An Extra Something For the Long Drive Home

Discussion
Apr 06, 2009

By Bernice Hurst, Managing Partner, Fine
Food Network

The principle isn’t new but the player is.
British supermarket, Waitrose, has decided to hit the highway by opening
two convenience stores at Welcome Break, the U.K.’s second largest motorway
services operator.

According to the Independent, "Waitrose
has signed a franchise agreement with Welcome Break to grab a slice of
the motorway food market that M&S has in effect made its own since
launching the Simply Food store in a Moto site in 2003."

Since the first U.K. service station opened
in 1959, a great deal has changed. The Independent says Neil Saunders,
a consulting director at the retail consultancy Verdict, attributes improvements
in what were generally
"pretty appalling" places with poor quality products and service
as well as extortionate prices largely to "service-orientated chains
going in there, such as the restaurants KFC and McDonald’s, and Marks &
Spencer."

Going head to head with Marks
& Spencer may be good for drivers who will have increased choice and
temptation. There is no danger of competition from larger supermarkets, however,
as the Highways Agency prohibits motorway service areas (MSAs) from building
sites bigger than 5,000 sq. ft. on one side of a road.

Waitrose’s objective, according to its commercial
director, Richard Hodgson, is "to grow our brand and make it significantly
more accessible to people." Following the trial, more outlets are
expected although Mr. Hodgson said not all service areas would be suitable. The
Financial Times
reports that the units, about a sixth of the size of
a typical Waitrose store, will stock over 850 product lines, made up of
food traditionally associated with travel, such as sandwiches, snacks and
soft drinks, as well as convenience foods, such as ready meals and essential
groceries, from a combination of Waitrose own and other brands.

M&S is also continuing to expand, having
just opened its 28th Simply Food inside an MSA although Mr. Hodgson said, "We
are not gunning for M&S; we are gunning for more customers wherever
they come from… it is about making good, quality food accessible to
everyone."

Discussion questions: Do highway service
areas present an opportunity for grocers? What do you think of the potential
for U.S. supermarkets to extend into c-store concepts, either alongside
highways or elsewhere?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

8 Comments on "An Extra Something For the Long Drive Home"


Sort by:   newest | oldest | most voted
Anne Bieler
Guest
Anne Bieler
13 years 1 month ago

It makes sense to explore this concept–capitalize on the need most busy folks have to pick up perishables “on the way home.” In the UK, the retail brand is very strong, and the shoppers expect nothing less than fresh produce, ready meals, and dairy. The extension in the UK with gas/convenience would be a good next step.

In North America, finding locations that attract the right shoppers who are looking for fresh, fairly priced perishables is critical–then executing well. Grocery retailers here could also leverage their brands as well, but must work to differentiate with the right products and services.

Ralph Jacobson
Guest
13 years 1 month ago

You know, I can’t find a Stuckey’s Nut Log in Los Angeles to save my life!

John Crossman
Guest
John Crossman
13 years 1 month ago

I think this is real tough to do. While it would seem easy, the reality is that reaching convenience store customers is different. To create the margins needed, convenience stores charge higher prices and provide less service. A grocer can hurt their brand if the customer does not have the same experience that they had at their grocery store but if the experience is similar than the convenience store will probably not be profitable.

Joel Warady
Guest
Joel Warady
13 years 1 month ago

The UK is a perfect market for this trial. People in the UK spend considerably more time in the cars, both due to the fact that they commute longer for work, as well as the fact that the M roads tend to back up for hours on end.

Waitrose is known for their upscale selection, as well as their fresh foods. Having a fresh food alternative while on the road is a great idea, and it is a great opportunity to raise the brand awareness for this retailer. While we are sure that Waitrose will look at this as a profit center, it should also be measured as a marketing effort as it will raise brand awareness for people who are normally Tesco or Asda shoppers.

We always like companies that are willing to try something new, especially during a down economy. Waitrose gets high marks for taking advantage of this opportunity, and for their willingness to take the risk.

Steve Montgomery
Guest
13 years 1 month ago

The concept of supermarkets entering the convenience retail channel is not new. Kroger (operates almost 800 c-stores in 16 states), Albertsons, Royal Ahold, and others have operated c-stores here in the U.S. Depending on how it is done, it allows the supermarket to extend it reach and add points of distribution economically.

Where most supermarkets fail to capitalize on the opportunity is that they operate the c-store (many times located on the out lots) as another lane of their store. This severely limits the items carried (assume because they don’t want to authorize the SKUs for the larger format stores). In addition, it stops them from capturing the extra margin that they need to support the c-store. Finally, quite often they operate it with the same sales force which brings it higher labor cost, etc.

Bottom line–the opportunity is there but to be successful, the supermarkets need to understand it is a different business and not just a smaller format supermarket.

Doron Levy
Guest
Doron Levy
13 years 1 month ago

I don’t have hard numbers, but my observations are that these service areas always seem busy no matter what time of the day. As for grocery, if there were staples and reasonable prices, I would give it a shot. The convenience factor is there but everyone is so price conscious that I don’t think convenience pricing will work. And of course, it has to be easy to get to, easy to shop, easy to get out of, etc.

I could see places like these getting busy, and one helpless cashier for 15 people in line. Not really convenient. Something like this would need a strong and detailed operations plan with support from regular sized locations. We will see an increase in road travel as airline capacity shrinks so this is the right time for the idea.

Pradip V. Mehta, P.E.
Guest
Pradip V. Mehta, P.E.
13 years 1 month ago

I see some opportunity for grocers in opening stores in highway service areas on interstate highways, especially within large metro areas, of course–strategically located. As people return home from a week-end trip, they would need to pick up grocery items for the following week. It would be very convenient if this can be accomplished from the last service area before reaching home rather that to go home and then go to a grocery store or to stop by on way to a grocery store in town, which may be away from the highway.

Jonathan Marek
Guest
13 years 1 month ago

In the UK, supermarkets have done a much better job establishing two pieces of the offering that are essential to smaller formats:

1) Ready-meals with store branded labels (and different levels of quality / price point)

2) Store brands that assure freshness and quality

These two components are extremely rare within c-store chains today, so if supermarkets are well enough established with them, they can make real in-roads with smaller store formats. I don’t think you can “skip over” establishing these points in the larger format–witness Tesco Fresh and Easy. You need to earn the consumer’s trust in the supermarket format.

In the states, I see Safeway moving strong with both these points, and smaller formats could be a logical next step.

wpDiscuz

Take Our Instant Poll

How would you rate the opportunity for U.S. grocers to open stores alongside highways?

View Results

Loading ... Loading ...