Shy but not retiring: McColl's chairman James Lancaster breaks his silence

For a retailer with 1,268 stores, £845m in sales, and a colourful and varied 40-year heritage, surprisingly little is known about McColl’s and its ebullient founder, James Lancaster. For all his opinions, Lancaster has always shunned the limelight. Until now. His first-ever media interview comes just months after McColl’s Retail Group released its first annual report. “I have always been intensely private about the business but we’re now coming out into the public arena,” Lancaster says.

McColl’s has certainly had people talking in 2013. After reporting a 48.4% jump in pre-tax profits to £6.3m and a 5% increase in sales to £844.7m for the year to 25 November 2012, in March it secured a £126.5m refinancing package with a consortium of five banks and its private equity backer Caird Capital. And in June it signed a contract with Nisa to deliver to 330 of its largest convenience stores.

Arguably the biggest development, however, came in August, with Lancaster’s decision to drop the name Martin from the company’s name. Though the Martin’s and RS McColl fascias will continue to feature above the door of its 586 CTNs, with 682 convenience stores, “we’d reached a tipping point where the name Martin McColl was not representative of the business as a whole,” he says. “About 70% of sales and profits are now from our convenience stores. We’d just finished the refinancing so it was appropriate that the name reflected the business as it stands today, and the direction in which it is headed in the future.”

Converting CTNs to c-stores is not a new idea for McColl’s. In fact, Lancaster started the process as far back as 1995. “When we had our first management buyout my strategy for retail was the same as it is today - to convert CTNs to c-stores. Tesco had entered the sector and we were mindful it could steamroll over us.”

The work of converting CTNs to c-stores continues to this day, and Lancaster is targeting 800 by 2015. The process is “relatively easy” and involves adding a grocery offer and alcohol as well as extending opening hours. C-stores require a larger store than a CTN, so in some cases McColl’s will acquire the shop next door and knock through.

Where McColl’s has changed is in its approach to the supply side, with greater focus now placed on fresh and chilled food. Having trialled a number of options, in June it signed up the largest of its convenience stores to distribution by Nisa. Initially McColl’s had planned to convert the stores over 12 months, but this process has been accelerated to six months, with all 330 stores to be converted by the end of November (P&H will continue to deliver to the other 352 c-stores, as well as its CTNs). Through Nisa, stores will now have an extended fresh and chilled offer, as well as Nisa’s Heritage own-label range - the first own-label range McColl’s has offered.

“So far we’re very pleased,” Lancaster says. “The sales increase we hoped to get has been achieved.”

Despite the conversion process, Lancaster insists CTNs aren’t dead - they just need to adapt. “Retail is a space. In that space you should sell what’s best, not products because you’ve always sold them. You should always improve and add new products.”

CTNs, he adds, are also a perfect springboard for convenience. “The heritage of a newsagents, I think, is particularly good to build on to,” he says. “CTNs have high footfall and so it is therefore easy to build alcohol sales and groceries from this.”

And what about Lancaster’s own reinvention? At 65, he has no plans to retire, and believes the refinance should finally put paid to constant rumours that have circulated of a sale. “When we had our MBO in 1995, lots of people said it would be a quick flip, and it wasn’t.”

“I have always been intensely private about the business but we’re now coming out into the public arena”

So what is the plan now? McColl’s is 80%-owned by management, with Lancaster, COO Martyn Aguss, and CFO Jonathan Miller owning the bulk of the shares, and the rest shared between 25 other senior managers. Ownership of 100% “would be nice”, he concedes. But he’s enjoying himself too much to retire. “When I was buying Mayfair Vending back in 1973, the owner’s mother said to her son that he was too young to be selling it. If my mother was still alive, I think she would say exactly that. This year is my 40th year in the business. It’s been through various incarnations, but I am still ambitious. And when you retire, I think it is very important to retire to do something. There is nothing I want to do more than this.”

Still, there are bound to be rumours. Bargain Booze owner Conviviality Retail floated earlier this year, and Lancaster is full of praise for the move, which he believes wouldn’t have been an option 12 months ago. However, he has “no urgent desire to retail or sell shares”.

What is more important is achieving the company’s goal, set in December last year, to reach 800 c-stores by 2015. “We want to be bigger in convenience and we always look at opportunities to buy or expand,” he says. “We like to think we are a fleet of foot organisation and when we are at our best, we are as good as the best.”

As McColl’s fast approaches its November year-end, Lancaster is “quietly confident” on trading. But quiet is one thing McColl’s will not be in the future. You can expect to hear a lot more from the UK’s biggest independent convenience operator.