Innovation in the UK Retail Sector - Nesta
Innovation in the UK Retail Sector - Nesta
Innovation in the UK Retail Sector - Nesta
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Vignette 3.2: The Local Epicurean/Budgens<br />
Context: <strong>Innovation</strong> <strong>in</strong> a small retailer<br />
<strong>Innovation</strong> <strong>in</strong> <strong>the</strong> <strong>UK</strong> <strong>Retail</strong> <strong>Sector</strong><br />
Example: The Local Epicurean was founded <strong>in</strong> 2006 by Andrew Thornton, a retail consultant who acquired his first food store<br />
from Budgens and jo<strong>in</strong>ed <strong>the</strong> Musgrave-Budgens-Londis (MBL) franchise. Less than two years later his company The Local<br />
Epicurean operates two Budgens branded stores, <strong>the</strong> first one of 9,000 sq ft <strong>in</strong> London’s Crouch End and <strong>the</strong> second of 7,000 sq<br />
ft, located <strong>in</strong> Belsize Park. The company employs altoge<strong>the</strong>r 170 people and has an annual turnover of about £17 million.<br />
Budgens as a retail brand is owned by MBL - Ireland’s largest food and grocery distributor. The bus<strong>in</strong>ess model is based on<br />
<strong>in</strong>dependent retail operators who buy products from <strong>the</strong> company and to whom MBL provides sales, market<strong>in</strong>g, IT and logistical<br />
expertise. In <strong>the</strong> process <strong>the</strong> <strong>in</strong>dependent franchisees have a fair amount of freedom <strong>in</strong> terms of how <strong>the</strong>y construct <strong>the</strong>ir ranges<br />
<strong>in</strong> view of local needs. Accord<strong>in</strong>g to Thornton:<br />
“Consumer needs can be very different from one place to ano<strong>the</strong>r <strong>the</strong>refore <strong>the</strong> benefit of such entrepreneurial model is that <strong>in</strong>dividuals who own <strong>the</strong>ir stores<br />
will do what is absolutely right for <strong>the</strong> local community. There some guidel<strong>in</strong>es you have got to follow <strong>in</strong> terms of brand entity, but with<strong>in</strong> that, how you<br />
work with <strong>the</strong> local community is up to you.”<br />
Therefore while Thornton has to buy a substantial amount of his goods through <strong>the</strong> MBL system he does not have to buy all of<br />
<strong>the</strong>m from <strong>the</strong>re.<br />
“So you can buy from Musgrave your corn flakes at competitive prices but you can also buy your bread from <strong>the</strong> local baker who is just 50 yards across<br />
<strong>the</strong> street.”<br />
Thornton’s two stores serve over 22,000 local customers seven days a week. Competition <strong>in</strong> <strong>the</strong> area is <strong>in</strong>tense. Just with<strong>in</strong> a<br />
walk<strong>in</strong>g distance from of his Crouch End store <strong>the</strong>re are one Tesco Express and a Marks & Spencer Simply Food - both<br />
formidable competitors. Therefore as a retail entrepreneur, he sees his role <strong>in</strong> keep<strong>in</strong>g <strong>the</strong> bus<strong>in</strong>ess fresh and attractive to<br />
customers: <strong>in</strong>novation is not a matter of choice but a matter of survival.<br />
“We must <strong>in</strong>novate cont<strong>in</strong>uously and <strong>in</strong> a customer focused way to susta<strong>in</strong> and grow <strong>the</strong> bus<strong>in</strong>ess and my job is all about <strong>in</strong>novation really, bus<strong>in</strong>ess<br />
development, chang<strong>in</strong>g th<strong>in</strong>gs mak<strong>in</strong>g th<strong>in</strong>s better. That’s how I would def<strong>in</strong>e <strong>in</strong>novation – basically ‘change <strong>in</strong> a bus<strong>in</strong>ess’ <strong>in</strong> l<strong>in</strong>e with what customers<br />
want.”<br />
New ideas are implemented through a team of managers whose concern is <strong>the</strong> smooth day-to-day runn<strong>in</strong>g of <strong>the</strong> bus<strong>in</strong>ess. The<br />
<strong>in</strong>novation effort of <strong>the</strong> company is channelled <strong>in</strong> three broad directions: (1) local sourc<strong>in</strong>g, (2) environmental <strong>in</strong>itiatives and (3)<br />
retail<strong>in</strong>g tailored for <strong>the</strong> local community.<br />
1. A dist<strong>in</strong>ctive store, localised product range and friendly services are seen as absolutely essential <strong>in</strong> establish<strong>in</strong>g <strong>the</strong> two stores<br />
as local dest<strong>in</strong>ations. S<strong>in</strong>ce <strong>the</strong> acquisition, <strong>the</strong> Crouch End store has been refurbished to reflect Thornton’s vision of<br />
<strong>in</strong>novative food retailer. The revamp <strong>in</strong>cluded <strong>the</strong> <strong>in</strong>troduction of zones for delicatessen, beers, w<strong>in</strong>es and spirits and <strong>the</strong><br />
<strong>in</strong>troduction of new l<strong>in</strong>es with emphasis on local foods. Additionally a ‘food to go’ counter was <strong>in</strong>stalled replac<strong>in</strong>g a chiller<br />
cab<strong>in</strong>et for pre-packed sandwiches. The new unit features juice and coffee bars for freshly made fruit juices, smoothies and<br />
Lavazza coffee and also offers freshly baked bread and made to order sandwiches. The store has an Epicurean Deli with<br />
fresh salads and meats all sourced locally. “There are a many good food producers around London which we want to br<strong>in</strong>g <strong>in</strong> our stores. In<br />
fact we are organis<strong>in</strong>g a meet<strong>in</strong>g <strong>in</strong> January with about 15 of <strong>the</strong>m and will be work<strong>in</strong>g with <strong>the</strong>m to <strong>in</strong>troduce <strong>the</strong>ir products <strong>in</strong>to our stores.”<br />
Both stores already offer a sizable range of ‘direct from <strong>the</strong> producer’ SKUs, sourced with<strong>in</strong> 100 miles and free from artificial<br />
colours and preservatives. There is also <strong>the</strong> ‘product of <strong>the</strong> week’ <strong>in</strong>itiative with regular supplier tast<strong>in</strong>g <strong>in</strong>-store, shelf-edge<br />
labels clearly <strong>in</strong>dicat<strong>in</strong>g <strong>the</strong> food miles of each of <strong>the</strong> local products. The stores offer fresh bread from Dunn’s - a local<br />
bakery, a range of food products from Suffolk and cheeses from Whitfield.<br />
2. In terms of <strong>the</strong> environment, <strong>the</strong> company <strong>in</strong>novates through a range of <strong>in</strong>itiatives. ‘Pennies for plastic’ is one of <strong>the</strong>m. “We<br />
want to encourage people to re-use <strong>the</strong>ir bags, <strong>the</strong>refore for every bag not used <strong>in</strong> our stores we are donat<strong>in</strong>g 1 penny to a local charity.” The<br />
campaign has helped raise money for build<strong>in</strong>g a new stage at <strong>the</strong> local school - Weston Park Primary. The message has been<br />
clearly publicised both <strong>in</strong>-store and through <strong>the</strong> media. The <strong>in</strong>itiative has gradually ga<strong>in</strong>ed momentum, <strong>the</strong> end result be<strong>in</strong>g<br />
that Budgens Crouch End has managed cut <strong>in</strong> 5 months <strong>the</strong>ir carrier bag usage by 55%. Accord<strong>in</strong>g to Thornton this is <strong>the</strong><br />
first step towards altoge<strong>the</strong>r substitut<strong>in</strong>g <strong>the</strong> disposable plastic bags for <strong>the</strong> more environmental reusable and Jute bags. “In<br />
March next year we are plann<strong>in</strong>g to give away 15,000 reusable and Juke bags and <strong>the</strong>n we shall stop altoge<strong>the</strong>r offer<strong>in</strong>g disposable plastic bags <strong>in</strong><br />
our stores.” O<strong>the</strong>r environmental <strong>in</strong>itiatives <strong>in</strong>clude food compost<strong>in</strong>g, mak<strong>in</strong>g sure that food products refuse is composted<br />
ra<strong>the</strong>r than to put <strong>in</strong> landfills and hoist<strong>in</strong>g <strong>the</strong> heat emitted from <strong>the</strong> store chillers back <strong>in</strong>to heat<strong>in</strong>g up <strong>the</strong> stores, thus<br />
reduc<strong>in</strong>g energy consumption. These <strong>in</strong>itiatives are carried out <strong>in</strong> co-operation with environmental organisations, one of<br />
<strong>the</strong>m - The Carbon Trust.<br />
3. The third direction for <strong>in</strong>novation accord<strong>in</strong>g to Andrew Thornton is local community retail<strong>in</strong>g. This <strong>in</strong>cludes a range of<br />
<strong>in</strong>itiatives <strong>the</strong> aim of which is to make local <strong>in</strong>dependent retailers <strong>the</strong> preferred dest<strong>in</strong>ation for shoppers. “There are many good<br />
<strong>in</strong>dependent retailers locally, but we have to market ourselves more effectively. The idea is make <strong>in</strong>dependent retail<strong>in</strong>g <strong>in</strong> Crouch End more<br />
attractive and to encourage local shoppers to stop us<strong>in</strong>g <strong>the</strong>ir cars, travell<strong>in</strong>g all that way to out of town shopp<strong>in</strong>g centres and <strong>in</strong>stead just walk<strong>in</strong>g<br />
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