddicare mentions in stores?

It's a strong brand and retains a lot of trust which is absolutely vital for parents and parents to be, whether when Liberate is rolled out, we see elements of Kiddicare arrive in stores remains to be seen.

I mentioned own label development and keeping an eye on the trademark registration site reveals that Morrisons have registered trademarks for Dynamic, Magnetism, Clear Protect and Energy under the Health & Beauty categories. The Northampton correspondent believes these are to be the new range of deodorants and I think that will certainly expand their own label offering within H&B.

It's good to see that new layouts and merchandising methods are feeding into the wider corporate plans, a much bigger focus on own label as we know with o2o and it's interesting to see how it's coming to life in the concept store.

The rollout continues with Pasta changing over to Bistro from Italian Deli

In the wider estate of course, things are markedly different and some stores are starting to creak a bit ahead of Christmas, wage budgets are tight across retail with a rumour on twitter earlier that Tesco had banned overtime for Christmas again which will put considerable pressure on their store teams. Morrisons traditionally have kept strong availability and standards which is a key reason their manual order controls work so well with availability topped up throughout the day.

However the hours have been tightened recently and although my local stores generally perform well, gaps are starting to appear, especially as stores become busier with some stores comfortably beating sales forecasts which shows the wider appeal of the group is working.

Dalton spoke to gathered press in London on Tuesday (15/11) stating they'd be investing £100m in Christmas price cuts, with £35m invested via the Christmas Voucher scheme with the rest coming via promotions and price cuts with 'efficiency savings' mooted as funding the cost saving. Whether there are wider efficiency savings available within the network isn't clear but some stores I've visited have showed signs of needing an hours investment with a few gaps on the shelves and lower standards than usual.

Dalton did concede facing up and gap filling was a waste of resource so packet perfect shelves aren't to be expected, however there seems to elements of a disconnect between what is / isn't acceptable.

A concern in the run up to Christmas but hopefully stores are able to recover and trade well in the run up to Christmas, especially with competition fierce and the consumer likely to be very selective in terms of what they buy and where they buy it.

In other news, M Local have their 3rd store opening up on Grafton St in Manchester, near a sizable student population in a former 'Valu' convenience store, the staff will transfer to Morrisons so it's purchased as a going concern. It will be served out of Cheadle store like Wilmslow and it's a test for the hub and spoke model, how many stores can a main store supply?

Further stores were planned as the initial trial looks to be a success, a city centre store is on the cards with applications lodged for New St in Birmingham. The 3rd store was supposed to be Widnes but the developer hasn't yet handed the store over (it's part of a wider development) so that's delayed for the time being.

Ahead of Christmas trading, the Christmas voucher scheme will be popular once again and all eyes will be on January where Dalton promised a 'fresh initiative' of promotions rather than a £5 voucher as part of the Christmas scheme. With the changes that have gone on so far, there will be a lot of people hoping for something really innovative.

Booths - the Waitrose of the north?

2011-11-08T21:25:00.000Z

Based not too far from the fledgling M Local store in Ilkley is a Booths store, many of our southern readers may ask 'who are Booths?' In fairness, they asked 'who are Morrisons?' in the early noughties when Sir Ken refused to entertain the city with non execs or press days and even refused to travel down to London for city announcements insisting analysts et al should come see him in Bradford!

Booths aren't listed on the stock market but they too remain a relatively well kept secret outside of the North West. Their head office is based in Preston and they've a myriad of stores in Cumbria and Lancashire with recent expansions seeing them enter Greater Manchester and Cheshire for the first time.

Map showing Booths stores (c) Booths.com

The stores based in Yorkshire are in relatively rural 'spa town' locations, Settle is relatively 'out in the sticks' and affluent Ripon isn't far from York. Ilkley as we know is another affluent area and Booths were concerned about the M Local arrival, concerned enough to send a van around on opening day letting customers know that Booths were competitive on prices too.

It's a similar story in Cumbria with the stores in locations that favour local produce but are affluent too, stores like Windermere and Kendal must take good money but crucially perform well on margin as customers flock to buy fresh and local produce. There is little non food space to prop up food margins here!

The latest store to open is the much awaited MediaCity branch in the new area of Manchester set aside for the new BBC building amongst other developments. The fact that Booths are here is testament to their financial muscle as it was presumably a fiercely contested bidding war, it will fit in well here, especially since it's the only Booths store within the Greater Manchester area.

Booths Mediacity, Manchester (c) Manchester Confidential

To further extend their reach, Booths have their Booths outside concept which is selling sandwich platters, salads and desserts to the masses in and around Manchester. A particularly clever way to advertise their brand too considering the produce included in the sandwiches and salads is local. Whilst the concept is neat, the website needs to be tightened up as it looks a little like a potentially fraudulent site for my money and doesn't lend itself to the wider Booths branding.

Booths do have a mere 27 (including Mediacity, their twitter site indicates 28 as Penrith opens mid Nov) stores so it could be argued that they themselves may become a takeover target as an increasingly fragmented food retail market becomes tighter and tighter. With larger chains such as Somerfield and Safeway being eaten up in recent years and considering Booths size, is it likely they'll be too become a takeover target?

'cube' signage for pet food

Not particularly, chairman Edwin Booth is the 5th generation in the family line to have taken the reigns of the retailer, with 230 members of the family having 96% of the company's shares, it would take a lot of agreement to sell off shares for a takeover to happen.

What on wider expansion though? Booth himself says they'll never build more than one store every 18 months in this interview in 2006 with the guardian. In the face of people stating Booths are the Waitrose of the north, he says that 'we're a bit more of a human face'. Brilliantly adding that 'Waitrose is how a supermarket would be if the civil service ran it'.

Market 'feel' to the Booths Produce department

Admittedly a lot has happened in five years over at Waitrose with their continual growth surprising many industry observers, not because their products or stores are poor rather they weren't supposed to be a winner out of this downturn. They have continued to grow market share and sales as customers have traded down from a 'meal out' each Saturday to going to Waitrose for their food and drink, still enjoying the treat but saving money in the process.

Whether they would go to Booths if they had national coverage remains to be seen, the ethos of Booths is around local produce and 26% of their stock comes from it's local trading area (for each store). There is a focus on local foods along with a quality own label range, the stores lend themselves to affluent areas which generally don't have vast amounts of land available. When there is a site available there will invariably
be opposition from local residents who are concerned about the impact of a store on the local trading environment.

OOS tags fit in well with the branding.

There won't just be residents disapproval but its rare to find an untapped source of wealth these days, certainly some areas are almost overrun with supermarkets and their respective convenience arms opening up. The challenge is to continue to find new sites that will complement the existing store network, but are right in terms of demographic as well as geography and as Booths venture into Manchester and Cheshire for the first time, there has to be a consideration around logistics and locations of depots too in an effort to supply the stores for the right cost in the right time.

Coffee grinder at M Local Ilkley

I visited the Ilkley store a few weeks back and I was keen to see how it was shaping up since M Local opened not too far away from them. Naturally the major challenge will come when Tesco open their larger store that they (eventually) got permission for by the railway station.

Coffee grinder at Booths

It's clear that there were a number of things that potentially inspired Morrisons for M Local when they waked around Booths, the presence of a coffee grinder in both stores for example indicates they did their homework but also that there is demand for good coffee. Certainly the people of Ilkley like a certain level of food and drink considering the continued presence of Booths and independent retailers such as Lishmans butchers.

POS advertising the farmers name and picture - where food comes from.

The focus on locally produced food is clear when you enter the store, the feature product at the front of Produce was Cauliflowers that were grown in Hesketh Bank in Lancashire. The advertising features the farmers name and his picture to enhance the relationship between farmer and customer and to let customers know where their food has come from.

Rustic wooden fixtures and handwritten POS add to the 'feel'

There is a real rustic feel to the Produce department, throughout the store are wooden units to display product on along with handwritten chalked signs indicating prices of products. It feels very much like a market stall or farm shop rather than a supermarket.

Wooden baskets featuring Rhubarb and Sweetcorn

More rustic wooden units and handwritten signs.

Further back in the store is the bakery which features 'naked' artisan bread, these are not wrapped and are merchandised just as they are baked. There appeared to be a vast range of breads available with bloomers, small and large loaves along with other 'french' based lines such as baguettes and batons. I am not sure if these lines are scratch or bake off but I'd be disappointed if Booths were using bake off bread considering their commitment to quality there again M&S / Waitrose both use bake off bread rather than scratch baking.

Naked bread on display at Booths - a strong range of artisan breads.

The store is laid out in a similar fashion to Morrisons, whilst there isn't a 'street' as such for counters, the back of the store flows around making the counters the focal point of the store. As you'd expect, the counters are filled with local fresh produce which naturally attracts a price premium but are clearly popular with the shoppers.

Delicatessen counter with a vast range of hams.

Pre cut cheese on a table also drives sales.

The counter service is a big part of the Booths experience with each member of staff having good levels of product knowledge, I observed a couple of staff members conversing with customers about the suitability of certain meats and cheese, so it's a good example that staff are taught elements of product knowledge which is no doubt down to a good training package.

Whether this is a new partnership or something that has been going on for a longer spell but there was some frozen foods space given up for Cook! which is essentially Iceland for posh people. I jest but the theory is they are frozen ready meals that taste like freshly homemade dishes. They even come in portion sizes that fit traditional cookware which can give the impression that someone has cooked the meal from scratch, when in reality it was bought from Cook! and then heated in the oven.

Cook! Freezer space in Booths

Cook's furthest store north is Harrogate and with stores being expensive to operate, especially when they're competing with the supermarkets. It makes sense for them to have a tie up with stores like Booths, it's very much a complimentary partnership.

Wine chillers with feature wines on offer.

Naturally with the affluent area and clientele, the store has a strong wine selection with trained advisers around to help the customer out. The wine department features mainly ambient space but each corner of the department has a chiller for featured wines. Another key sales driver as many customers to express a preference for chilled wine.

Beer sampling at Booths with information on each beer.

A lot of information around the sampling.

The staff members told me the sampling was relatively popular and was proven to drive sales, they'd generally have free reign over the beers to select but occasionally advice was given by head office to select certain beers.

Overall, a remarkably impressive store, both in layout, experience and product. I've heard a lot about Booths in terms of their locally sourced produce and quality product and was pleased to note it translated really well to the offer, there was a clear focus on local produce and the POS reflected that along with a clean and clear shop floor which helped customer flow.

I'm intrigued to see how Booths continue to expand, their arrival at MediaCity in Manchester shows that the firm are clearly ambitious about the sites that they open and I'll be hoping to visit this and other Booths stores as they continue their steady expansion across the north west.

Tesco Bradford - does it have 'extra' ?

2011-11-02T09:36:00.001Z

We've never been particularly well served in Bradford by Tesco which is surprising considering they are the number 1 retailer in the UK. Tesco didn't reach us in Bradford until the late 90's with their Peel centre store (a former Food Giant) and it shows with that section of the enlarged store resembling 1993. The store was then extended into the former tile unit adjacent to the food arena and the store gained a vast non food space which is some of the most impressive I've seen.

The Peel store in the centre of Bradford has a full seasonal arena along with a full homeware, H&B, entertainment and clothing offer giving customers a real strong choice of non food. Recently the store had concessions like the phone shop, pharmacy and a Direct desk added to it's offer. Despite this, they still don't class as an Extra, presumably the sparse food offer holds the store back.

Further up the city, Tesco have their Extra store on Great Horton Road, again this wasn't a classic 'extra' as even though it had the relevant counters and departments, the food offer was quite poor compared to the larger extra stores such as Seacroft. The store seemed to lack space for the food offer despite its size and it looked dated especially across chilled and Bakery.

Tesco seemingly felt the same and after only building the store in 2006, put a planning application in 2009 for an extension to the store, a mezzanine floor for the cafe and a remodelled car park and entrance. Councillors refused the application due to concerns over the store size and Tesco then won the subsequent appeal.

The halt on building extensions and mezzanines for Tesco then kicked in and it hasn't been until recently that the store started having work undertaken on it, the extension has popped up in no time and the remodelled entrance was opened to customers in early October. It has to be said that the new store is far better aesthetically, it's clad in brick rather than a strange beige coloured prefab style wall which looked like something from the Soviet Union in 1970.

Tesco price drop - has it made a difference to trading? Tesco claim so.

The store closed for a week (w/c 10th October) as the real work of removing and replacing fixtures, remodelling the store and moving huge amounts of stock around the branch had to be done behind closed doors. With the store being closed, the short dated fresh food had to be sent to nearby stores for them to sell.

The extension sees the store increased in size to accommodate more non food, a cafe on the mezzanine floor and a wider food offering. Naturally there are additions such as a a halal counter and a wider world foods range than previously.

Click & Collect for groceries at Bradford extra (c) Tesco

Perhaps the most interesting aspect was the late planning application for a click&collect area for food deliveries, the ruse is pretty simple. You order your shopping online in the same way but rather than have a van turn up with your shopping, you go to the store and pick it up. The profitability aspect of this is an issue, no delivery charge means no return on staff costs. Without that charge, the retailer is picking up the tab for the extra labour to pick the shopping and then move it around the store before it's picked up. Admittedly no one knows the true profitability (if there is one) from the .com model but the absence of any charge and having someone do the shopping for you must erode margin (though being Tesco, it's strong anyway).

Overhead shelving for non food.

As I mentioned, the extension has seen non food expand into the enlarged area with more of a focus on technology with the phone shop gaining floorspace, along with an expansion in the offer of laptops and cameras. Despite the refit, good use was made of the overhead capping shelves to hold overstock. There was some talk a year back that the 'dead' warehouse space would be used for the much vaunted launch of Tesco Bank in store branches. No sign of that here though it looks like the store has expanded at the north side where the warehouse is, perhaps there has been a little movement there.

Overhead shelving in use for the overstock on toys (+ 5p off fuel!).

Retail is still too variable to abandon warehousing though to focus on an overhead shelving only solution. Late deliveries, night shift sick calls or overtime bans mean the warehouse can rapidly fill up, not just that but the seasonal events also see extra stock driven into stores so the space is always required.

Strong seasonal space with the 'half price toy sale' heavily promoted.

Speaking of seasonal events, some stores have a seasonal area where two aisles face each other with space in the middle for branded pallets, shippers and other displays related to the seasonal event. The Bradford Extra store has two aisles that border non food near the store entrance for seasonal product.

The half price toy event was on when I visited so it makes sense to place impulse purchases near the entrance as customers will see them and certainly have a look at them considering the bright POS and excitement of a bargain.

The other half of the seasonal space given up for Halloween.

There is a non food revamp too with an extended entertainment section along with a nice 'faux' kitchen background for the kettles on sale. There is also a wider choice of laptops and phones via the 'phone shop' too with the Tesco direct desk forming part of the 'electricals' area. Naturally there are the 'tech team' also on hand to demonstrate products and sell their extra service with any purchase.

Kettles with a 'faux' kitchen background.

A wider selection of electricals, tv, laptops, phones and cameras.

The overhead signage preferred by Tesco for certain departments.

The back wall in Tesco stores features the counters, an extended Produce department and other concessions and an interesting aside in this store is that they've added in a Photo centre and a beauty salon!

A wider range of counters in the revamped store - new signage and a fresher look.

The Beauty salon was a test in a few stores but it seems to have been a success considering the roll out has reached Bradford. It was doing a good trade when I visited the store with people both waiting to be seen and having treatments. The photo centre is another area that offers huge margins and is perhaps an area where online hasn't yet totally taken over, especially with the advent of 1 hour processing.

Salon trial successful considering we've seen it as far north as Bradford!

A good range of services available at the salon - 'menu of services' however doesn't seem to fit?

Naturally the store looked remarkably polished but after being closed for a week and no doubt having a good level of labour thrown into the mix, I'd expect nothing less. The big weakness is ongoing trading in other stores, and no doubt Bradford Extra once the hours return to normal levels.

With the extension and revamp, there is a lot more seasonal space in this store than previously, the Christmas selection is vast with a strong range of varying biscuits and chocolate, compared to Asda who have rolled out 'phase 1' which is poor in comparison.

Strong range of Christmas lines - a focus on efficiency with pre filled units to be dropped in.

Strong Christmas confectionary offer

Another area of improvement with this refit is the new signage that Tesco employ, gone is the dark blue and it seems to be more of a purple colour these days, whether this is to calm customers as they approach queues at checkouts or visit shelves bereft of stock I don't know. It's much more pleasing on the eye if a little uninspiring compared to some of the newer guises seen in Morrisons for example.

New signage in dark purple.

Tesco have to be admired for their stellar growth, certainly in the UK and they've never been far from the pulse of the customer, recognising customers would shift to Finest rather than Value at the start of the downturn for example was an inspired move. Another plank in their growth strategy has been their relentless focus on local communities, as the EU has been widened to include countries such as Poland, we've seen a lot of migration to the UK and as such real communities have built up like the asian community who began settling in Bradford in the 1960's.

Very strong world foods range in Tesco, this is a bulk aisle for promotional lines.

Tesco have reacted to this by ranging a great number of world food lines to encourage the communities to shop with Tesco, meaning these customers can get their core shop plus the more specialised lines for curries for example. Tesco tend to range these stores on an individual basis rather than a 'one size fits all' range for small, medium and larger stores.

Wider world food aisle is sited near checkouts and features the 'ring' signage.

Another department that has been expanded post refit is fresh Produce, Tesco generally doesn't perform too badly on Produce but with Morrisons blazing a trail with their new stores of the future, it will be interesting to see if anyone can respond. Produce generally is relatively utilitarian with green crates, wheel in shippers and other initiatives designed to strip as much cost as possible out of replenishing.

Strong back wall with signage for expanded Produce department.

Efficiency initiatives are never far away.

On the back of Tesco exploring further avenues for growth, much has been made of their venture brands, with the latest one being New York Soup co, whether the idea is to mask the fact it's actually owned by Tesco is unclear, certainly the SEL gave it away in this respect, highlighting the Tesco Jamabalya soup rather than New York Soup Co.

SEL errors 2 days after opening - one without an SEL, one showing 3 for 2, other not.

It's interesting to see how Tesco are pushing the venture brands across the rest of the store, certainly the pet food 'nutricat' and dog food 'Lathams' are key venture brands marketed as a healthier option for pet owners. The branding and advertising push when they were launched certainly didn't indicate that Tesco were the owners of the brand, rather indicating that it was only available in their stores.

Lathams dog food - venture brand with a 'frame' to drive sales to the brand.

Tesco have attempted to ensure that these brands won't be lost in a busy category by building a frame around them highlighting 'nutrition' with another bay given up for IAMS and Purina 'one' which will bring some return from the supplier. The 'frame' is vital for the new brands especially when there is a strong element of loyalty by pets and their owners towards food. The benefit of placing next to established brands is obvious, especially with the higher promotional and lower price points delivered by Nutricat.

It's worth pointing out - for clarity, that Lathams is a true 'venture brand' whereas lines like New York Soup co are made and the trademark is retained by a supplier - albeit they are exclusive to Tesco.

Nutri-cat 'frame' alongside established brands such as Iams and Purina to highlight comparable product.

The Bakery features a new design on the display equipment with a wooden trim, presumably to give more of an artisan feeling, there is the usual strong range of bread and rolls along with a wider range of cakes and the celebration cake machine returns with the option to print photographs onto cakes.

Wooden trim on feature but note the 'flour power' sign - Kirkstall inspired?

Morning goods also feature the wooden trim on fixture.

The Stock reduction process extends to cakes.

Wine also has had a new layout with new wood panelled fixtures and a clearer merchandising plan, by country but it's much better with clearer signage and space for feature wine in the middle of the fixture. The fixture features purple signage once again and has a much more premium feel than previous versions of the aisle.

A revamped wider selection of wine is also available with stronger merchandising.

Another notable change was the amount of stacks that were dotted around the store, a move to improve the sales per sq foot metric perhaps? Certainly the quest for sales continues across the retail landscape and Tesco are under as much pressure as the rest. It was interesting to note the implementation of numerous stacks in this revamped store, clearly a corporate decision considering it's a refitted store likely to attract high profile visits.

Bulk stacks were noticeable across the store.

Extending to seasonal lines in the main areas of store.

Non food is the slowdown story and where growth and subsequent profit were relatively simple by just extending your store for non food and away it went. However the reality for the hard pressed consumer is that their discretionary spend is diminishing with rising inflation, fuel and everything else. With that spend goes the opportunity to drive non food sales as hard (and put to the bottom line as easily) as was previously the case.

Health & Beauty has seen a sales slowdown, Tesco Extra does have more of a department store feel.

A far better flow to the Clothing department at Tesco

Tesco have recognised the slowdown on non food and are working on modifying their offer which has become cluttered, one aspect of success has been the 'F&F' Tesco clothing range which goes from strength to strength, certainly in Eastern Europe the standalone stores are performing well and the UK stores are now seeing new thinking from a merchandising angle.

Sharper merchandising and an easier customer flow.

More Free standing units rather than long aisles.

Whereas many stores have utilitarian aisles like the rest of the store, uninspiring and leaving customers to walk down a large aisle to find their area of interest, Bradford Extra seems to feature more dynamic displays that make it easier to shop and leave the customer feeling they are shopping a department store, rather than for clothes in a supermarket.

Shoes on a curved display unit to further enhance the flow of the department.

As I've mentioned, we know that Tesco have been steadily reducing labour costs in stores to retain the profitability of the wider business, especially with sales falling and market share under increasing pressure from the discounters, Waitrose, Morrisons and Sainsbury's. Stores have seen hours budgets eroded and it's now coming to a breaking point, system problems during the end of day updates means tasks are slowing down which means time sensitive tasks such as label changes are not able to be completed in time.

It's a problem that CEO Phil Clarke admitted when he announced a budget to be set aside for IT updates which presumably will improve the performance and stability of the wider system. The problem (one assumes) is that the original system when it was built was never envisaged to look after as many stores as it currently does with express, metro, superstores, extra and the growing international side of the operation.

Bulk stacked beer on wheel in stacks. - Efficiency drivers across the store.

Also a system when built is fine for 'as is' with certain expansions planned but as things need to be quicker, faster, cheaper just to keep up with the competition. It's inevitable that bolt ons and new pieces of software are needed to programmed and added. However these can make the wider mainframe unstable over time, you only have to look at the availability issues that Asda face which are largely system related to see how quickly things can get out of control.

Sainsbury's have to be admired for their investment in IT, the abandonment of the woeful Accenture contract early in Justin King's reign set them up for their recovery and since then they've quietly being investing in the technology with the availability systems massively improved from previous guises. The advancement of the FOA (focus on availability in store ordering system) and gapbusters enabling stores to request out of stock items within 12-24 hours have helped massively. You only have to look at their recent brand match push and the technology which delivers instant price comparisons against Asda and Tesco on branded items rather than a 24 hour wait before logging onto a website for the APG.

Admittedly Morrisons are miles away with their systems, despite having industry leading availability their back office systems were outdated and inefficient. They are now updating to an Oracle platform which means they'll have the solid platform going forward. They'll be confident about the future with the latest technology on board and the opportunity to ramp up expansion knowing that the systems will back it all up. Efficiencies yet to be driven from the switch will see Daltons £100m savings target become all the more achievable.

The Bradford Extra visit was great, it was nice to be in a Tesco store that wasn't tired or shabby. The store had been closed for a week before my visit which was on the second day post re opening so it's to be expected that things are nigh on perfect. The issue for Tesco is that stores continue to struggle along running under hours targets if stories are to be believed, certainly my local superstore is calling for red card holders to checkouts (shop floor staff) at non peak times of the trading day, so what do hope they have on a Friday / Saturday when it's busy?

Broken freezer two days post refit isn't a good sign.

Despite this store being fresh from a refit, there were still minor issues. Having the freezer with ice cream totally empty after a breakdown is certainly not you want to see, or indeed expect after a refit. Not only are there lost sales but potential corruption for sales forecasts as the system struggles to understand a day with no sales when it plots the expected sales.

Whilst the refit is undoubtedly a positive move for the store, with a sales floor increase of 21000 sq ft (going from 60,000 to 81,000) there is ample opportunity to drive more sales to the store if the standards are maintained, queues and availability remain a huge issue across the wider store estate.

On sale in October 2011.

Taking another store in Bradford as an example, it was only last week that I found this in store, BBE Dec '10 and monickered with the World Cup 'celebrate' 2010 logo. Unacceptable and behind it was an 11 day old copy of 'the Sun'! These are the sort of issues and do indicate a wider problem within stores.

The store network will benefit from the investment in CAPEX which sees stores refreshed and updated. With the increasingly strong competition it's vital that Tesco do provide a compelling offer as having more shops than anyone else isn't always enough. The big price drop will go a way towards enticing customers with the next batch of products due later this month for version 2.

Overall, a great store and great refit for Bradford Extra, I'll be interested to note how things are progressing as the store beds in. With Phil Clarke announcing an investment in front line staff recently, this will help massively and it's vital that they're used correctly by stores to provide a better shopping experience to their customers.

Price drop can't do that on it's own.