In October 2015, Morrisons sold 140 M Local convenience stores to Mike Greene, 130 of which were trading and 10 of which were closed.
It gave an opportunity for independent retailers to really see how much of an advantage the supermarkets have.
Top line sales numbers dropped significantly and initial store performance wasn’t helped by being stripped of stock upon the change of ownership.
Of course, top line sales figures don’t tell the whole story as they are only one element of the net profit mix. A key burden for the M Local stores was the cost of distribution to them. Mike says it was 12%. For My Local, being supplied by Nisa, the cost of distribution is only 1% and staffing is run on a much tighter model now. That being said, there is clearly a higher cost in terms of buying products from Nisa than Morrisons.
One of the questions that each store manager was asked on the My Local road trip was how much they were up week on week. This is a positive strategy as looking at what the previous owners achieved is irrelevant. Asking managers whether sales are growing not only focuses on the success of current activity, it keeps the My Local team motivated on the good news of now.
The stores that shared their then and now sales figures certainly revealed significant differences. One could look at some of these numbers and think “This is shocking, surely My Local can’t survive!”; or you will see the opportunity that is there to be grabbed with both hands.
In the conversations that Ramesh Shingadia and I had with Mike Greene on our road trip, Mike and the store managers described that supermarket-owned convenience stores have two key advantages over stores in the independent sector – the credibility that the supermarket name gives them, and the vast fresh range and quality available to them.
Mike has a solution to both of these opportunity gaps. His ‘Five F’s’ deal with the credibility of the My Local brand and his teams obsession with getting the fresh range right.
The opportunity gap is not just for Mike Greene and My Local, it’s your opportunity too and bridging it could double your turnover!