Retail Profile: MBL

MBL has been busy. Ever since the group acquired Londis in late 2004, it has been formulating the strategy for its Budgens and Londis brands.

Now it is unveiling the results of that work, the process and why it was necessary in the first place.

Marketing director Ross Halliday says: “When Musgrave first acquired Londis it had two brands which, other than size of stores, did not have a great deal of difference between them. They were not uniquely different and no better than the competition.

“Therefore the board took a strategic decision one and a half years ago on how we would create a sustainable business for independent retailers. We wanted to really get behind the brands, give retailers reasons to join Musgrave and drive customers into stores.”

MBL teamed up with leading brand agency Interbrand to drive the brand differentiation.

According to Halliday, this encompassed four key areas:

Products and services

Store environment

Communications

People and behaviours

At Budgens the product offer has recently been enhanced with the launch of a premium own label range called Our Kitchen. It launched in July with an initial 42 fresh lines, supplemented by 60 last month (August) and with a further 70 planned for October, including Christmas products.

“It's our best range,” says Steve Carter, head of buying for fresh food. “We've approached it differently to other retailers. We talk about the authenticity and provenance of our products. In addition, all of the nasties have been taken out, the products are free from hydrogenated fat, free from artificial colours and flavours and use only free-range eggs. Other retailers have based their premium ranges around the brand but there's generally no story behind them.”

The products were launched with an introductory 20% off offer for the first five weeks, to encourage trial. Further value-type promotions will follow, according to Carter.

“It is a premium offer,” he says. “The last thing we want to do is devalue it. We want to drive the weight of purchase.”

Carter reveals the uptake by Budgens stores has been extremely encouraging with 60,000 packs in stores within days of the launch.

Participating stores receive barker cards for each of the new lines, detailing the story behind each product and highlighting the 20% off message.

There's even a 'mission statement' for the range, which harks back to its provenance and fine ingredients etc.

At Londis, meanwhile, fresh foods are now a key focus, following the introduction of a six-monthly fresh foods catalogue, offering 700 lines including 100 lines in fresh produce, all available out of the Londis depot.

The catalogue incorporates planograms, based on store size, and introduces range architecture based on a good, better, best offer as well as everyday value lines.

It also provides retailers with a guide to fresh participation – what they can expect to achieve across dairy, produce and meat, for example – as well as wastage guidelines.

For Londis retailers, targeting 22% fresh participation versus 45% at Budgens, this type of information is invaluable, says Carter.

Now in its third edition, the catalogue has introduced a range of own label sandwiches plus fresh fish, meat and poultry to Londis retailers for the first time.

According to Carter, 800 retailers now take Londis sandwiches, 300 retailers buy produce and 130 stock meat, fish and poultry.

“When Musgrave first acquired Londis it had a core chilled dairy offer but in the last six months we have delivered fresh produce, meat and poultry. Our commitment to deliver ranges is a reality,” he says.

“The permanent multi-buys are really starting to drive the growth of fresh foods,” he adds.

For Londis retailers, remaining competitive and investing in fresh foods is key to a sustainable future, says MBL.

Carter again: “The margins are not there to support their business in confectionery, tobacco and news but the margins are there in fresh so there's an opportunity for retailers to grow their business at the same time.”

The Budgens and Londis store environments have been developed too. Pilot stores for each format have recently opened, featuring the latest designs, new ranges and departments. The Londis pilot opened in Weymouth in May and Budgens' in Moreton-in-Marsh in the Cotswolds in July.

MBL worked with convenience consultants srcg to develop the optimum store layouts such as focusing on food to go in the forecourt arena and food for later in neighbourhood stores.

Communications, both in-store and externally, reinforce the fresh branding in both chains. At Budgens, the message is firmly rooted in 'real food', highlighting seasonality, provenance and taste.

According to Halliday, the Moreton-in-Marsh store is introducing 1,400 pieces of new POS, touching every element of design including carrier bags, lorry liveries and even deli tickets.

“You can't cut corners on things like this,” he says. “If it's not delivered consistently, customers do not believe it.”

MBL is personalising its brands too.

The Moreton-in-Marsh store, run by Guy Warner, is branded as Warner's Budgens of Moreton-in-Marsh.

“It supports our fundamental belief in the independent store,” says Halliday. “Guy's face has been plastered around the store and he's featured on radio ads etc. We absolutely believe that being truly local could be the key point of difference.

“Brands have to be sustainable and compelling for customers,” he continues. “We know a local retailer in a local economy is compelling for customers. The money is staying in the community, supporting local suppliers and charities, it is paying staff wages, which they spend in their local community, so it all becomes a hugely virtuous circle. That's what we are trying to create – a virtuous circle for retailers.”

Within MBL internal communications have been ramped up too, via the Musgrave Your Voice magazine and town hall briefings.

“There's been a lot of brand engagement with staff,” says Halliday. “Our customers, retailers and staff all need to understand what the brands mean and what makes a Londis or a Budgens retailer. There's also been a lot of work around Our Kitchen, encouraging sampling and telling staff which stores it has gone into. We have got our own staff to understand the brands and buy into the brands.”

People and behaviours, the fourth pillar in MBL's brand strategy, have been a focus too.

“It recognises that people in our stores are our greatest asset,” says Halliday. “The customers who shop in Budgens or Londis stores are friendly – the fact they know the retailers is fundamental to them.”

Halliday reports MBL has invested heavily in store training and has created product experts in its four key 'famous for' categories: beers, wines and spirits; produce; bakery; and food to go.

Technology is being deployed too. Moreton-in-Marsh, for instance, features a touch screen terminal in the wine department to provide wine recommendations and a plasma screen above the deli revealing how products such as the award-winning Newitt's pies are made.

“We are quite good at this,” says Halliday. “We now want to take it to the next level such as putting staff in t-shirts which say, 'I'm the wine expert…ask me'.

“Customer service training has gone out to absolutely everybody,” he adds.

MBL's brand work is already paying dividends, it seems.

While the group is in the final throes of its divestment programme – only two stores out of the 183-strong Budgens' estate remain – there's already a sense of pride in the brand.

Carter says: “There's a general recognition among the retailers that we are moving them and the brand forward.”

And, while MBL is unable to provide targets, it wants to bring more Budgens retailers on board.

“We can't share absolute numbers but we have a five-year plan and recruitment is one of the key sectors,” says Halliday. “We'd certainly like retailers from other groups.”

And, as the race for space reaches the symbol group sector, Halliday claims it will be those with a differentiated offer who will win out. As well as symbol group switch and retailers joining from the unaffiliated sector, Budgens says there is also an opportunity for Londis retailers to convert, provided they differentiate.

In tandem with the brand work, MBL is developing its IT strategy for both chains, dovetailing with the parent company in Ireland, as well as its road map for the supply chain. These developments and associated synergies are expected to come to fruition in three to four years and will be a further carrot for retailers eyeing up the MBL brands.

“It will take some time to really see some traction but in four to five years time we expect to have significantly more retailers in both brands,” says Halliday.