Grocers in the Channel Islands are refitting to wrest every last penny from existing shelf space before the advent of Morrisons. Elaine Watson reports
Channel Islanders have faced their fair share of foreign invaders, from pre-Neanderthal cavemen to Gauls, Romans, Franks and Christian missionaries.
But are they ready for Sir Ken Morrison?
Whether Sir Ken fancies his luck in Jersey and Guernsey, which have a Safeway store apiece, remains to be seen, but the locals are already trying to put him off.
The largest food retailer on the island, Le Riche, was first off the mark, penning a letter to Morrisons’ Bradford HQ expressing an interest in the two Safeway stores plus some sites on the south coast. Channel Islands Co-op - the second biggest player on the islands - is keeping its cards close to its chest, but sources close to the society say it would rather Le Riche got its hands on Safeway than Morrisons, which has a far more aggressive pricing strategy.
“It’s a case of better the devil you know,” says one local trader.
But what kind of threat would Morrisons pose? And are Jersey and Guernsey’s food retailers geared up for the challenge?
Since our last visit to the Channel Islands in November 2001, the islands’ largest food retailer and Nisa member Le Riche has merged with local brewer and hotelier Ann Street to create CI Traders - a trading conglomerate with 45 food retail outlets and interests in brewing, property and car financing.
The deal has brought 10 new c-stores into Le Riche’s food retail stable and MD Andrew Bagot is focusing his attention on an aggressive re-branding programme (see
below) and a supply chain overhaul. The new Island Shopper c-stores acquired from Ann Street are still being reviewed, he adds. “Some are in great locations, but one, for example, is 500 yards from our Checkers superstore - not so great.”
Although there was talk at the time of the merger about possible tie-ups with retailers in northern France, a large combined property portfolio to play with and joint procurement on alcohol and soft drinks, Bagot stresses the merger was not driven by operational synergies. However, being part of CI Traders will give Le Riche access to more ready cash, which should start flowing in now that CI Traders has scooped the islands’ first (and only) casino licence for its St Pierre Park Hotel in Guernsey, says one local trader. “It’s basically a licence to print money,” he adds.
As for Morrisons, says Bagot, the Channel Islands is potentially a highly lucrative market. But Safeway only has two stores there - one at 27,000 sq ft and another at just 14,500 sq ft - and little chance of building new sites, given the market is already saturated and the population static. “There are only 150,000 people on these islands and they are already served by an unbelievable number of supermarkets.” Channel Islands Co-op, Le Riche's biggest rival with 15 stores, is also bullish about its prospects, despite the changes afoot at Le Riche and the prospect of an EDLP operator arriving in town.
Head of operations and HR Colin MacLeod says: “We were hit initially when Le Riche opened its big Checkers in 2001, but people began to return once the novelty wore off. People like our offer and our double divi on Tuesday and Wednesday means you get 8% off your shopping.”
Food retail like-for-like sales were 10.3% in
the year to September 2003, he adds - not the sign of a business on the run.
As the market reaches saturation point, however, and opportunities to open new stores dry up, all sides admit the pressure is on to defend market share and they are pumping cash into refits to squeeze every last drop of business out of existing space before Sir Ken arrives.
There are unlikely to be any large scale food retail developments after Le Riche’s £12m three-storey site at Red Houses, St Brelade, Jersey (opening December 2004), and a Co-op site at St Samson, Guernsey (opening by the end of the decade), predicts MacLeod. “We are probably already at saturation point - sales are being cannibalised and we are fighting a battle for market share. Every time you open a new site you re-cut the cake to a dramatic extent.”
Jersey-based Spar wholesaler and retailer Nigel Robson admits the Ann Street/Le Riche merger has probably scuppered his plans to move to Guernsey, where Le Riche has just snapped up the Island Shopper estate.
However, business is good at his 11 company-owned Spar stores and 12 stores owned by Channel Islands News, which now trade under the Spar brand, says Robson. “We have several new sites earmarked.”
The spectre of Sir Ken represents a distant threat, says Robson. But there are more pressing issues keeping retailers awake at night, notably rising wage bills (recent surveys suggest pay rates for shopfloor staff in Jersey and Guernsey are up to 25% higher than on the mainland). Likewise, there is talk of a new sales tax - a shock for a people not subject to VAT. And an employment tax, also expected, could add 1.5% to their payroll bill.
Morrisons might take some business off Checkers in Guernsey and the Co-op’s Grand Marche superstore in Jersey, predicts Robson. “But it won’t affect us. We’re operating in a different market.”
Channel Islanders have faced their fair share of foreign invaders, from pre-Neanderthal cavemen to Gauls, Romans, Franks and Christian missionaries.
But are they ready for Sir Ken Morrison?
Whether Sir Ken fancies his luck in Jersey and Guernsey, which have a Safeway store apiece, remains to be seen, but the locals are already trying to put him off.
The largest food retailer on the island, Le Riche, was first off the mark, penning a letter to Morrisons’ Bradford HQ expressing an interest in the two Safeway stores plus some sites on the south coast. Channel Islands Co-op - the second biggest player on the islands - is keeping its cards close to its chest, but sources close to the society say it would rather Le Riche got its hands on Safeway than Morrisons, which has a far more aggressive pricing strategy.
“It’s a case of better the devil you know,” says one local trader.
But what kind of threat would Morrisons pose? And are Jersey and Guernsey’s food retailers geared up for the challenge?
Since our last visit to the Channel Islands in November 2001, the islands’ largest food retailer and Nisa member Le Riche has merged with local brewer and hotelier Ann Street to create CI Traders - a trading conglomerate with 45 food retail outlets and interests in brewing, property and car financing.
The deal has brought 10 new c-stores into Le Riche’s food retail stable and MD Andrew Bagot is focusing his attention on an aggressive re-branding programme (see
below) and a supply chain overhaul. The new Island Shopper c-stores acquired from Ann Street are still being reviewed, he adds. “Some are in great locations, but one, for example, is 500 yards from our Checkers superstore - not so great.”
Although there was talk at the time of the merger about possible tie-ups with retailers in northern France, a large combined property portfolio to play with and joint procurement on alcohol and soft drinks, Bagot stresses the merger was not driven by operational synergies. However, being part of CI Traders will give Le Riche access to more ready cash, which should start flowing in now that CI Traders has scooped the islands’ first (and only) casino licence for its St Pierre Park Hotel in Guernsey, says one local trader. “It’s basically a licence to print money,” he adds.
As for Morrisons, says Bagot, the Channel Islands is potentially a highly lucrative market. But Safeway only has two stores there - one at 27,000 sq ft and another at just 14,500 sq ft - and little chance of building new sites, given the market is already saturated and the population static. “There are only 150,000 people on these islands and they are already served by an unbelievable number of supermarkets.” Channel Islands Co-op, Le Riche's biggest rival with 15 stores, is also bullish about its prospects, despite the changes afoot at Le Riche and the prospect of an EDLP operator arriving in town.
Head of operations and HR Colin MacLeod says: “We were hit initially when Le Riche opened its big Checkers in 2001, but people began to return once the novelty wore off. People like our offer and our double divi on Tuesday and Wednesday means you get 8% off your shopping.”
Food retail like-for-like sales were 10.3% in
the year to September 2003, he adds - not the sign of a business on the run.
As the market reaches saturation point, however, and opportunities to open new stores dry up, all sides admit the pressure is on to defend market share and they are pumping cash into refits to squeeze every last drop of business out of existing space before Sir Ken arrives.
There are unlikely to be any large scale food retail developments after Le Riche’s £12m three-storey site at Red Houses, St Brelade, Jersey (opening December 2004), and a Co-op site at St Samson, Guernsey (opening by the end of the decade), predicts MacLeod. “We are probably already at saturation point - sales are being cannibalised and we are fighting a battle for market share. Every time you open a new site you re-cut the cake to a dramatic extent.”
Jersey-based Spar wholesaler and retailer Nigel Robson admits the Ann Street/Le Riche merger has probably scuppered his plans to move to Guernsey, where Le Riche has just snapped up the Island Shopper estate.
However, business is good at his 11 company-owned Spar stores and 12 stores owned by Channel Islands News, which now trade under the Spar brand, says Robson. “We have several new sites earmarked.”
The spectre of Sir Ken represents a distant threat, says Robson. But there are more pressing issues keeping retailers awake at night, notably rising wage bills (recent surveys suggest pay rates for shopfloor staff in Jersey and Guernsey are up to 25% higher than on the mainland). Likewise, there is talk of a new sales tax - a shock for a people not subject to VAT. And an employment tax, also expected, could add 1.5% to their payroll bill.
Morrisons might take some business off Checkers in Guernsey and the Co-op’s Grand Marche superstore in Jersey, predicts Robson. “But it won’t affect us. We’re operating in a different market.”
No comments yet