Innovation in the UK Retail Sector - Nesta

Vignette 3.2: The Local Epicurean/Budgens
Context: Innovation in a small retailer
Innovation in the UK Retail Sector
Example: The Local Epicurean was founded in 2006 by Andrew Thornton, a retail consultant who acquired his first food store
from Budgens and joined the Musgrave-Budgens-Londis (MBL) franchise. Less than two years later his company The Local
Epicurean operates two Budgens branded stores, the first one of 9,000 sq ft in London’s Crouch End and the second of 7,000 sq
ft, located in Belsize Park. The company employs altogether 170 people and has an annual turnover of about £17 million.
Budgens as a retail brand is owned by MBL - Ireland’s largest food and grocery distributor. The business model is based on
independent retail operators who buy products from the company and to whom MBL provides sales, marketing, IT and logistical
expertise. In the process the independent franchisees have a fair amount of freedom in terms of how they construct their ranges
in view of local needs. According to Thornton:
“Consumer needs can be very different from one place to another therefore the benefit of such entrepreneurial model is that individuals who own their stores
will do what is absolutely right for the local community. There some guidelines you have got to follow in terms of brand entity, but within that, how you
work with the local community is up to you.”
Therefore while Thornton has to buy a substantial amount of his goods through the MBL system he does not have to buy all of
them from there.
“So you can buy from Musgrave your corn flakes at competitive prices but you can also buy your bread from the local baker who is just 50 yards across
the street.”
Thornton’s two stores serve over 22,000 local customers seven days a week. Competition in the area is intense. Just within a
walking distance from of his Crouch End store there are one Tesco Express and a Marks & Spencer Simply Food - both
formidable competitors. Therefore as a retail entrepreneur, he sees his role in keeping the business fresh and attractive to
customers: innovation is not a matter of choice but a matter of survival.
“We must innovate continuously and in a customer focused way to sustain and grow the business and my job is all about innovation really, business
development, changing things making thins better. That’s how I would define innovation – basically ‘change in a business’ in line with what customers
want.”
New ideas are implemented through a team of managers whose concern is the smooth day-to-day running of the business. The
innovation effort of the company is channelled in three broad directions: (1) local sourcing, (2) environmental initiatives and (3)
retailing tailored for the local community.
1. A distinctive store, localised product range and friendly services are seen as absolutely essential in establishing the two stores
as local destinations. Since the acquisition, the Crouch End store has been refurbished to reflect Thornton’s vision of
innovative food retailer. The revamp included the introduction of zones for delicatessen, beers, wines and spirits and the
introduction of new lines with emphasis on local foods. Additionally a ‘food to go’ counter was installed replacing a chiller
cabinet for pre-packed sandwiches. The new unit features juice and coffee bars for freshly made fruit juices, smoothies and
Lavazza coffee and also offers freshly baked bread and made to order sandwiches. The store has an Epicurean Deli with
fresh salads and meats all sourced locally. “There are a many good food producers around London which we want to bring in our stores. In
fact we are organising a meeting in January with about 15 of them and will be working with them to introduce their products into our stores.”
Both stores already offer a sizable range of ‘direct from the producer’ SKUs, sourced within 100 miles and free from artificial
colours and preservatives. There is also the ‘product of the week’ initiative with regular supplier tasting in-store, shelf-edge
labels clearly indicating the food miles of each of the local products. The stores offer fresh bread from Dunn’s - a local
bakery, a range of food products from Suffolk and cheeses from Whitfield.
2. In terms of the environment, the company innovates through a range of initiatives. ‘Pennies for plastic’ is one of them. “We
want to encourage people to re-use their bags, therefore for every bag not used in our stores we are donating 1 penny to a local charity.” The
campaign has helped raise money for building a new stage at the local school - Weston Park Primary. The message has been
clearly publicised both in-store and through the media. The initiative has gradually gained momentum, the end result being
that Budgens Crouch End has managed cut in 5 months their carrier bag usage by 55%. According to Thornton this is the
first step towards altogether substituting the disposable plastic bags for the more environmental reusable and Jute bags. “In
March next year we are planning to give away 15,000 reusable and Juke bags and then we shall stop altogether offering disposable plastic bags in
our stores.” Other environmental initiatives include food composting, making sure that food products refuse is composted
rather than to put in landfills and hoisting the heat emitted from the store chillers back into heating up the stores, thus
reducing energy consumption. These initiatives are carried out in co-operation with environmental organisations, one of
them - The Carbon Trust.
3. The third direction for innovation according to Andrew Thornton is local community retailing. This includes a range of
initiatives the aim of which is to make local independent retailers the preferred destination for shoppers. “There are many good
independent retailers locally, but we have to market ourselves more effectively. The idea is make independent retailing in Crouch End more
attractive and to encourage local shoppers to stop using their cars, travelling all that way to out of town shopping centres and instead just walking
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