Recruitment, national distribution and driving awareness of an offer that can put stores of any size on a par with Marks & Spencer and Waitrose – Budgens brand director Mike Baker has ambitious expansion plans for his fascia in 2018, and met Chris Rolfe to unveil them.
Mike Baker doesn’t want to talk about Tesco. While other symbol group managers spent 2017 debating and preparing for a merger that is set to create unprecedented competition and change among mid-tier fascias, his attention was elsewhere.
His goal for the past three years, he tells RN, has been to create an improved Budgens offer that will attract new retailers and increase in-store sales.
Away from the furore in the main symbol arena, he has designed a package to allow the group’s members to trade at the top end of the convenience market, with store offerings comparable to Waitrose and Marks & Spencer.
Early research for the revamp of the premium fascia – commissioned by Booker chief executive Charles Wilson in 2015 – revealed retailers were dissatisfied with the existing Budgens model, and wanted more freedom to run their businesses, bring in local products and generate more profit.
“Knowing this, I wanted to evaluate and fix the model, stabilise our existing customer base and make retailers more profit, because costs were only going one way,” says Mr Baker.
“We needed a more attractive offer – better pricing, better quality, unlocking as much as we could from the Booker group in the knowledge that if my existing customers were happier, I had a platform from which to grow the business.”
He describes 2016 as “a transitional year” during which Budgens’ offer was updated, and store owners RN has spoken to in the past six months have testified to the benefits of the improvements.
One early change was the relaxation of contracts which required retailers to source 95% of their stock from Budgens. With the option to reduce this to 75%, north London retailer Paul Gardner is one store owner who has taken advantage of the change, by introducing sushi, Italian and Cook concessions, along with a butchery counter, to complement his mainstream range.
But while retailers have greater freedom to choose where to source their stock, Budgens’ own product range has been modernised and expanded to better serve group members – a change made possible in part by Booker’s acquisition of Londis and Budgens in 2015.
“Booker’s produce purchase was 10 times Budgens’, so now I’m able to go to a different supply base, buy more volume, better quality products, improve shelf life and wastage and pass on better wholesale prices to retailers,” says Mr Baker.
Fresh produce is a great example, he says. It typically forms 45% of a Budgens store’s range and is therefore where the biggest chunk of that cost saving came from.
“I was able to reduce the wholesale price of a medium chicken by £1, for example, so the price has gone down, the margin has gone up and the product is better quality,” he says.
Ranges are continually refreshed to track current trends too, he adds. It’s a change noted by Berkshire retailer Jonathan Fraser, who told RN when interviewed in November he has sourced Swedish yogurt, craft ales, gluten-free and protein products, and premium and craft gins from Budgens in the past year.
Another of Mr Baker’s priorities with range expansion has been delivering a wider selection of ingredients for meals for stores.
Budgens is not just about the 3,000sq ft model – it’s for everyone who has the right chilled space and store standards
A decision to upgrade Budgens’ sandwich supplier to Urban Eat and include them in a ‘£4 or less’ meal deal has paid off in many stores, with Jonathan Fraser reporting a 20% uplift in sales.
Mr Baker sees evening meals as a huge profit opportunity too, and here Booker’s own range development has been hugely beneficial. One of the most significant additions last year was its the Discover the Choice ready meals range. With its selection of popular pizzas and ready meals and a two-for-£5 price mechanic, it has already attracted strong sales for retailers.
“A long-term multibuy like this means retailers can buy two or 20 cases and the deal is still relevant. It gives customers confidence too,” says Mr Baker.
“We’ve also taken the number of products we promote down from up to 700 every three weeks to 170 every four weeks. As a result, you can focus promotions and the products get more attention, so the deals work better.”
This, combined with the aforementioned access to locally-sourced fresh produce and food to go concessions, has allowed Budgens retailers to tap into a growth area.
“It was desperately needed and has gone down fantastically,” says Mr Baker. “It is a great proposition for consumers that is pulling though higher volumes, because people are now coming to Budgens to buy their meals for tonight, whether that’s a mid-tier brand like Discover the Choice, or more premium options such as Cook.
“We talk about chilled and fresh being important, but really, it’s meals that matter – for tonight, lunch, top-ups. The biggest trend that will influence convenience retailing over the next five years is food to go.”
With these changes now established, Mr Baker believes Budgens is ready to focus on expansion this year.
Budgens will concentrate on three additional opportunities to achieve this, he says: “demystifying” the Budgens offer, attracting more retailers – including small stores – and expanding distribution.
That smaller-format stores are fertile ground for growth has been demonstrated by Budgens’ two-year partnership with Shell to develop forecourt stores with a strong convenience offer.
“Through working with Shell, we’ve made Budgens work in a 1,000sq ft box. We’ve shown you can get a credible meal for tonight solution into a 1,000sq ft forecourt or independent,” he says.
“We want to demystify Budgens for people because it’s not just about the 3,000sq ft model – it’s for everyone who has the right chilled space and store standards. There are a lot of these stores where the Budgens model would work and there is consumer demand for meals for tonight. Thanks to our work over the past two years, we now have a solution to help them.”
Mr Baker also plans to expand Budgens’ distribution network this year, moving from using one distribution centre in Wellingborough to putting the Budgens range in regional Booker depots in new areas such as the north west, north east and Scotland.
While 2018 will doubtless produce more headline Tesco-Booker merger developments, Mr Baker is confident a strengthened offer that allows Budgens retailers to operate in a different, premium sector of the convenience market will set his stores apart and keep him on track to achieve his expansion goals.
“Whatever happens, I’m confident we’ve got a great proposition that will help independent retailers and national accounts grow their businesses and evolve their offer to better suit consumer needs,” he says.
“We are opening an average three Budgens stores a week. Budgens retailers are telling other store owners we can do a better job, and the phone outside my office is ringing more and more. There is a huge opportunity for Budgens this year. 2018 will be about growth.”