M&S can take comfort from what SSP is achieving with Simply Food. Liz Hamson speaks to chief executive Andrew Lynch
SSP operates 27 of the UK’s 129 Simply Food stores, 18 at railway stations, seven at motorway service stations and two at airports. As the franchisee, it is very much in the driving seat on a day-to-day basis, says Lynch. “It’s our staff, profit and investment,” he says. “M&S is clearly bringing the brand, the product range and the supply chain.”
It is an arrangement that clearly works for both parties. Now in its third year, the roll-out across the nation’s transport hubs followed a three-store trial with M&S at three railway station sites between 2001 and 2002.“Our view was that it matched very well the young affluent railway customer base,” recalls Lynch. “Yet while there was little provision, there was large latent demand.”
Elsewhere the issue is not of scaling up, but scaling down. It is difficult to find units to accommodate the average 2,000 sq ft footprint at railway stations, so Lynch and his team are assessing whether a smaller footprint is viable.“Our big challenge for the future is to find good sites. If we can make a smaller footprint work, it will increase the number of places we can put it.
“We are working with M&S on these plans and talking to landlords about the opportunities available. We cannot discuss specific locations until we have decided this is a potential way forward.” SSP’s aspirations don’t end there. Its business already extends to more than 140 airports in 35 countries, 250 railway stations in 11 countries and 135 motorway service stations in 10 countries. Lynch now wants to take some of SSP’s key brands into the regional railway stations.
The slide in food sales at M&S has added insult to injury as chief executive Stuart Rose focuses rescue efforts on the weakest parts of the business. At least he can take some solace in the fact that Simply Food continues to perform strongly, even though the best-performing stores appear to be those operated by someone else - its franchisee SSP, the specialist travel and retail division of Compass Group.
Simply Food has proved an “ideal brand for the sector” and the stores are “still seeing sales growth”, says SSP chief executive Andrew Lynch in an exclusive interview with The Grocer at Compass’s Chertsey HQ. He adds that with SSP’s business spanning 44 motorways and 100 railway stations in the UK, “there are clear opportunities for development”, especially if plans to reduce the footprint come off. What’s more, he says, hypothetically there is no reason why the brand could not be taken overseas.
He’s not exaggerating. Passenger numbers through the London stations can exceed 100 million annually. In terms of footfall, this translates to 50,000 customers a week at the Waterloo store alone - or seven a minute.
As soon as the first stores opened at railway stations, they were attracting a higher percentage of outside customers than existing foodservice or retail offers, says Lynch, citing research showing that 40% were coming to the station specifically to shop at the store, while just 22% of those using standard SSP offers, such as Upper Crust and Burger King, were not travelling.
Lynch believes that Simply Food complements rather than competes with SSP’s existing retail offer, Whistlestop, which it acquired in 2001, because the latter stocks only branded goods and the range is differentiated.
But it is clear which shoppers prefer. A number of Whistlestop units have been converted to Simply Food and even where the former were highly successful, as at Liverpool Street, Victoria and Marylebone, the conversions saw sales double or triple in the first few weeks of trading and soar 500% within the year. Lynch attributes some of the success of the stores, ranging from 1,200 sq ft to 2,700 sq ft, to the high percentage of food to go - some 25% of the mix. But SSP also made sure there were an adequate number of tills to handle the huge volumes of traffic and improved the queuing system.
Buoyed by its success at railway stations, SSP soon turned its attention to Moto’s motorway service areas and in August 2003 a trial began at Moto’s Toddington station. Lynch freely admits that the trial results were
mixed. “It was a bit of a shock. Total retail sales grew, but Moto retail and catering sales fell and the profit impact was negative.”
The team had failed to fully appreciate the different types of shopper and shopping behaviour at motorways, he believes.
“Dwell time is different. People have more time to shop than at railway stations and they have cars, so average spend is higher. There are lots of differences and it takes time to understand them.”
SSP spent a year doing just that and, in year two, sales had already grown 12%. “We
wanted to make sure we understood exactly what people wanted, not just in terms of range planning but also the relationship between Simply Food and the other offers,” says Lynch. “What’s working well now is having Caffe Ritazza or an Upper Crust close to the M&S. We’re picking up incremental sales. It’s all about traction between brands.”
Having ironed out the problems at the motorway sites, SPP is now pushing ahead with a more aggressive rollout. “We’re up and running at a faster rate,” says Lynch. He is also monitoring progress at its two airport stores. “We’ve got to be convinced that it works the same way. There are far fewer regular customers, though the most obvious market is people who work at the airport. We’ve got a fair amount of exposure with Whistlestop. But that’s much smaller. It’s a question of whether we can scale up.”
“The thing we’re really trying to do is put a range of our brands in. Millie’s, Ritazza, Upper Crust are all concepts that could work and we’re a big franchisee of Burger King.”
And Simply Food?
“It’s only in the UK at the moment,” Lynch says, “but it could work. The concept is essentially a high quality c-store offer and would make a good deal of sense. But whether it is an M&S or a local offer is open to question.”
He is quick to stress that the suggestion is hypothetical. “In terms of big strategic decisions like where we take Simply Food, then it has to be a joint decision,” he says.
At the moment, the focus is very much on growing the UK business. There are three railway and one motorway sites in the immediate development pipeline and, suggests Lynch, there is plenty more to come.“Subject to agreement with M&S, we think in the short term there are opportunities for 30 to 40 stores including the current 27,” he says. “In the longer term, we’d like to double that if we can find the solutions to the space issue.”
SSP operates 27 of the UK’s 129 Simply Food stores, 18 at railway stations, seven at motorway service stations and two at airports. As the franchisee, it is very much in the driving seat on a day-to-day basis, says Lynch. “It’s our staff, profit and investment,” he says. “M&S is clearly bringing the brand, the product range and the supply chain.”
It is an arrangement that clearly works for both parties. Now in its third year, the roll-out across the nation’s transport hubs followed a three-store trial with M&S at three railway station sites between 2001 and 2002.“Our view was that it matched very well the young affluent railway customer base,” recalls Lynch. “Yet while there was little provision, there was large latent demand.”
Elsewhere the issue is not of scaling up, but scaling down. It is difficult to find units to accommodate the average 2,000 sq ft footprint at railway stations, so Lynch and his team are assessing whether a smaller footprint is viable.“Our big challenge for the future is to find good sites. If we can make a smaller footprint work, it will increase the number of places we can put it.
“We are working with M&S on these plans and talking to landlords about the opportunities available. We cannot discuss specific locations until we have decided this is a potential way forward.” SSP’s aspirations don’t end there. Its business already extends to more than 140 airports in 35 countries, 250 railway stations in 11 countries and 135 motorway service stations in 10 countries. Lynch now wants to take some of SSP’s key brands into the regional railway stations.
The slide in food sales at M&S has added insult to injury as chief executive Stuart Rose focuses rescue efforts on the weakest parts of the business. At least he can take some solace in the fact that Simply Food continues to perform strongly, even though the best-performing stores appear to be those operated by someone else - its franchisee SSP, the specialist travel and retail division of Compass Group.
Simply Food has proved an “ideal brand for the sector” and the stores are “still seeing sales growth”, says SSP chief executive Andrew Lynch in an exclusive interview with The Grocer at Compass’s Chertsey HQ. He adds that with SSP’s business spanning 44 motorways and 100 railway stations in the UK, “there are clear opportunities for development”, especially if plans to reduce the footprint come off. What’s more, he says, hypothetically there is no reason why the brand could not be taken overseas.
He’s not exaggerating. Passenger numbers through the London stations can exceed 100 million annually. In terms of footfall, this translates to 50,000 customers a week at the Waterloo store alone - or seven a minute.
As soon as the first stores opened at railway stations, they were attracting a higher percentage of outside customers than existing foodservice or retail offers, says Lynch, citing research showing that 40% were coming to the station specifically to shop at the store, while just 22% of those using standard SSP offers, such as Upper Crust and Burger King, were not travelling.
Lynch believes that Simply Food complements rather than competes with SSP’s existing retail offer, Whistlestop, which it acquired in 2001, because the latter stocks only branded goods and the range is differentiated.
But it is clear which shoppers prefer. A number of Whistlestop units have been converted to Simply Food and even where the former were highly successful, as at Liverpool Street, Victoria and Marylebone, the conversions saw sales double or triple in the first few weeks of trading and soar 500% within the year. Lynch attributes some of the success of the stores, ranging from 1,200 sq ft to 2,700 sq ft, to the high percentage of food to go - some 25% of the mix. But SSP also made sure there were an adequate number of tills to handle the huge volumes of traffic and improved the queuing system.
Buoyed by its success at railway stations, SSP soon turned its attention to Moto’s motorway service areas and in August 2003 a trial began at Moto’s Toddington station. Lynch freely admits that the trial results were
mixed. “It was a bit of a shock. Total retail sales grew, but Moto retail and catering sales fell and the profit impact was negative.”
The team had failed to fully appreciate the different types of shopper and shopping behaviour at motorways, he believes.
“Dwell time is different. People have more time to shop than at railway stations and they have cars, so average spend is higher. There are lots of differences and it takes time to understand them.”
SSP spent a year doing just that and, in year two, sales had already grown 12%. “We
wanted to make sure we understood exactly what people wanted, not just in terms of range planning but also the relationship between Simply Food and the other offers,” says Lynch. “What’s working well now is having Caffe Ritazza or an Upper Crust close to the M&S. We’re picking up incremental sales. It’s all about traction between brands.”
Having ironed out the problems at the motorway sites, SPP is now pushing ahead with a more aggressive rollout. “We’re up and running at a faster rate,” says Lynch. He is also monitoring progress at its two airport stores. “We’ve got to be convinced that it works the same way. There are far fewer regular customers, though the most obvious market is people who work at the airport. We’ve got a fair amount of exposure with Whistlestop. But that’s much smaller. It’s a question of whether we can scale up.”
“The thing we’re really trying to do is put a range of our brands in. Millie’s, Ritazza, Upper Crust are all concepts that could work and we’re a big franchisee of Burger King.”
And Simply Food?
“It’s only in the UK at the moment,” Lynch says, “but it could work. The concept is essentially a high quality c-store offer and would make a good deal of sense. But whether it is an M&S or a local offer is open to question.”
He is quick to stress that the suggestion is hypothetical. “In terms of big strategic decisions like where we take Simply Food, then it has to be a joint decision,” he says.
At the moment, the focus is very much on growing the UK business. There are three railway and one motorway sites in the immediate development pipeline and, suggests Lynch, there is plenty more to come.“Subject to agreement with M&S, we think in the short term there are opportunities for 30 to 40 stores including the current 27,” he says. “In the longer term, we’d like to double that if we can find the solutions to the space issue.”
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