The Blakemore guide to survival

These are choppy times in convenience. Last week Nisa boss Nick Read announced a triumphant return to profitability for the symbol group. A week earlier My Local (itself a Nisa member) went into administration, just nine months after it launched.

“It’s a tough market,” is the verdict from AF Blakemore group MD Peter Blakemore. He should know. Having started out in his family’s greengrocer in 1965, aged 21, there are few (if any) convenience operators more battle-hardened than the septuagenarian.

“Years ago, in a lot of areas, there were empty properties and it was profitable for the grocery multiples to enter the market quickly with convenience stores. But those heady days of growth are over.”

Blakemore, who was a supplier to My Local, says Mike Greene and his team “did a decent job” but suggests they were hamstrung from the start by the location of the 130 stores Greene bought from Morrisons for £25m.

“My Local had a lot of tough sites they had to develop very quickly,” he says. Whatever mistakes they might otherwise have made the locations meant they never stood a chance, Blakemore believes. “We surveyed the lot of them as Blockbusters and thought maybe only a few were suitable.”

That said, he snapped up seven this week for an undisclosed sum. And he wasn’t prepared to let the uncertainty sweeping the UK thanks to Brexit put him off making that investment.

“England is going to get a new football manager, the UK will get a new leader of the Tory party and Scottish independence may or may not be back on the agenda. Against a background like that it’s very hard to predict what’s going to happen. You need to deal with things as they come and plan as much as you can. We’re not holding back because a lot of our investments in the next year will be in infrastructure and service, which we will continue with.”

On a Brexit-related level, Blakemore’s first priority is to ask politicians to maintain free trade. “It’s important for the EU as well because they will also want to maintain their position in the UK market.”

And he doesn’t believe Brexit is all bad news. “Duty frauded alcohol has been a massive problem in our sector for a number of years. That is one thing that could be improved by the result. Although the Alcohol Wholesale Registration Scheme is already sending positive vibes through the sector, strict border control could be an advantage.”

Another challenge for convenience was the introduction of the national living wage in April 2016. Blakemore expects retail customers will see a 1% increase to their store costs each year.

“It’s been a real challenge but also an opportunity. I’m not against the living wage, I think people should be paid a fair wage, but it has a great impact at retail level. It’s important that we give our customers the right tools and weapons to enable them to compete on price.”

Sometimes that means cash, sometimes a refit. Blakemore says new stores are fitted to the highest possible standard and he is happy to dip into his own pocket to get them up to scratch, a bill that can run to “several million pounds” each year.

“Typically we will invest significant sums of money in refit costs with various schemes, loans and even getting bankers and other funders involved.”

It’s not an entirely altruistic approach, of course. Blakemore is warm and friendly but only a sharp eye and a head for business could grow his business to the multifaceted retail, wholesale and distribution empire it is today. And he expects to be met halfway when it comes to compliance and purchasing.

“We wouldn’t tolerate a retailer only buying own label and promotions from us,” he says. “We have a reasonable amount of retailer churn, about 6% a year. Some join the competition. Some get bought out or don’t fulfil their part of the bargain. We don’t say you have to buy everything from us, but obviously, within a commercial environment, their costs go down and the supply is more efficient the more they buy from us.”

Blakemore’s flexibility is also “really important”.

“We understand that 1,703 of our 1,998 stores are owned by independent operators and they’re offering prices that fit their neighbourhood. If a store needs a lot of locally sourced products we actively encourage that. We’re not a one size fits all operation, which seems to be the multiple approach. And some of our competitors are very formulaic. We’re not a centralised franchise dictating to our retailers from the centre.”

Fresh thinking

That lack of formulaic thinking has helped Blakemore stay young as it approaches its 100th anniversary. “Life is faster now,” he says. “We’re responding to changes in customer needs.”

For instance, he believes a quality fresh offer has never been more important. Blakemore says he has a “long experience of delivering daily to convenience stores and we’ve got a very strong portfolio of products. It’s very difficult to get into fresh unless you’ve got the right market, the right range of products and the right volumes to deal with suppliers.”

Over the last couple of years Blakemore has revamped its food to go offer, launching everything from Sunday roasts at Spar Wrexham (which turned the slowest day for food to go into the third busiest), rolling a Daily Deli concept out across the estate (offering fried breakfasts, pasties and hot lunches) and launching Bargain Bites, which offers breakfast and lunch options for a round pound.

It’s also struck deals with popular high street chains like Subway (it’s been working with them since 2012 and now has 41 in-store franchises), Costa (Blakemore offers Costa in 175 stores) and boasts four in-store Greggs (it was the first convenience chain to seal a deal with the sausage roll king).

“We’ve covered the spectrum. We’re putting in food to go, coffee, wine bars and cafés. And we have a track record for being involved in that sort of [innovation].”

Culture

It does appear to be working. As the UK’s biggest independent c-store operator, the largest partner in Spar UK, and the leading member of the Landmark Wholesale Group, unaudited accounts for 2015/16 reveal sales up 2.4% to £1.3bn and profits will be around £9m.

“We’ve had a reasonable sales increase and quite a decent bottom line increase, helped by a 53-week year,” he says. “On a net basis we’ve had 140 people join Spar in the last 12 months with some of the forecourt multiples expanding, particularly Euro Garages, and an equally large number of independent retailers have joined us.”

It was also a record recruitment year for franchise operation Blakemore Trade Partners, with 140 new stores eclipsing the 89 they landed the year before.

And last month, Blakemore scooped a Grocer Gold award for Independent Retail Chain of the Year. One judge described the group (which employs over 5,500 staff) as an “innovative business that cares equally about customers and colleagues”.

Judges were also impressed by the amount of work the Blakemore business does in the local community (last year employees spent over 3,000 hours volunteering for deserving causes, from store study tours for local schoolchildren to local regeneration projects like painting and gardening).

Blakemore says this commitment to the community and staff is the crowning achievement of the overarching AF Blakemore business. He adds that its staff training scheme, The Blakemore Way, is “one of the greatest things we’ve ever done. A lot of people join, at managerial level in particular, who come from a different culture or background from previous jobs. Ten years ago we got very concerned about this and we saw an opportunity to form our own culture.”

Blakemore “got together with an academic and Investors in People to help go through our values and define our purpose. Staff go on two or three-day courses, which talk about various behaviours and how they should interact with other employees.”

Over 1,300 Blakemore employees have already completed the training course and the number continues to grow. “It’s not all woolly stuff,” he smiles. “It offers really practical skills and gives people purpose. It makes a difference and it is of great importance.”

It does sound a bit woolly though. So above all else, what is Peter Blakemore most proud of in his 51 years in the family business?

“Surviving.” he beams. “Hanging on in there. That makes me proud.”