Simple changes have boosted Balfour. John Wood reports
Anyone familiar with the One Stop chain of c-stores before its takeover by T&S in May 1999 could be forgiven for a sense of d vu when walking into a Balfour store. The colour scheme is different, and the wording on the PoS is not the same, but the management team that built up the highly successful One Stop chain is applying the same principles to Balfour with similarly successful results.
When it bought Balfour in February 2000, the company was in the doldrums. While other chains had moved into the more profitable c-store sector, all but a handful of the group's 120 stores were CTNs, and in the year before the takeover it achieved a turnover of £53m.
Two and a half years on, the group has only made a net gain of eight stores, although about 25 CTNs have been sold and replaced with c-stores, but turnover is up by more than 40% to £75m.
Two simple changes made a big contribution to the turnaround, according to managing director Mike Taylor. The first was extending opening hours. The majority of stores worked, at most, a six-and-a-half-day week and closed at 6pm. Now stores operate from 6am to 11pm Monday to Saturday and are open to 10pm on Sunday.
The other, most fundamental change introduced by the new management was converting the group from a chain of CTNs with a handful of c-stores to a chain of c-stores with a handful of CTNs. Within a year of the takeover more than 60 off-licences were obtained and a full convenience range was introduced wherever space allowed. About 30 CTNs are left and property director John Mason says that while some are highly profitable and will be retained, others are earmarked for disposal.
Balfour's management team has also simplified its supply chain. Buying and marketing controller Thane Coventry says the company used to deal with 500-600 suppliers, but that number is now down to fewer than 200. EPoS lines have also been cut from 36,000 to 6,000.
Data from the EPoS system is polled from the stores every night by an outside company which does all the number crunching and produces management reports. Using an outside agency allows management to concentrate on retailing, says Taylor.
Inside the stores there is a strong promotional offer. Commercial director Tony Start says the Star Buys on gondola ends concentrate on extra value, rather than price point deals, in order to increase consumption. However there are also Cash Saver signs highlighting competitive offers around the store.
Taylor says the company has a very good relationship with suppliers because of its support for branded products. He says the company is willing to highlight brands because they are what its customers seek rather than the Balfour name. The company has even been able to turn this philosophy into a new income stream by persuading suppliers to pay to have their logo on the signs pointing out category areas in the store.
While the group was traditionally strong in the Home Counties, its territory now forms a triangle stretching from the east coast up to Bromsgrove in the West Midlands and along the south coast as far as Exeter.
Taylor says the management team's first task when it took over was to sort out the estate, and that has been completed. The next step is to grow the estate, and Balfour has funding to buy up to 20 stores a year. It will buy single stores if they fit its criteria, but he adds: "We are keen to buy chains rather than individual stores."
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Anyone familiar with the One Stop chain of c-stores before its takeover by T&S in May 1999 could be forgiven for a sense of d vu when walking into a Balfour store. The colour scheme is different, and the wording on the PoS is not the same, but the management team that built up the highly successful One Stop chain is applying the same principles to Balfour with similarly successful results.
When it bought Balfour in February 2000, the company was in the doldrums. While other chains had moved into the more profitable c-store sector, all but a handful of the group's 120 stores were CTNs, and in the year before the takeover it achieved a turnover of £53m.
Two and a half years on, the group has only made a net gain of eight stores, although about 25 CTNs have been sold and replaced with c-stores, but turnover is up by more than 40% to £75m.
Two simple changes made a big contribution to the turnaround, according to managing director Mike Taylor. The first was extending opening hours. The majority of stores worked, at most, a six-and-a-half-day week and closed at 6pm. Now stores operate from 6am to 11pm Monday to Saturday and are open to 10pm on Sunday.
The other, most fundamental change introduced by the new management was converting the group from a chain of CTNs with a handful of c-stores to a chain of c-stores with a handful of CTNs. Within a year of the takeover more than 60 off-licences were obtained and a full convenience range was introduced wherever space allowed. About 30 CTNs are left and property director John Mason says that while some are highly profitable and will be retained, others are earmarked for disposal.
Balfour's management team has also simplified its supply chain. Buying and marketing controller Thane Coventry says the company used to deal with 500-600 suppliers, but that number is now down to fewer than 200. EPoS lines have also been cut from 36,000 to 6,000.
Data from the EPoS system is polled from the stores every night by an outside company which does all the number crunching and produces management reports. Using an outside agency allows management to concentrate on retailing, says Taylor.
Inside the stores there is a strong promotional offer. Commercial director Tony Start says the Star Buys on gondola ends concentrate on extra value, rather than price point deals, in order to increase consumption. However there are also Cash Saver signs highlighting competitive offers around the store.
Taylor says the company has a very good relationship with suppliers because of its support for branded products. He says the company is willing to highlight brands because they are what its customers seek rather than the Balfour name. The company has even been able to turn this philosophy into a new income stream by persuading suppliers to pay to have their logo on the signs pointing out category areas in the store.
While the group was traditionally strong in the Home Counties, its territory now forms a triangle stretching from the east coast up to Bromsgrove in the West Midlands and along the south coast as far as Exeter.
Taylor says the management team's first task when it took over was to sort out the estate, and that has been completed. The next step is to grow the estate, and Balfour has funding to buy up to 20 stores a year. It will buy single stores if they fit its criteria, but he adds: "We are keen to buy chains rather than individual stores."
{{ANALYSIS }}
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