The other, Musgrave UK executive chairman Eoin McGettigan, bought a one-way ticket to Budgens HQ in Ruislip. But he has not set about hoisting the tricolour above the entrance just yet. "Commitment and proximity to the business was important to the [Musgrave] family," he says, "but I'm not under any illusions. What do I know about Budgens the 6,500 people working here don't already know?"
What Musgrave can offer, however, is cash, and expertise in supplying independent retailers, says McGettigan, who has been made executive chairman of a new Musgrave UK division covering the C&C, SuperValu and Centra businesses in Northern Ireland and Budgens in Britain. "Franchising is what we do best, and this is where the real growth opportunities lie for Budgens," he says. "They have only really dipped their toes in the water on this one."
The apparently lacklustre growth of the Budgens Local format for independents  notching up just 30 stores in over two years  is not a reflection of the attractiveness of the proposition, he insists.
Budgens has simply not had the time, people and resources it needed to really drive this side of the operation. "Franchising is not the core business at Budgens, and as it has been a plc up until now, the City might have questioned a big upfront investment in this area," he speculates. "We will be investing in the Budgens Local team to put more people on the ground meeting retailers to sell the message. Whether they buy into it is a function of how strong our business model is. But I am convinced Budgens Local gives independents something in fresh food they can't get with another partner, and that gives them a point of difference in the locality.
"What consumers want is local stores of a certain size that offer a credible alternative to superstores. And I think Budgens does that in a way that no retail or wholesale company does in Britain."
Musgrave's targets are very ambitious: 200-250 Budgens Local stores in the next five years or so, requiring current growth rates to almost triple from about 15 to between 35 and 45 new signings a year. But McGettigan is confident the company can meet its goals: "The Local model is very solid. It's one of the primary reasons we invested in Budgens."
Looking at buying 15-20 stores a year
The central location of its Wellingborough distribution centre means Budgens can look as far north as Leeds for new sites without having to open a second depot, he says. "There's plenty of spare capacity there to support our expansion."
Growth in the company owned segment (currently 179 stores) would not be as rapid, as buying stores outright is more capital intensive. However, Musgrave is looking at buying "between 15-20 stores a year, possibly more", making company owned and independently owned store numbers in 2007/8 roughly equal, says McGettigan. "We want to double the size of the Budgens business in five years  to get to the £1bn turnover mark."
Given Musgrave has quadrupled the size of its business in the last decade, and the SuperValu and Centra stores it supplies now represent almost a quarter of the market in the Irish Republic and a sizeable chunk of the Northern Ireland market, it's no idle boast. However, Musgrave has "absolutely no intention" of using the Budgens deal as a springboard to introduce its cash & carry operation or retail brands to Britain, although experience from the Irish operations can filter into the GB business. "We have just bought a brand that attracts one million customers a week," he stresses. "We want to double that to two million in five years, not confuse people with unfamiliar brands."
Likewise, while there will be some cost savings in marketing, buying and administration, says McGettigan,the Budgens deal was not driven by hard synergies.
It would shave a bit off the procurement bill if Musgrave were to create a generic M' own label for products in SuperValu, Centra and Budgens, he accepts, "but that's not what we're all about  creating some el-cheapo own label to save a few pence."
The arrogance of the multiples amazes me'
Next on his to do' list, however, is arranging meetings with MPs and government officials to push pricing and planning issues back on the political agenda."We want to get more of a voice politically," says McGettigan. "The independent sector here seems to suffer from a sectoral self-esteem problem, while the arrogance and smugness of the multiples never ceases to amaze me."
While McGettigan is not in favour of open book costing, another example of the multiples "believing they own the space between consumers and the raw materials," he does want greater transparency over terms. Budgens is no stranger to controversy in this respect, with trading director Cliff Goodman declaring that an 11% differential in the cost prices charged to Tesco and Budgens on big branded lines put Budgens "in the pit lane with a flat tyre".
Clearly, Tesco can offer suppliers larger volumes that Budgens and there has to be some recognition of that in trading terms. "But if we both order 10 full trucks of product, we should both get the same price. At the moment, it's completely arbitrary. In my opinion it is the role of government to see that people supplying food ought to sell it at consistent prices irrespective of who is buying it."
There was originally the bones of something good in the first draft of the code of practice, says McGettigan  "a recognition that building stores so big they could be designated as shopping centres effectively buys the goodwill of all the other local traders". Shops above a certain size, say 20-30,000 square feet, shouldn't be allowed, he adds. "And neither should predatory pricing. "I might be wasting my time here," he acknowledges, "but I hope that the government would look at this more seriously."
{{ANALYSIS }}
What Musgrave can offer, however, is cash, and expertise in supplying independent retailers, says McGettigan, who has been made executive chairman of a new Musgrave UK division covering the C&C, SuperValu and Centra businesses in Northern Ireland and Budgens in Britain. "Franchising is what we do best, and this is where the real growth opportunities lie for Budgens," he says. "They have only really dipped their toes in the water on this one."
The apparently lacklustre growth of the Budgens Local format for independents  notching up just 30 stores in over two years  is not a reflection of the attractiveness of the proposition, he insists.
Budgens has simply not had the time, people and resources it needed to really drive this side of the operation. "Franchising is not the core business at Budgens, and as it has been a plc up until now, the City might have questioned a big upfront investment in this area," he speculates. "We will be investing in the Budgens Local team to put more people on the ground meeting retailers to sell the message. Whether they buy into it is a function of how strong our business model is. But I am convinced Budgens Local gives independents something in fresh food they can't get with another partner, and that gives them a point of difference in the locality.
"What consumers want is local stores of a certain size that offer a credible alternative to superstores. And I think Budgens does that in a way that no retail or wholesale company does in Britain."
Musgrave's targets are very ambitious: 200-250 Budgens Local stores in the next five years or so, requiring current growth rates to almost triple from about 15 to between 35 and 45 new signings a year. But McGettigan is confident the company can meet its goals: "The Local model is very solid. It's one of the primary reasons we invested in Budgens."
Looking at buying 15-20 stores a year
The central location of its Wellingborough distribution centre means Budgens can look as far north as Leeds for new sites without having to open a second depot, he says. "There's plenty of spare capacity there to support our expansion."
Growth in the company owned segment (currently 179 stores) would not be as rapid, as buying stores outright is more capital intensive. However, Musgrave is looking at buying "between 15-20 stores a year, possibly more", making company owned and independently owned store numbers in 2007/8 roughly equal, says McGettigan. "We want to double the size of the Budgens business in five years  to get to the £1bn turnover mark."
Given Musgrave has quadrupled the size of its business in the last decade, and the SuperValu and Centra stores it supplies now represent almost a quarter of the market in the Irish Republic and a sizeable chunk of the Northern Ireland market, it's no idle boast. However, Musgrave has "absolutely no intention" of using the Budgens deal as a springboard to introduce its cash & carry operation or retail brands to Britain, although experience from the Irish operations can filter into the GB business. "We have just bought a brand that attracts one million customers a week," he stresses. "We want to double that to two million in five years, not confuse people with unfamiliar brands."
Likewise, while there will be some cost savings in marketing, buying and administration, says McGettigan,the Budgens deal was not driven by hard synergies.
It would shave a bit off the procurement bill if Musgrave were to create a generic M' own label for products in SuperValu, Centra and Budgens, he accepts, "but that's not what we're all about  creating some el-cheapo own label to save a few pence."
The arrogance of the multiples amazes me'
Next on his to do' list, however, is arranging meetings with MPs and government officials to push pricing and planning issues back on the political agenda."We want to get more of a voice politically," says McGettigan. "The independent sector here seems to suffer from a sectoral self-esteem problem, while the arrogance and smugness of the multiples never ceases to amaze me."
While McGettigan is not in favour of open book costing, another example of the multiples "believing they own the space between consumers and the raw materials," he does want greater transparency over terms. Budgens is no stranger to controversy in this respect, with trading director Cliff Goodman declaring that an 11% differential in the cost prices charged to Tesco and Budgens on big branded lines put Budgens "in the pit lane with a flat tyre".
Clearly, Tesco can offer suppliers larger volumes that Budgens and there has to be some recognition of that in trading terms. "But if we both order 10 full trucks of product, we should both get the same price. At the moment, it's completely arbitrary. In my opinion it is the role of government to see that people supplying food ought to sell it at consistent prices irrespective of who is buying it."
There was originally the bones of something good in the first draft of the code of practice, says McGettigan  "a recognition that building stores so big they could be designated as shopping centres effectively buys the goodwill of all the other local traders". Shops above a certain size, say 20-30,000 square feet, shouldn't be allowed, he adds. "And neither should predatory pricing. "I might be wasting my time here," he acknowledges, "but I hope that the government would look at this more seriously."
{{ANALYSIS }}
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