express

n One opening a week is the ambitious boast from Tesco for its 1,000-store convenience plan. Anne Bruce reports Big box supermarket Tesco put traditional convenience operators in a spin last month when it announced plans to open a chain of 1,000 convenience stores across the country over the next five years, possibly hoovering up many of the best secondary trading locations in the process. The chain is taking its Express format, which up to now has been little more than a retail add-on for about 85 Esso petrol stations, and developing it as a standalone c-store. Terry Leahy, chief executive, said in September that the company was considering launching Express as a standard convenience store and now the full scale of Tesco's ambition is becoming clear. The company's investor relations manager Lucy Cross explains the strategy: "Seventy three per cent of people who go to Express stores are buying food only. When we found that out it made us change our view of Express and decide to launch a standalone version." An outstanding Express forecourt store can take £100,000 a week ­ that's £5m a year ­ including petrol, according to Tesco finance director Andrew Higginson. And a good one can take about £50,000 a week, or £2.5m a year. This compares with a standard 30,000 sq ft Tesco big box supermarket which turns over about £650,000 a week, or £34m a year. But with 1,000 Express stores ­ as many as 850 run as standalones ­ Tesco would have a 15% share of the convenience market, with its sales worth about £2.8bn a year, which it predicts could add 13% to its current turnover. Cross says: "The convenience market is worth £20bn a year ­ but at the moment it is diversified. When we shared our calculations with analysts they could understand the scale of business opportunity Express presents." However, Tesco has received a mixed reaction from the City and has been busy at analysts' briefings trying to convince any doubters of the value of its plans. And whether the City likes it or not, Tesco says that the Express format will spring up in the best shopping parades and busy traffic routes across the UK as the chain takes advantage of "a huge opportunity away from where you would expect to find a supermarket", as Cross puts it. Stores will carry 2,500 lines, and will be an average of 2,000 sq ft, ranging from 1,500 sq ft to 3,000 sq ft. A massive 10,000 customers are expected in each store a week. That footfall would allow Tesco economies of scale with Express, despite the challenges of delivering to small stores. It expects to make a profit from sites which have a weekly turnover of £35,000 and above. Cross says: "You have to remember Express is a high volume format, selling 40 cages of fresh a day. We will use our existing logistics network and make composite deliveries ­ fresh and ambient together. There will be a price premium ­ around 3%, as in the petrol station stores ­ but prices will be 15­20% cheaper than conventional independent c-stores," she asserts. At £400,000 for a pre-fabricated unit, an Express store is cheap to build and the units can be assembled on site in just 10 days. Total cost, including land, is £1.2m. Tesco has been identifying 1,000 Express sites in the UK and Cross says: "We will roll out one a week ­ either a standalone and or a petrol station. Where possible they will be licensed to sell alcohol, and we may add other services, such as pharmacy. We cannot say how long the rollout will take. There will be a domino effect when we get going." The first standalone Express opens in Southborough, Kent, in October, and another two, in Manchester and Sussex, should be on stream by Christmas. Tesco will also continue to roll out its Express/Esso joint venture stores until the end of next year, when it should have about 150. The plans are ambitious if the struggle to get planning approval for the Southborough store is anything to go by. The battle ran for three years with permission only granted by the Department of Trade and Industry on appeal. And the fact that rival Sainsbury has opened only 38 of the 1,000 chain of Local stores it promised at the format's launch in 1998 might give some hope to the beleaguered independents that the supermarkets are not always able to practise what they preach. n {{FEATURES }}