Discount UK (former Woolworths), Newcastle (4 Nov 2011)

Poundworld-owned variety retailer Discount UK has opened its Newcastle store today, with stilt walkers and free sweets on hand to welcome shoppers to the former Woolworths site.

I dropped by shortly after the store opened at 10am, and it seemed to have got off to a good start – it was packed with shoppers, and there were plenty of people queueing at the tills to make their purchases. Inside, the store has retained the old Woolies wooden flooring, but otherwise looks to have had a comprehensive refurbishment. It also seems to have used the bulk of the space that Woolworths previously occupied, making it rather larger than the existing Discount UK store in Middlesbrough. Externally, the store has gained some smart and bright signage that is an undoubted improvement on what it replaced.

Discount UK (former Woolworths), Newcastle (4 Nov 2011)

While Discount UK was making a concerted effort to drive shoppers into its store – with leafletters handing out offers flyers across the city centre – I couldn’t help but notice the staff and security guards in Poundstretcher opposite, looking out the window at all the activity across the street.

Poundstretcher, Newcastle (4 Nov 2011)

Newcastle’s Poundstretcher has the advantage of being housed in a handsome Grade II-Listed Richard Grainger building dating from 1837, with two decent-sized trading floors. While the ground floor features all the traditional Poundstretcher ranges, such as snacks, greetings cards, stationery, hardware and gardening, the upper level includes an usually extensive range of furniture and homewares. Like most Poundstretcher stores, however, the quality of the goods sold is far superior to the cluttered and neglected environment in which they’re presented.

Advertising board at Poundstretcher, Newcastle (4 Nov 2011)

The dreary advertising board that Poundstretcher had outside its store today is illustrative of the retailer’s presentational problems. With faded black Times New Roman lettering on a white background, it’s the type of point-of-sale advertising that would look unprofessional even for a corner shop – yet Poundstretcher is an expanding chain, with over 350 stores nationwide. Surely it could have done something more creative and eyecatching to capitalise on all the buzz and extra footfall being generated over the road?

As I’ve argued before, Discount UK’s arrival will be positive for Clayton Street in bringing some life back to the location, and helping to cement its appeal as a value retail destination. Indeed, rather than Discount UK being a threat to Poundstretcher, the shot in the arm that it will give to Clayton Street should be seen as a great opportunity.

For all that Discount UK is a multi-price fascia, the fact still remains that 80% of its product range comprises items costing £1 or less. In this regard, it is competing much more with the two Poundland stores in Eldon Square, and with Poundworld’s eponymous shop in Grainger Street, rather than with Poundstretcher, where the average item price is undoubtedly much higher.

Poundworld, Grainger Street, Newcastle

If I ran Poundstretcher, I’d be seizing the opportunity to revamp the Newcastle store as a flagship for the chain – investing in (and – crucially – maintaining) a cleaner brighter interior that matches the quality of the product; creating a clear visual identity for the store, inside and out - including the latest logo on the fascia; and sorting out the clutter by trimming the range and selling fewer products better.

Despite its name, and the tagline of ”the original value store”, Poundstretcher isn’t and never has been a pound store – it’s a brand that should be able to compete with chains like Wilkinson, Cargo, Argos and the big supermarkets, based on the quality, range and value of its home and garden products. If Poundstretcher is to build on the momentum of recently making its first (albeit modest) profit in six years, this is surely the direction in which it needs to head – rather than competing with the discounters to see who can sell the most cans of Pepsi for £1.

Signage at UGO Lundwood (11 Oct 2011)

The emergence of UGO as Britain’s newest discount supermarket chain has been one of the most interesting retail launches of 2011 so far.

Back in January, I reported on Asda’s OFT-instigated divestment of 47 Netto stores, and the news that Haldanes would be buying 20 of those sites for a new discount fascia, UGO. Subsequently, I wrote about Haldanes’ intention to make UGO “the icing on the Netto cake”, seeking to keep the best of Netto – including its familiar yellow and black corporate colours – while bringing in an enlarged product range and additional services.

UGO’s birth hasn’t been straightforward, however. When I visited the Eston and Hartlepool shops, on Teesside, in May, I praised the stores’ external appearance and great offers, but highlighted some concerns regarding availability, instore signage and customer service.

Woodhead Bakery cakes at Lundwood (11 Oct 2011)

Two months later, when I interviewed UGO’s boss, Arthur Harris, he was having to contend with the fallout from the collapse of the eponymous Haldanes chain, as well as a need, in his own words, for the UGO stores “to trade a little bit better”. He promised, however, that “every fix possible” would be looked at, addressing key issues such as IT and ordering, product range and price, and developing vertical integration by introducing bread, cakes and pies from the recently acquired Woodhead Bakery.

A few weeks ago, at UGO’s invitation, I went to visit some UGO stores – Lundwood and Monk Bretton in Barnsley, and Eton Street (Boulevard) and Boothferry in Hull – for the first time since my Teesside trip. I was keen to see how the stores were getting on; look at what had changed from five months earlier; and have a chat with the store’s managers and staff.

So, how did the Barnsley and Hull stores fare under the five headings that I’d reviewed before: first impressions; instore signage; product range and availability; price; and customer service?

First impressions

UGO Lundwood (11 Oct 2011)

On Teesside, I praised both UGO stores’ bold and bright exteriors, and the Barnsley and Hull stores didn’t disappoint in this regard. As I observed before, UGO’s visual identity is clearly and openly inspired by that of Netto, but Darlington-based agency Charles Hollywood has done a great job of creating an overall look that combines eyecatching signage with banners and window vinyls. All four of the stores that I visited were highly visible – and very hard to miss – when arriving by car.

UGO, Monk Bretton (11 Oct 2011)

To complement the permanent signage and banners, each of the stores was recently given a £200 budget to spend as they saw fit on materials to promote October’s ’3 for £10′ wine offer – a clever way of both engaging the store teams and, potentially, coming up with some new and creative promotional ideas.

UGO Lundwood window poster, October 2011

While some stores opted for leafleting, window posters or PR activity, Monk Bretton’s huge banner – impossible to miss from the roundabout adjacent to the store – probably wins the prize for making the biggest impact.

Banner at UGO Monk Bretton (11 Oct 2011)

Happily, all the promotional activity does seem to be having the desired effect in generating awareness of UGO and, in turn, an increase in footfall and spend. While I was visiting the stores, there were decent numbers of people arriving both by car and on foot. Not enough to make the stores or their car parks really busy yet, but certainly an improvement on the occasionally eerie quietness that I experienced in May. This is backed up by UGO’s own figures, which show impressive week-on-week sales growth in the fortnight proceeding my visit, including a 36% increase at Nuneaton, 31% at Ashington and 26% at Stanley.

UGO Eton Street, Hull (11 Oct 2011)

The quality of the estate that UGO has inherited from Netto is also an advantage in creating a positive first impression and drawing shoppers in, with the buildings themselves looking smart and appealing. While the Eston store that I visited previously felt comparatively small and dark, this seems to be the exception rather than the rule.

UGO Boothferry (11 Oct 2011)

Apart from the slightly older-looking Boothferry shop – which, like Eston, shares a parade with other retail units – the UGO stores that I visited in Barnsley and Hull are good-sized, modern stores, more comparable in look and feel to the Hartlepool branch. Monk Bretton, for example, only opened as Netto in 2008, while Lundwood benefited from a major refurbishment in the same year.

UGO Lundwood (11 Oct 2011)

On entering the stores, the bright and modern feel continues. Where the ex-Netto stores taken over by Asda and Morrisons have enjoyed a comprehensive internal refit, UGO’s ‘Netto-plus’ model relies on the existing walls, flooring, ceilings, shelving and equipment being in good shape – which they generally are. Where UGO is doing especially well, however, is in maintaining the overall tidiness and cleanliness of its stores. Netto’s shops sometimes had a reputation for being messy, and the spotlessness of the stores as UGO is apparently one of the main differences that shoppers have noticed, and welcomed.

Entrance of UGO Monk Bretton (11 Oct 2011)

Of course, a cynic could argue that because business is still quieter than it was as Netto, the stores have less chance to get dirty and the staff more time to keep them clean. It’s not a given, however – there are plenty of other stores where lack of customers doesn’t translate into a spick-and-span shopfloor, and the UGO managers’ evident pride in their store environments is commendable.

Instore signage

Basket POS at UGO Monk Bretton (11 Oct 2011)

After visiting Hartlepool and Eston in May, I praised the way in which the UGO brand was implemented instore, with a consistent colour palette and tone of voice running throughout the posters, navigational signage and other point-of-sale materials. Pleasingly, this is the case in Barnsley and Hull too, from the fun ‘UGO for a basket’ cutout that greets you at the entrance to the ‘Mind how UGO’ exhortation as you leave.

UGO Eton Street, Hull (11 Oct 2011)

I particularly like the good-quality UGO-branded doormats, which add a splash of colour as you enter the stores, and help to prevent the floors getting too slippy. On the very wet day that I visited, the mats were looking a bit mucky from all the dirty feet that had used them – as long as they clean up OK, however, it shows that they’re doing their job.

Welcome mat at UGO Boothferry (11 Oct 2011)

Amid a generally high level of attention to detail, the scrappy handwritten signage that I previously spotted at Eston and Hartlepool stood out for the wrong reasons. Pleasingly, however, there was no sign of anything similar in the Barnsley or Hull stores.

Current product signage is a combination of centrally- and instore-produced A4 posters, and I spotted a variety of approaches while visiting the four stores. The centrally-produced posters were typically red and black, and stood out well against the yellow backdrop; in contrast, the instore-produced signage at all four stores, printed on plain white paper, was neat but a little lacking in professionalism. In a few cases, I also spotted a need for a proofreader to catch some of the misspellings before they make it onto the shopfloor!

Product signage at UGO Lundwood (11 Oct 2011)

At Eton Street, I noticed some of the old Netto ‘Discount Price’ paper being used up, and the yellow and red colour scheme works well in allowing the store-produced signage to fit better with the overall look and feel of the UGO brand. I’m told that UGO is about to produce its own A4 poster template, featuring a red frame around a yellow field, and this will be a welcome replacement for the underwhelming white posters in due course.

Ex-Netto paper used at UGO Eton Street (11 Oct 2011)

Another effective visual device in all the stores is the UGO-branded ‘pallet wraps’. At Lundwood, for instance, the store was using long stretches of the wraps around its promotional and non-food sections, which worked well, as intended, at disguising the unattractive pallets.

Pallet wraps around the non-food section at UGO Lundwood (11 Oct 2011)

However, I especially liked the way that Eton Street had used the wraps in shorter stretches, around its end-of-aisle displays. This seemed to work really well in creating a visual link with the other yellow elements of the store, and particularly in drawing the eye down the centre aisle.

Pallet wraps at UGO Eton Street, Hull (11 Oct 2011)

Attention to detail is important here – making sure that the wraps are clean, that the corners are neat and sharp, and that the wraps don’t (as I spotted in one store) overlap in such a way that the text is partly obscured.

Product range and availability

Fruit and veg at UGO Monk Bretton (11 Oct 2011)

Gaps on shelves were a problem when I visited the UGO stores in Hartlepool and Eston in May. However, a combination of sorting out the chain’s IT and ordering systems, and some judicious pruning to what Arthur Harris quickly recognised was an over-ambitious product range, seems to have done the trick. The fruit and veg sections – problem areas at both Eston and Hartlepool five months ago – were well equipped in all four of the Barnsley and Hull stores that I visited.

Hessle Road Woodhead branch, close to Eton Street UGO, Hull (11 Oct 2011)

Perhaps the biggest product change, however, is the introduction of Woodhead Bakery ranges across all the stores. This is a real point of difference for UGO, given that Woodhead-badged products have previously only been sold through the bakery’s own stores across the north of England. However, the purchase of the bakery by UGO’s parent company earlier this year has created great opportunities for vertical integration, as well as the ability to capitalise on a familiar and respected northern brand. Just around the corner from Eton Street’s UGO, for example, I spotted a Woodhead branch on the busy Hessle Road.

Woodhead bread products at UGO Boothferry (11 Oct 2011)

Given the benefits to the wider Haldane Retail Group, UGO’s store managers are, as you would expect, being encouraged to push the Woodhead ranges, and all the stores I visited had products such as bread, rolls, fruit pies and cakes prominently displayed.

Woodhead rolls at UGO Eton Street (11 Oct 2011)

Woodhead rolls at Boothferry (11 Oct 2011)

All the store managers I spoke to reported that the Woodhead ranges were selling really well, and it’s not surprising – the products look fresh and attractive, and are very competitively priced.

Woodhead apple pies at UGO Lundwood (11 Oct 2011)

One of the biggest sellers is apparently the 12-pack of white rolls for £1, while the large apple pies for £1 were also attracting plenty of attention. These prices are almost identical to those in Asda, so are very reasonable for a smaller chain. The 4-pack of Woodhead frozen chicken pies for £1.79 also seemed like a great deal – combining the convenience of frozen with simple packaging that lets the product, and its ‘homemadeness’, speak for itself.

Frozen Woodhead pies at UGO Eton Street (11 Oct 2011)

Price

That issue of price is clearly at the heart of UGO getting its offer right, given that it’s modelling itself on Netto and uses “where the prices are low” as its strapline.

Bacon deal at UGO Monk Bretton (11 Oct 2011)

When I interviewed Arthur Harris in June, he admitted that UGO needed to address the perception – and, to some extent at least, the reality – of it being more expensive than Netto.

Baked bean deal at UGO Lundwood (11 Oct 2011)

Again, there seems to be good progress on this front. One of the barriers to being able to offer lower prices has been UGO’s reliance on sourcing products via Nisa, the buying group for independent retailers that also supplies many corner shops and, for example, the Beales Food Hall in Hexham.

Since UGO’s launch, however, I understand that the proportion of SKUs sourced from Nisa has dropped from more than 90% to around 85% – partly as a result of the Woodhead-supplied ranges, but also through sourcing selected grocery and non-food items direct from other suppliers. Deals on bacon, baked beans and large tins of biscuits were among the non-Nisa sourced offers instore when I visited, all of which were selling well.

UGO also seems to have got cleverer in promoting and, in turn, delivering upon its best offers. Last time, I complained that some of the deals featured on the offers leaflet were difficult to locate instore, but a combination of better POS materials and giving more powers to the store managers seems to have done the trick.

Wine offer display at Eton Street (11 Oct 2011)

My understanding of how Netto worked is that store layouts and promotions followed quite a prescriptive set of rules, and there was limited scope for the store managers to tailor those to their local market. UGO’s approach, in contrast, is to give store managers greater control. At the two Barnsley stores, for example, one store manager reported doing a roaring trade in beer, while the other sells much more wine; this can now be reflected in terms of which offers are given most prominence in store. In Monk Bretton, for example, the store manager had made use of surplus fridge space to create a section of chilled wine, which he reported was selling well.

Chilled wine at UGO Monk Bretton (11 Oct 2011)

Indeed, when I visited, all the stores were making a big push on the 3 for £10 wine offer that I mentioned before, reinforced by the door-to-door leaflet deliveries and newspaper adverts in those locations where UGO has multiple stores – namely Barnsley, Hull and Liverpool.

UGO ad in Hull Daily Mail, October 2011

As the sales uplifts show, the wine offer has been a really successful footfall driver – after all, it is a good deal. More importantly, UGO will be hoping that by bringing lapsed Netto or UGO shoppers back into the store – and, perhaps, attracting some completely new customers – it will open shoppers’ eyes to how the overall offer has improved from those early days.

Customer service

Checkout at UGO Eton Street (11 Oct 2011)

Finally, to customer service – another area where there were shortcomings last time. In Eston and Hartlepool in May, the staff didn’t seem particularly happy, perhaps because they were having to deal with customers who appeared confused by the change from Netto, and who were complaining about the relatively poor levels of availability.

Five months on, and I couldn’t have been more impressed by the store managers and other staff that I met. In each of the four shops that I visited, the managers were motivated, enthusiastic, and clearly proud of their stores. Staff on the tills were also actively promoting the current offers, such as the deals on wine and tinned biscuits. In all the stores I visited, only the security guards – typically – struggled to raise a smile.

Wine offer at UGO Monk Bretton checkout (11 Oct 2011)

Despite the customer service shortcomings, one of the features I praised at Eston and Hartlepool last time was the smartness of the staff, and that was the case in Barnsley and Hull too. The staff uniforms – especially the bright yellow shirts – are eyecatching and good quality, which helps to convey a professional and positive image.

Conclusion

To truly make a direct comparison with my previous UGO visit, I’ll need to go back to Eston and Hartlepool again. However, from what I saw at the four stores that I went to in Barnsley and Hull, there have been tangible improvements to UGO’s offer and customer experience:

• The prices and offers are better, and are being more actively promoted both inside and outside the store
• The new Woodhead ranges are a real asset, and seem to be going down well with customers
• The stores look appealing, thanks to their staff and managers – who are superb – having a real sense of ownership.

Of course, there are still things that need more work. Last time I lamented the lack of any UGO-branded carrier bags, as it’s such an easy way to let customers promote the brand as they walk to and from the store. Apparently there have been some UGO-branded bags since my last visit, but the quality was poor, and some better ones are currently being sourced. Nisa bags are being used in the meantime.

There’s obviously also a need to get the stores trading better, but at least now there’s every reason to expect that customers will like what they see once they step through those doors. The success of the recent wine deal has shown that new and lapsed customers alike can be enticed back if the offer and pricing is right.

Above all, I think there’s a sense that UGO is starting to work out what it’s trying to be, and is establishing a brand personality and identity distinctive to that of Netto from which it has evolved. With recent changes to the top team and more power to store managers seemingly having the desired effect, UGO appears to be on the right track – it just needs to keep doing what it’s doing, and to keep doing it smarter and better.

Tesco in Eger, Hungary (15 Jul 2006)

Today’s release of fairly weak UK trading figures from Tesco – where like-for-like sales, excluding petrol and VAT, fell by 0.5% in the first half of the year – has unsurprisingly prompted much media discussion, both about Tesco specifically and the state of the UK economy more generally.

Tesco’s coverage hasn’t been helped by rival grocer Sainsbury’s revealing that its own like-for-like sales, excluding petrol but not VAT, rose by 1.9% in the first six months of the financial year (a measure for which the equivalent at Tesco was a 0.5% rise).

As new Tesco boss Philip Clarke noted, there’s no doubt that retailers across the spectrum are having to eke every penny of spend out of cautious shoppers at the moment, with further gloomy figures on household consumption released today. The big question, however, is why the UK performance of Tesco – a retailer that has long been the behemoth of the British supermarket sector – is seemingly lagging behind that of major rivals such as Sainsbury’s.

Tesco Express, Lyme Regis (4 Sep 2011)

Before trying to answer that question, it’s worth reminding ourselves that Tesco as a whole remains a phenomenally successful business. Today’s figures showed that the company made a profit of £1.9bn in the first half of the year, on group sales of £35.5bn – a performance that most retailers can only dream of. Tesco’s store estate comprises more than 5,300 shops – half of those overseas – and it is now the third biggest retailer in the world, with a strong presence in Ireland, eastern Europe, Asia and the US. And for all that its UK performance is below par, Tesco’s market share remains more than that of Asda and Morrisons combined – thanks in no small part to the efforts of its 200,000 UK staff. As a homegrown international success story, Tesco has given the UK much to be proud of.

Tesco in Košice, Slovakia (2 Sep 2008)

However, it’s the business’s very immensity that also contributes to some of its present challenges. The perception that Tesco is simply too big – and too powerful – is widely held, not least here in the North East where it owns much of Gateshead town centre and holds the key to the centre’s long-awaited regeneration. There are clearly some shoppers who refuse to shop at Tesco for that reason.

In the UK, a significant chunk of Tesco’s growth in recent years has been built on expansion in non-food. This served the business well in the good times, but has arguably left it more exposed than its rivals now that discretionary spend is under pressure. There is also, I would suggest, some sense that Tesco’s expansion into new categories – whether that’s non-food, banking or used cars – has allowed others, such as Waitrose and the hard discounters, to up their game and become the innovators in the core grocery business.

Tesco-owned One Stop, Crewkerne (10 Sep 2011)

I touched upon some of Tesco’s challenges in grocery when I recently blogged about the Asda Price Guarantee, and Tesco, like Asda, is having to fend off rivals at both the premium and value ends of the market. For all its investment in price – including the eyecatching Price Drop campaign announced last month – my reckoning is that Tesco still faces an uphill struggle to be perceived as cheaper than Aldi, Lidl or even Asda. The proliferation of higher-priced Tesco Express stores – and the growth of the supposedly even dearer One Stop ‘stealth fascia’ – surely don’t help this perception. In contrast, Asda’s clear message about charging the same prices in its smaller stores as in the larger ones helps to cement its own value credentials.

What about quality? Here too, Tesco arguably has work to do. Just among my own circles of friends, I often hear perceptions of Morrisons being better than Tesco in fresh produce; Sainsbury’s as being a more ‘upmarket’ shop in general; and Waitrose – still a relatively recent entrant to ‘the North’ – as excelling in speciality products and treats. In contrast, Tesco’s dalliance with being ‘Britain’s biggest discounter’ and its recent launch of ‘venture brands’ – its own in-house products, but without a Tesco branding – overlaid with the familiar Value, mid-tier and Finest ranges, arguably create a confused picture of what Tesco stands for.

One of Tesco's discount brands

The one area where Tesco beats all its rivals is its long-established loyalty scheme, Tesco Clubcard. Reportedly boasting 15 million active cardholders, Clubcard provides the retailer with an unrivalled snapshot of UK consumers’ shopping habits, as well as a means of communicating targeted news and offers to its customers. Given the importance of Clubcard, the decision last week to scrap the Double Points promotion – and invest the money saved in immediate Price Drop reductions – is a bold if risky one. Tesco’s reckoning, perhaps, is that investing in loyalty is only worthwhile if shoppers are actually loyal – and don’t go off to Aldi, Lidl, Morrisons or Waitrose instead.

Back in the days when Prunella Scales’ Dotty was the face of Tesco’s TV advertising, there was a warmth and clarity about the Tesco brand – and even an affection for it – that has got rather lost in the intervening years. Today, Tesco’s rather cold and soulless stores seem like a metaphor for the brand.

Whether the recently announced initiatives will clarify what Tesco stands for – and win back those customers who have started to establish new shopping habits elsewhere – remains to be seen. However, given Tesco’s deep pockets, immense experience as a retailer, and past record of success, only a brave observer would write off its present efforts to bring the UK business back on track.

Wellchester's Claire Robertson (8 Sep 2011)

For someone who makes a habit of visiting old Woolworths – and I’ve racked up about 140 so far – there can be few ex-Woolies sites more celebrated than the one in Dorchester (store #403).

The story is well known: former Woolworths store manager Claire Robertson was hailed as a heroine of the downturn when she reopened her old shop as Wellworths, gave most of the staff their jobs back, and became a TV documentary star and chum of radio DJ Chris Evans. In turn, Claire’s actions paved the way for other ‘sons of Woolies’ to be born – including Smallworths in Selsdon, Wee W in Stornaway, and the shortlived Alworths chain – while Chelmsford’s Faith girls were inspired to (briefly) reincarnate their collapsed store as Hope.

Wellchester (with old signage) in Dorchester (8 Sep 2011)

Two-and-a-half years later, Wellworths remains a fixture on Dorchester’s South Street, though today (16 September) marks the start of a new chapter as it rebrands itself to Wellchester.

As I reported back in November, the move was necessitated by Shop Direct – owner of the Woolworths trademark since the chain’s collapse – who argued that the Wellworths brand was too similar to its own, and insisted that Claire curtail any expansion plans if she wished to retain the use of the name. Rather than face this limitation, the new Wellchester brand was born – celebrating the place where the business started, while still ensuring that it can be known as Wellies for short.

New and old logos

A week before the relaunch, I finally visited (the then) Wellworths to meet Claire and to take a guided tour around her store. Well used to dealing with the media by now, Claire is as delightful and professional as you’d expect, and her passion – for her staff, for her store, for Dorchester, and for retail in general – comes across strongly. I also detected a steely determination and a sense of not taking any nonsense – surely a valuable combination of assets for anyone seeking to build a fledgling retail business into a long-term success.

Almost since Wellworths was first launched, the media has speculated about possible expansion for the business. Claire confirmed to me that she is on the lookout for additional sites in the Dorset area, and has one or two locations in mind, though nothing suitable has become available as yet. It’s clear, however, that making the Dorchester store as successful as possible – and avoiding an Alworths-style overexpansion – remains Claire’s focus.

Pick 'n' mix at Wellchester (8 Sep 2011)

The store itself is an interesting mix of the old and new. On the shopfloor, the wooden flooring, ex-Woolies shelving and core product categories – such as toys, stationery, homewares and the iconic pick ‘n’ mix – ensure that Wellies retains a distinct whiff of Woolies.

Kitchenware aisle at Wellchester (8 Sep 2011)

The generally professional feel of the instore signage, visual merchandising and shelf labelling also gives the impression of a business that is much larger than just a single store.

A bit of Woolies heritage at Wellies (8 Sep 2011)

Upstairs, in the staff and stockroom areas, the Woolworths heritage is more explicit. Claire pointed out the old noticeboard outside the staff room, which retains its Woolies logo and the slightly odd strapline ‘People serving people’ – presumably a fairly fundamental principle for any retailer.

Wellchester's stockroom, Dorchester (8 Sep 2011)

Meanwhile, in the stockroom, Claire revealed that most product categories are stored in the same locations as they were in the Woolworths days, and that staff often still refer to them by their Woolies department numbers. Old habits, it would seem, die hard!

Yet for all the reminders of the past, Claire’s tailoring of ranges for the local market ensures that Wellies has grown into a store that feels very much a part of its community and has developed a personality of its own. Some of this is no doubt down to Claire’s own prominence and visibility; while I was touring the shopfloor with her, for example, she was approached by a customer who clearly knew who she was and wanted her to direct them to the shoe polish aisle.

Inside Wellchester (8 Sep 2011)

As Claire took me around her store, many of the most interesting stories related to how the shop’s ranges have been tweaked over time in response to customer demand, with new categories introduced, and some established ones expanded or reduced. Claire highlighted this as one of the big differences between Woolies and Wellies – moving from a format where store managers had limited power over the products that customers were offered, to one where Claire and her team can respond decisively if categories are underperforming or show further potential.

Groceries at Wellchester (8 Sep 2011)

Near the tills, for example, Claire has recently introduced a small range of groceries from Booker’s Euro Shopper value range. This features everyday products such as tinned foods, biscuits and jams, and is apparently proving popular.

Entertainment and confectionery at Wellchester (8 Sep 2011)

Though always a staple of Woolworths’ offer, entertainment is another category that Claire chose not to bring in at Wellies in the beginning, but has subsequently introduced in response to customer demand. The primary reason for not stocking CDs and DVDs to start with – the wafer-thin margins on chart product – remains an issue, and Claire highlighted how a new DVD can be cheaper to buy at Tesco than it is from her supplier. However, she noted that the popularity of the store’s back-catalogue ranges takes off some of the pressure to stock every new release.

Computer accessories at Wellchester (8 Sep 2011)

Another recent arrival is the computer accessories department, introduced on a concession basis but fully integrated into the overall look and feel of the store. This has apparently been more successful than expected, and is going to be expanded further in the coming weeks.

Picture frames at Wellchester (not stationery...) (8 Sep 2011)

One department that I was bound to ask about was picture frames, which everyone remembers from the 2009 How Woolies Became Wellies documentary on BBC One. The programme charted the run-up to the store’s opening and Claire’s recruitment of a young buyer – since departed from the company – who memorably filled an entire aisle with picture frames of every size and type. Happily, his legacy lives on in what Claire admitted is one of the store’s most popular product categories, recently supplemented with a small range of canvas prints.

Childrens' clothing at Wellchester (8 Sep 2011)

Children’s clothing, in contrast, is an area that Claire highlighted as performing less well than hoped. Like entertainment, it was another ex-Woolies staple that Wellworths hadn’t initially stocked, but later introduced in response to customers’ requests. I noticed that items were being cleared at 40% off marked prices, and Claire told me that she plans to focus more attention on childrens’ accessories – such as gloves and socks – which have performed more strongly for the store to date.

Wellworths-branded hardware products (8 Sep 2011)

When I visited the store, preparations were already underway for today’s relaunch, and, contrary to what you might expect, Claire explained that the cost of switching names will be relatively low. For example, the store’s business card and letterhead supplies were already running out, while its Wellworths-branded hardware products will be replaced with Wellchester ones as stock is sold through. 

The retention of the logo’s existing typeface and orange and blue colour scheme means that the window vinyls and instore signage – which features the corporate colours, but not the store name – do not have to be changed, and even at the front of the store, the ‘Well-’ half of the fascia can be kept with only the ‘-worths’ part replaced. At the same time, Claire is using the relaunch as an opportunity to tidy up the store’s rear service entrance on Trinity Street, adding signage where previously there was none.

Rear of Wellchester, Dorchester (8 Sep 2011)

Overall then, I was pretty impressed with what Claire and her team have achieved at Wellies. It’s a good-looking, well-stocked store, with many attractive and keenly priced products. Indeed, most things about it – from the product to the presentation – are much better than the slightly disappointing Alworths (now long gone) that I visited in Amersham last year.

Importantly, Claire and the other staff also seem to have a great team dynamic, and exude a real sense of enjoying their work – perhaps not too surprising, given their history of working together back in the Woolworths days.

Inside Wellchester (8 Sep 2011)

Most crucially of all, perhaps, Wellies was busy with shoppers for the full hour and a half that I was there. When Claire first launched Wellworths in 2009, she made the point that Woolworths in Dorchester had always been profitable, and it’s easy to see why. There’s no doubt that the store benefits both from its great location at the heart of Dorchester’s main thoroughfare – next to Marks & Spencer and opposite the independent department store Goulds – as well as from limited local competition in quite a few of its product categories.

Dorchester's busy South Street (8 Sep 2011)

However, in evolving Wellworths into Wellchester over the last two-and-a-half years, Claire seems to have avoided the trap of taking any success for granted, or of coasting along on the back of the store’s celebrity. Through decisive management and the hard work of all its staff, Wellchester has grown – and is still growing – into a store of which both Claire and Dorchester can be proud, and that performs a valuable function on the town’s high street.

Existing Waitrose in Tudor Arcade, Dorchester (8 Sep 2011)

Challenges lie ahead, for sure. Nationally, the economic situation is still flaky, while in Dorchester itself, Simons Developments’ Charles Street Project – set to feature 20 new shops and a replacement Waitrose – will bring both opportunities and competition for the town’s established retailers. Equally, any new Wellchester stores will need to respond to their local communities’ needs in just the way that Wellies in Dorchester has.

However, having met Claire, I certainly wouldn’t bet against her achieving her retail ambitions. Today is a new start for Wellchester, and it will be fascinating to see where it goes next.

New BHS, Swindon (11 Sep 2011)

While visiting Swindon’s out-of-town John Lewis at Home, I also managed to spent some time exploring the town centre.

The open-air Parade shopping centre has the distinction of hosting one of the UK’s few (as yet) new-concept BHS stores, reviewed by Retail Week’s John Ryan shortly after its June opening, and described by him as “without doubt the best shop in Swindon.” Given the store’s similarity to the new BHS shops that will be opening soon in Hartlepool and Newcastle, I was keen to take a look for myself.

Render of Newcastle's new BHS (prior to latest changes). Image by Dalziel & Pow

As you may recall from my previous blogs, BHS is taking over the prominent former Woolworths unit in Hartlepool’s Middleton Grange Shopping Centre, though the opening has been put back from this autumn to early next year as a result of the unit’s redevelopment taking “longer than expected.”

Meanwhile, in Newcastle, BHS’s planning application to revamp the old Next store was ‘granted conditionally’ last month. The core design is unchanged, though the main logo (now slightly smaller) and building surround (now York stone instead of aluminium) have been tweaked in response to council officers’ criticism of the original proposals.

At this stage there’s no official opening date, but Arcadia’s PR person tells me that an opening early next year is now more likely, rather than the autumn of this year as had been originally planned. Given the scale of building work involved, that’s not terribly surprising, particularly as any new store would ideally want to open well before Christmas rather than in the midst of festive trading.

Former BHS, Swindon (4 Jan 2010). Photograph by Brian Robert Marshall

While the upcoming BHS stores in Hartlepool and Newcastle involve a comprehensive revamp of existing buildings – including, in both cases, a new frontage – Swindon’s is a complete new build, constructed on the site of the previous rather tired BHS store (above). Many older BHS shops, such as the now-closed Newcastle store, feel sprawling and overspaced, and it’s telling that the redevelopment has provided room for a more compact, two-storey BHS (but still with a selling area of 27,000 sq ft) as well as several other new arrivals – Topshop/Topman, USC, and a funky and eyecatching River Island.

New River Island, Swindon (11 Sep 2011)

On the outside, the BHS store’s double-height glazing, bold signage and stone surround all give a real flavour of what we can expect to see on Newcastle’s Northumberland Street. Inside, the joy of the new shop is that it still feels roomy, as well as much brighter and fresher than the BHS stores of old.

New BHS, Swindon (11 Sep 2011)

Crucially, the infusion of natural light and more compact footprint ensure that the store has none of the dark and dreary corners that characterise BHS’s older estate. For example, rather than being hidden away at the back of the store, the BHS Café is now a core part of it, its location at the front of the first floor offering great views over the busy street.

Similarly, the lighting department – always a BHS strength, yet not always showcased to best advantage – sits in the middle of the first floor, providing an immediate wow factor as you step off the escalator. Indeed, throughout the store, it’s remarkable quite how much the modern setting enhances the visual appeal of BHS’s own-label product.

Where the first new-concept store in Uxbridge featured several Arcadia concessions – as introduced previously in locations such as Middlesbrough – Swindon’s is what John Ryan terms a “monobrand BHS store.” Given the existing strong presence of Arcadia’s other brands in Newcastle, I’d expect the Northumberland Street store to have a similar focus on BHS’s own ranges, though its four-floor configuration will create new and interesting opportunities for display and navigation.

Rear of BHS Reading (19 Aug 2011)

The problem, of course, is that shiny new BHS stores reinforce quite how tired many of the older ones are – and with a 183-strong estate, updating all of them fully to the new format will be both costly and time consuming. Reading, for example, has had the new logo applied to its existing street frontages; it’s a slightly clunky juxtaposition, however, and almost makes one long for the storefronts to be given a Swindon- or Newcastle-style full-on makeover.

Front of BHS Reading (19 Aug 2011)

As I’ve observed previously, some BHS stores seem to have had little or no investment in the last twenty years. In Exeter last week, for example, I spotted an unmodernised BHS still featuring the old ‘ribbon’ logo that was replaced in 1995. As if to emphasise the point, the store also featured the signature logo (1995-2010) over one of the entrance doors, and the new capitalised logo (2010-) on its window posters. In a city that has a new Debenhams, a decent House of Fraser, and John Lewis on the way, this really isn’t good enough.

BHS Exeter (6 Sep 2011)

Assuming the new BHS format is a success – and it is said, by the chain’s MD, to be “making a difference” – I suspect that we will see further stores relocating to more suitable premises, as has happened in Newcastle, potentially freeing up larger-footprint sites for other expanding retailers. BHS owner Sir Philip Green offloaded ten stores to Primark at the start of last year, at the same time as opening others, and there is persistent speculation that Primark might acquire more.

Meanwhile, just as BHS has taken advantage of Woolworths’ demise to move into Hartlepool for the first time, I’d be surprised if some of the 51 sites left vacant by TJ Hughes’ collapse don’t end up in BHS’s hands. In Sunderland, for example, the TJ Hughes site in High Street West is more comparable in size to the Swindon BHS than the current small store opposite, while few people would complain if BHS wished to work its magic on the unremittingly ugly TJ Hughes store frontage.

TJ Hughes, Sunderland, prior to closure (7 Sep 2009)

Whatever the exact permutations, I suspect that the next few years will see the BHS estate evolving into something that comprises slightly fewer but much better stores. This is likely to be good for those locations that gain the new investment, good for shoppers, and good for the future of one of Britain’s most long-established yet historically undervalued retail brands.

Thank you to Brian Robert Marshall for the shot of the former BHS in Swindon, which is © Copyright Brian Robert Marshall, and licensed for re-use under this Creative Commons Licence.

Point-of-sale promotion of the Asda Price Guarantee

Judging from the number of hits – currently 900+, and rising – many of you enjoyed my recent illustrated post about Asda’s Old Fold Road store in Gateshead, following its impressive transformation from a Netto.

While the increase in product lines and instore services is one of Asda’s selling points at its converted Netto sites, another is its pledge that “all newly converted Netto stores will charge the same low price as every other Asda in the UK.” This means that smaller Asda Supermarket sites, just like their full-size counterparts, are covered by the much publicised Asda Price Guarantee: the company’s pledge to be “10% cheaper on your comparable grocery shopping” than Tesco, Sainsbury’s, Morrisons or Waitrose.

Asda Supermarket, Gateshead (8 Aug 2011)

At the same time as I was checking out the Gateshead store’s new look, Asda challenged me to carry out a £50 shop instore – to put the Price Guarantee to the test, as well as seeing whether it really was possible to do a full weekly shop in a compact Asda. So, how did I get on?

My shopping list

Coffee at Asda Supermarket, Gateshead (8 Aug 2011)

To make the test as real as possible, I prepared a shopping list comprising many of the items that I buy on a regular basis and needed to buy anyway, including fresh fruit and veg, storecupboard items (e.g. olive oil, coffee, baked beans), crisps and nuts, household items (e.g. handwash, toilet rolls), frozen foods, cat food and wine, as well as ingredients for that evening’s dinner (sausage and mash).

A couple of qualifiers

Asda billboard, Gateshead (26 Jun 2011)

As I’ve mentioned before, I’m not usually an Asda shopper, but in the supermarkets I do visit – mainly Waitrose, Sainsbury’s, Morrisons and Aldi – I tend to go for own-brands over branded products. The ‘comparable grocery shopping’ proviso of the Price Guarantee reflects the fact that while it’s easy to compare the price of branded products in different supermarkets, own-brand comparisons are more tricky due to variations in pack size, ingredients or other characteristics. To ensure that my shop included as many comparable items as possible, I was therefore prepared to buy a few more branded items than would usually be the case.

Finally, it’s worth noting that the shop took place on 6 August; inevitably, all the prices and offers that I mention can only ever be a snapshot of that particular day, and may well have changed – up or down – since. All the photos are from two days later, when I returned to the store – unladen with shopping – for a more detailed look around.

Finding what I wanted… and a few other things

Pesto at Asda Supermarket, Gateshead (8 Aug 2011)

By and large, I was able to find everything on my list, though I did have to make a few substitutions where my chosen brand wasn’t available. For example, I couldn’t find any Pears handwash, so bought a similar Baylis & Harding product (£2) instead. I couldn’t see any Sacla green pesto either, so decided to abandon the pesto rather than opt for the slightly cheap-looking Asda own-brand alternatives.

Handwash at Asda Supermarket, Gateshead (8 Aug 2011)

In some other categories – such as meat sausages, vegetarian sausages, redcurrant jelly and, more surprisingly, potatoes – the options instore were a little bit limited, and you might well choose to go to a larger store if you were after a wider range or particular brands. On the other hand, it’s hard to imagine that the old Netto on the site would have sold vegetarian sausages or redcurrant jelly at all.

Belvoir Elderflower Pressé at Asda Supermarket, Gateshead (8 Aug 2011)

Alongside the items I planned to buy, I was also tempted by a few of the offers that grabbed my attention instore. Mr Muscle Window & Glass Cleaner (500 ml) for £1 seemed like a great deal, as did Belvoir Elderflower Pressé (75 cl) at two for £3.50 (compared to £2.20 for one) and Taylors of Harrogate coffee at two for £5 (instead of £3.28 each). The branded wines (Blossom Hill at £5 and Echo Falls at £4) also seemed keenly priced.

Finally, my cat, Sebastian, did well out of the shop too, with the price for Iams (£3 for 1kg) looking very attractive compared to what I normally pay.

In total, my shop comprised 38 different products, and came to £68.77 once the ‘two-for’ discounts were deducted.

Wanting to enter the details of my shop online… but not until tomorrow

Asda Price Guarantee website welcome screen (6 Aug 2011)

Watching the rather cheesy TV ad for the Asda Price Guarantee, you can be forgiven for thinking that all you need to do is arrive home, gather the other mums around, and immediately start comparing each others’ receipts.

The reality is a little less exciting, especially as you have to wait until at least 6am the morning after you shopped before inputting your details at the Asda Price Guarantee website. At the moment, neither the receipt nor the Price Guarantee website homepage flags up that you can’t compare your prices straight away; it’s only mentioned once you reach the ‘Enter your receipt details’ page via the welcome screen’s ’Enter Receipt’ button.

This, I would have thought, has potential to cause disappointment and annoyance, yet would be easily remedied by changing the receipts to read “Check your receipt online from 6am tomorrow at…” instead of the current “Check your receipt online at…”

Putting the Price Guarantee to the test… and interrogating the data

My shop *is* 10% cheaper (7 Aug 2011)

Needless to say, I waited with baited breath until the following morning when – finally – I could enter and check the details of my shop, a process that is clearly explained and takes just thirty seconds or so to complete. So, was my comparable shop 10% cheaper than it would have been at Asda’s competitors? Yes, it was, as the results screen above happily declared.

How my shop compared (7 Aug 2011)

Given the prominence of the ’10% Cheaper’ promise within the Asda Price Guarantee, I found it a little strange that the main results screen showed the difference between my Asda shop and the equivalent elsewhere in terms of actual money saved, rather than percentage. Hence, I could see (above) that my comparable items would have cost £8.87 more at Tesco or £6.62 more at Morrisons, but beyond knowing that the saving must be at least 10%, the precise percentage difference was not made clear.

Another thing that immediately struck me was the fact that I’d apparently saved £7.61 compared to Waitrose, but £8.87 compared to Tesco. Did this mean that Waitrose was cheaper than Tesco for the items I’d bought? Actually, no, it didn’t at all.

Receipt comparison details: Asda vs Tesco (7 Aug 2011)

For each of the other supermarkets, clicking the ‘View details’ link brought up a more detailed, item-by-item price comparison. Pleasingly, only three of the 38 items I bought turned out not to be comparable with any of the other supermarkets, a much smaller number than I expected.

The store-by-store breakdown showed that while the Price Guarantee had been able to compare 31 of my 38 different items against Tesco, it had managed to compare 29 against Sainsbury’s, 28 against Morrisons, and only 23 against Waitrose. If you’re interested in the full detail, I’ve created a PDF (Table 1) that shows the price comparisons for all the items that I bought.

In other words, the headline saving of £8.87 against Tesco was based on comparable items costing £54.27 at Asda. In contrast, the headline saving of £7.61 against Waitrose was based on a much smaller comparable basket, costing £39.89 at Asda. Hence, while it’s fine to compare the headline figures for any one of the other supermarkets with Asda, it’s not fair to compare those competitors with each other, simply because the basket sizes being compared are all different.

Tesco store, Gateshead (18 Jun 2010)

Asda would probably point out, of course, that the whole point of the Price Guarantee is only to compare its own prices with those of competitors, and that it doesn’t claim to compare, say, Tesco against Waitrose or Tesco against Morrisons. That’s fine, but I wonder how many other shoppers would have drawn the same initial Tesco vs Waitrose conclusion as I did from those headline figures?

Certainly, it’s another reason why it would make more sense for the initial results page to show the percentage savings relative to Asda’s competitors, rather than actual cost savings that have potential to confuse. Currently, however, the actual percentage savings against the other supermarkets are not stated anywhere in the results – I had to work them out myself by copying and pasting the data into Excel.

Morrisons came closest to beating the Price Guarantee

This is surprising, as in my case, at least, the statement that “Your comparable grocery shopping is 10% cheaper than Tesco, Sainsbury’s, Morrisons and Waitrose” actually underplayed the true extent of the saving. In percentage terms, Morrisons came closest to beating the Asda Price Guarantee, where I saved ‘only’ 12.2% by shopping at Asda. Tesco was next best (14% cheaper at Asda) followed by Waitrose (16%) and finally – perhaps surprisingly – Sainsbury’s (16.1%). Again, my PDF shows the detailed data from which I calculated these percentages.

Taking the impulse buys out of my comparison

Iams at Asda Supermarket, Gateshead (8 Aug 2011)

As I noted above, there were quite a few items in Asda that I bought on impulse because they seemed like really great deals. It turned out, for example, that the £3 bag of Iams was £1.41 cheaper in Asda than its nearest competitor (Sainsbury’s), and a full £2.50 cheaper than Waitrose [see full breakdown]. While great for me, as the customer, including such items in the test inevitably gives Asda a head start in meeting its ’10% cheaper’ pledge.

So, what happens if I exclude those impulse purchases from the comparison and just test the Price Guarantee on the items on my shopping list? Well, Asda still came out top, but obviously by a bit less than before:

• 5.9% cheaper than Morrisons on my comparable shopping-list items
• 7.8% cheaper than Tesco
• 10.1% cheaper than Sainsbury’s
• 10.3% cheaper than Waitrose.

I’ve prepared a second PDF (Table 2), which makes clear the items that I excluded from each comparison. Again, bear in mind that the percentages above are only really meaningful in terms of comparing Asda to each of its competitors, not the competitors with each other.

Testing the data a third way 

Of the five supermarkets, Waitrose was cheapest on the fewest items

Having established that Asda was indeed cheapest across both my entire shop and the shopping-list items, I thought it would be interesting to look at which of the five supermarkets was cheapest on a product-by-product basis. You can see the results of my analysis in a third PDF (Table 3).

For each of the 35 comparable products that I bought, I ranked the five stores 1 to 5, where 1 was the cheapest supermarket and 5 was the most expensive. If two or more stores tied for the cheapest price, then both were ranked 1. If a product was only available at, say, three of the five stores, then I ranked these 1 to 3. So, which supermarket came out best by this measure?

Impressively, Asda ranked #1 for price on nearly two-thirds (23, or 66%) of the 35 comparable items that I bought, and was #2 on all but two others. Only the iceberg lettuce (cheaper at both Tesco and Morrisons) and the McCoy’s crisps (cheaper at Tesco and Sainsbury’s) let the side down.

Of Asda’s competitors, Tesco ranked #1 on 13 (i.e. 42%) of the 31 comparable items that I bought, while Morrisons was close behind with #1 ranks on 11 (39%) of 28 comparable items.

In contrast, Sainsbury’s (#1 on 7 (24%) of 29 comparable items) and Waitrose (#1 on just 4 (17%) of 23 products) performed least well by this criterion.

Conclusions

Self-service checkouts, Asda Supermarket, Gateshead (8 Aug 2011)

My test has exposed a few ways in which the Asda Price Guarantee website could potentially be improved, most notably in signposting the overnight wait more clearly, and in limiting scope for misinterpretation by presenting the headline savings against Asda’s competitors in percentage rather than cash terms. Where Asda is significantly more than 10% cheaper, as it was in my case, it also seems odd for this to be underplayed.

These quibbles aside, the Asda Price Guarantee is clearly a worthwhile and quite fun tool that is relatively easy for customers to use, and that helps Asda makes its point about price.

Whichever way you look at it, it’s also hard to dispute that I got a good deal by carrying out my weekly shop at Asda. The Price Guarantee’s ’10% cheaper’ pledge worked as promised – even in a small-format Asda Supermarket – and the analysis of my particular shopping basket, using my three different methods, seems to demonstrate the keenness of Asda’s prices relative to its competitors. Value is, and always has been, a key componenent of the Asda offer, and the Price Guarantee helps to ensure that Asda’s price credentials are widely understood among shoppers.

Herein, however, lies the problem. If Asda is indeed the cheapest of the big grocers, and shoppers recognise this, why is it continuing to lose market share?

Aldi and Lidl continue to gain

Could it be that in bigging up its Price Guarantee, Asda is actually attacking the wrong target? Look at the latest Kantar Worldpanel data, and the big gainers continue to be Aldi (with annual sales growth of 24.4%), Lidl (up 13.8%) and Waitrose. As Tesco and Asda slip, Aldi, Lidl and Waitrose have each recorded record market shares of 3.6%, 2.6% and 4.3% respectively.

My analysis indicates that Waitrose struggles to compete with Asda on price – but no-one would really expect otherwise. Shoppers love Waitrose for the customer service, the pleasant store environment and the quality products that you simply can’t get anywhere else.

Meanwhile, Aldi and Lidl win no awards for their store interiors, but the shopping experience is quick and efficient, and the stores are thriving as shoppers discover own-brand products that are eyecatchingly cheap yet surprisingly high in quality. A Price Guarantee based on ‘comparable’ items is therefore slightly undermined when shoppers are increasingly buying exclusive and ‘incomparable’ products from Aldi, Lidl and Waitrose.

Price is important, of course – especially in economically challenging times – but so is the quality of the products and the overall shopping experience. Asda, I would argue, needs to focus increasing attention on these last two factors.

One of Tesco's discount brands

Tesco’s reaction to the rise of Aldi and Lidl was to launch its own Discounter range, which worked for a while but came across as desperate, and muddied the chain’s “good, better, best” own-label strategy. Asda, wisely, has avoided such a confused approach, opting instead to highlight the price credentials of its existing ranges through the Price Guarantee.

Crucially, Asda has also started to recognise that the quality of its own mid-tier brands – or, at least, customers’ perceptions of the quality – is one of the areas where it is weakest relative to its competitors, and where Aldi, Lidl and Waitrose all present a threat. Asda’s response has manifested itself in the ‘Chosen by You’ label, launched last year, though extending the brand to too many categories – such as refuse sacks – does risk undermining any potential benefits.

Large Asda at Gateshead's Metrocentre (31 Mar 2010)

However, even once it’s convinced potential customers of its keen prices or improved quality products, Asda needs to keep getting more of those customers through the doors – possibly a bigger hurdle than you might think.

Chatting to my friends and colleagues about retail, as I have a habit to do, their first reaction to Asda often relates to it being a busy, stressful and unpleasant shopping experience – a point that I’ve previously made myself in relation to the vast Metrocentre store at the opposite end of Gateshead. It’s hard to know how widely-held this view is, but it’s a factor that drives at least some shoppers elsewhere.

If that’s the case, the small-format Asda Supermarket model may have unintended benefits. As I remarked after my visit to the new Gateshead store, there is something rather nice about shopping in an Asda that is attractively laid out and isn’t overwhelmingly large and busy. Could this, as much as the range and convenience, account for the converted Netto stores’ apparent uplift in sales to date?

If it is, it may well be through the growth of the Asda Supermarket format – rather than the traditional sheds, packed with non-food – that Asda succeeds in turning around its shrinking market share.

Signage at UGO store, Eston (4 May 2011)

Since first meeting them at the UGO launch press conference back in January, it’s been a pleasure to develop a really good relationship with the key people at both the Haldane Retail Group and at Charles Hollywood, the Darlington-based agency responsible for the chain’s graphic design and instore promo work.

In the last couple of weeks, the first of the 20 conversions of Netto stores to UGO have taken place, following on from the trial stores – both former Haldanes-branded shops – at Biddulph and Broxburn. In due course, I hope to be able to visit (officially) one or more of the local UGO stores and to get some interior pics for the blog.

Strongman Geoff Capes at the launch of Biddulph's UGO in February

However, with the first two North East branches – at Eston, near Middlesbrough, and Hartlepool – having already opened, I was curious to check them out as soon as possible.

So, unannounced – but without a Mary Portas-style dark wig – I went along on Wednesday (4 May) to experience and review the two shops, paying particular attention to certain key factors:

• First impressions
• Instore signage
• Product range and availability
• Price
• Customer service.

So, how did the two Teesside UGO stores fare?

First impressions

My first stop was the Eston store, which serves the town’s Whale Hill housing estate and is part of a modern retail block that also includes a Numark pharmacy and a Post Office branch. Though there is some parking close to the store, most people I saw seemed to be travelling to and from the store on foot.

UGO store, Eston (4 May 2011)

Initial impressions were good – bold UGO banners and signage ensure that the shop is hard to miss, even from the top of the road, and the overall treatment of the store exterior makes a smart and vibrant first impression.

I was a little surprised, however, to see shoppers leaving the store with plain white carrier bags. Given the obvious investment in building the UGO brand, it seems a missed opportunity to not use UGO-branded bags. Just by walking down the street, those shoppers on foot could be doing their bit to raise awareness of the local UGO store.

My first challenge at Eston was finding the way in. A lack of signage meant that it wasn’t obvious which of the two doors was the entrance, so I tentatively tried one in the hope that it was the right choice (it was).

Inside, the store is relatively compact – which is fine – though the interior did feel quite gloomy and cluttered, partly as a result of having rather fewer windows than if it were a detached, standalone store. This is a constraint of the property that obviously has to be worked with, but there are almost certainly ways – through lighting and surface treatment – to brighten things up a bit.

UGO store, Hartlepool (4 May 2011)

Hartlepool’s UGO, in contrast, feels rather more typical of a discount supermarket. Located in the Dyke House area close to the town’s main hospital, the store is housed in a functional but modern standalone building with its own car park, and is probably about twice the size of the Eston store. Though there is some housing nearby, my perception was that shoppers would be more likely to travel to this store by car than on foot.

Again, the initial impression is really good, with bold signage and banners ensuring that the store makes its presence felt strongly. After the relative disappointment of the Eston shop’s interior, I was also pleased to find that the Hartlepool store felt much brighter and more spacious, coming across very much like a typical Aldi, Lidl or, indeed, a Netto. I’m sure it’s no coincidence that Haldanes used the Hartlepool store in its initial mockup artwork, as it, rather than Eston, was much closer to my expectations of what a UGO store is supposed to look and feel like.

It was almost noon when I visited Eston and gone 4 when I arrived at Hartlepool, but both stores seemed to be doing a steady – rather than a bustling – trade. Despite this, I was oddly struck by the silence in the Eston store, and – despite not usually being an advocate of instore muzak – felt that it could really use some background music to help lift the mood.

Instore signage

Happily, the excellent implementation of the UGO brand – which is highly professional, yet warm and fun – carries through to the store interiors. Again, I felt it was more effective in the Hartlepool store, where the greater brightness and sense of space allows the posters and navigational signage to work really well and be better appreciated.

On the downside, both stores featured some rather scrappy handwritten signage to indicate where items had been marked down in price, and I thought this looked a little incongruous and unprofessional amid the otherwise slick implementation of the brand.

Also, I was puzzled by the prominent use of the abbreviation ‘PMP’ on some of the instore offers posters. As a supposed retail expert, perhaps I should have known already that this stands for ‘price-marked pack’ – basically, a branded product where the offer price is highlighted and preprinted on the item’s packaging. To me it seems a little odd, however, to use retail jargon on customer-facing material.

Product range and availability

At its press launch, Haldanes made great play of UGO being “the icing on the Netto cake”, and talked of the UGO brand and product mix being designed to provide “reassurance” and a “seamless transfer” for Netto’s loyal customers. One key Netto feature – the non-food offers – have, sure enough, been carried through to UGO, and the eclectic mix of suitcases, microfibre cloths and Gino D’Acampo cookware seemed to be attracting plenty of attention in both Eston and Hartlepool.

On the grocery side, Netto’s own-brand products have obviously had to go, replaced by items from Nisa’s Heritage label. As a very infrequent Netto shopper it’s hard for me to judge the impact of this change, but there are bound to be people who will dislike the disappearance of items that they’ve got used to buying. On the plus side, Netto stores have always included a higher proportion of well-known brands than its hard discounter rivals, Aldi and Lidl, which helps to ease the transition.

A key part of the UGO strategy is to make it easier for customers to carry out a full weekly shop, by doubling Netto’s core range of branded traditional grocery lines to around 3,000 SKUs. There was certainly evidence of this instore, with plenty of different items squeezed into the space, and the presence of certain types of product – such as puff pastry (an item I buy often!) – that haven’t traditionally been available from discount supermarkets. Moreover, where items were in stock, there seemed to plenty of them on the shelf.

Overall, however, it was clear that there were some problems with availability and stock replenishment. Both stores had some notable gaps, with the fruit and vegetable aisles especially depleted. Hartlepool, for example, had no avocados or cauliflowers, so if you’d gone along with a shopping list you may well have left the store disappointed.

Price

If being able to use UGO “for all your weekly shopping” is one of the chain’s key messages, the other is surely that of value. After all, the tagline “where the prices is low” is embedded in the UGO logo and fascia.

So, are UGO’s prices low? Again, having not been a regular Netto shopper, it’s difficult for me to be sure how they compare with the store of old. Overall, my impression was that the everyday prices seemed ‘reasonable’, rather than necessarily ‘cheap’.

The prices of the fresh fruit and veg that I looked at – such as cucumbers and tomatoes – seemed to compare favourably enough with what I pay in Aldi or Lidl, while the Heritage-branded items from Nisa looked to be similarly priced to the big supermarkets’ standard own-brand items, rather than any of the ‘Value’ or ‘Basics’-type lines. Presumably when groceries are being sourced from Nisa, rather than Haldanes’ own supply chain, there’s a limit to how far the prices can differ from Haldanes’ eponymous stores or, indeed, any other Nisa-supplied outlet.

In the alcohol aisle, however, I was pleased to see UGO still offering a decent selection of sub-£4 bottles of wine, at both regular and offer prices – this is one of the areas in which Netto was always particularly useful! As might be expected, the different in size between the two stores is apparent here, with Hartlepool seeming to have a far superior wines and spirits range.

Interestingly, where hard discounters (and Asda) have tended to adopt an ‘everyday low prices’ (EDLP) strategy, one of the most notable features of UGO, for me, is its eyecatching offers, which appear to change ever three weeks or so.

UGO offers leaflet

Prior to my visits, I’d checked out the online PDF of the latest offers leaflet from the UGO website, and was struck by some of the great deals on offer. Ones that stood out included two-packs of Frü and Gü puddings for half price (£1.50, compared to RRP of £3.19); 750 ml Innocent smoothies for £1.34 (RRP £2.96 to £3.05); and New Covent Garden soups (£2.19) on buy one get one free.

These are genuinely impressive offers; on my way home, I popped into Tesco in Gateshead where I noted that the same Innocent smoothies were being sold at £2.85; today, the same price was being charged in Morrisons in Morpeth. If I lived close enough to a UGO store, these deals would definitely prompt me to make a special trip, and I can imagine other people using UGO in a similar way to ‘top-up’ their regular grocery shop. On the other hand, you might question how far UGO’s target shoppers in areas such as Eston will care about posh soup and smoothies as opposed to keenly priced everyday basics.

Given the strength and appeal of the offers, I did feel that much more could be made of them instore. I found it hard to locate the soup, smoothies and puddings offers, even though I’d looked at the leaflet beforehand and was keeping a special eye out for them. The shelf-edge signage promoting the offers was relatively low-key, and in Hartlepool there was actually no reference at all to the soup being on BOGOF. UGO’s special offers seem to be one of its real strengths, and I think more can be done instore to really shout about these deals.

Customer service

Commenting on my blog last week, George Wilson remarked that the staff in the Eston store appeared “not very happy” when he’d recently visited, so I was particularly curious to assess the quality of both stores’ customer service.

I was pleased at how smart the staff looked in their new UGO uniforms, but, like George, I was a little underwhelmed by the customer experience. To test the checkouts I bought an item in both stores, armed with a smile and a readiness to engage in conversation.

In Eston, the first staff member I approached seemed to be having trouble with her till, resulting in the person in front having to move his purchases to another checkout. She seemed a little flustered as she told me – perhaps rather abruptly – that “there’s no point in you putting your stuff on this till”. I duly moved over to the next till and paid for my purchase, where the member of staff was pleasant rather than friendly. Based on my experience, I probably wouldn’t go back to the Eston store unless it was my local shop.

In Hartlepool, my experience at the checkout was similar; the service I received was adequate rather than exceptional – polite and perfunctory, rather than warm. I noted that the customer in front of me seemed to be complaining about certain items they wanted not being in stock, and there’s always a danger that this frustration from shoppers rubs off on the staff. If the availability issues can be quickly sorted, happier customers will hopefully lead to cheerier staff. Whatever the reasons, however, it does seems that there’s still a bit of work needed if UGO is to deliver on its promise – stated in the press pack that I received in January – to concentrate “huge effort on delivering the very best in customer service.”

Conclusion

Signage at UGO store, Hartlepool (4 May 2011)

To be a success, UGO needs to keep happy as many as possible of Netto’s customers while simultanously attracting new ones – no mean feat for any business taking over another retailer’s stores.

Having tried out the UGO experience, two particularly positive features stand out for me. The first is the implementation of the UGO brand, which is excellent throughout. Carrier bags and handwritten signs excepted, UGO has managed to develop a bold, distinctive and highly professional look and feel for the brand, carried through from the welcoming store exterior to the instore signage and offers leaflets.

UGO store, Hartlepool (4 May 2011)

The other real positive is UGO’s special offers. Some of the deals on the products that I regularly buy are among the best I’ve seen in any supermarket, and the chain’s marketing – externally and instore – really needs to celebrate these, perhaps through explicit price comparisons with other retailers, rather than less easily understood references to RRP.

As far as negatives are concerned, issues such as brightening up the Eston store interior or making sure the tills work are easily fixable. However, the crucial area for improvement is ensuring that the stores have in stock the products that people are expecting to find.

Haldanes, rightly, sees an opportunity to drive footfall and sales at UGO by offering a wider product range than Netto ever did, making it a place “for all your weekly shopping.” As the business finds its feet, delivering on this promise will be key. The danger, otherwise, is that shoppers will get out of the UGO habit as they head off to Morrisons in search of their cauliflowers and avocados.

Wilkinson, Gateshead (14 Feb 2011)

Given that a significant chunk of Gateshead town centre is currently flattened and awaiting redevelopment, it’s pleasing to see one of the town’s biggest retailers investing in its store.

Along with Tesco, the long-established Wilkinson store in the Interchange Centre is probably the town centre’s biggest draw. It’s not as big as the massive stores in Newcastle or South Shields, but it’s a decent size and always busy, stocking many product ranges that aren’t readily available elsewhere in the town.

West Street frontage, Wilkinson, Gateshead (15 Feb 2011)

Popping in last week, I was pleased to see that the interior of the store is getting a spruce up, and that the old, rather tired Wilkinson signs have been replaced by ones bearing the new, cleaner logo – previously blogged about in July 2009. As I argued then, I find the new, crisp logo a massive improvement on its rather old-fashioned and clunky predecessor.

Inside the store, the ongoing revamp seems very similar to the rebranded and modernised stores that I’ve already seen in Leeds and Sunderland, with improved signage, better views through the store, and a generally cleaner and less cluttered feel.

Outside – both in West Street, and within the transport interchange – the Wilkinson building is hardly a looker with its crinkly brown and red façade. However, the new signage makes a surprisingly big difference in giving it a fresher appearance, even if the West Street sign does seem a rather odd shape – presumably to cover up the holes left by the old one.

....and how it looked before (17 Sep 2009)

In contrast, the building on the opposite side of West Street has a new logo that I’m finding it much harder to warm to. This is the Argos store, occupying part of what used to be the North East Co-op department store in New Century House.

Argos, Gateshead, with new logo (14 Feb 2011)

...and how it looked before (16 Dec 2009)

In common with the rebranding taking place across the rest of the 700-plus-strong Argos estate, the store has recently gained new signage, featuring the chain’s revamped logo.

When the modernised logo was launched just over a year ago, Argos’s Head of Brand Marketing was quoted by Retail Week, making reference to the “strong customer recognition” of the Argos ‘smile’ and arguing that the new version “remains instantly recognisable” but “feels more modern and relevant.”

New Argos logo, Nuneaton (24 Aug 2010)

Old Argos logo, Sunderland (7 Sep 2009)

I’m not convinced – to me, the new logo just looks like a cheapened version of the old, while at the same time hanging together less successfully as a piece of design.

To be honest, I’d never realised that the swirl was supposed to be a smile, but it worked well as a device in linking together the ‘A’ and the ‘s’, and giving the logo a coherent look. In the new version, in contrast, the ‘smile’ floats oddly under the text, while the formerly distinctive font has been replaced by something much more bland and generic.

Even as signage, the modernised font seems to work less well. While the old version usually had the red text superimposed on a blue background, the new one commonly ends up with a red rectangle seemingly stuck slightly randomly on top of a blue backdrop. An improvement? Again, not in my book.

Perhaps the chain’s shoppers will agree that the new look is “more modern and relevant” – but it certainly doesn’t put an Argos smile on my face.

UGO cake

Following my recent post about Asda’s divestment of 39 surplus Netto stores, I had the pleasure of being invited to my first press conference last Friday, in Leeds. 

Appropriately held just a short distance from Asda’s corporate HQ, the event was organised by Haldanes, the fledgling independent grocer who, as I blogged before, is acquiring 20 mid-size Netto supermarkets – including four in the North East – that it plans to relaunch under a new discount fascia, UGO (pronounced You-Go, like the 1980s car brand). 

The press conference was a great opportunity to find out more about Haldanes’ intentions for the fledgling UGO chain and the eponymous Haldanes fascia, as well as a chance to meet some of the company’s key people – including Arthur Harris (Chief Executive Officer), Richard Collins (Chief Operating Officer) and Adam Hart (the recently appointed Non-Executive Chairman). 

So, what can we look forward to as Haldanes takes its next steps towards becoming, in its own words, “a viable alternative to the major multiples”?

Certainly, when I coined the phrase “son of Netto” to describe UGO, I hadn’t quite banked upon the chain’s visual identity being so derivative of what it’s replacing. Scottie may have been banished, but the yellow and black colour scheme, bold font and (modernised) basket device are all present and correct.

UGO logo

Netto logo

Haldanes’ argument is that by capitalising on what it sees as the “distinctive and trusted” yellow and black Netto fascia, the UGO brand will provide “reassurance” and a “seamless transfer” for customers. Indeed, COO Richard Collins told me that Netto had been “very supportive” during the process of developing the UGO visual identity, and that the Danish retailer had been “surprised but flattered” by the obvious similarities with its own brand. Of course, given that Netto is exiting the UK entirely, there will be no scope for confusion between the two chains – unless UGO decides to enter the Danish market at some point in the future.

Throughout the press briefing, one thing that came across strongly was Haldanes’ respect for the Netto business and what it has achieved in the UK to date, with Richard Collins praising the “loyal staff and customers”, and emphasising Haldanes’ “excitement” over the portfolio of stores that it is acquiring. Certainly, it’s worth noting that Netto’s British operation has been consistently profitable over the last decade (making an operating profit of £7.6m in 2009), even if its operating margin (of around 1%, compared to Asda or Morrisons’ typical 4 to 5%) has been a little on on the low side.

Mock-up UGO leaflets

This sense of not messing too much with the Netto formula comes through not only in UGO’s brand identity, but also in terms of what the rebranded stores will be like as places to shop, and the marketing channels that will be used. Hence, Haldanes has no intention of increasing prices, plans to keep Netto’s popular non-food and ‘spot line’ deals, and intends to maintain a strong fresh food offer – something the retailer sees as a current strength of Netto compared to the other hard discounters. The regular offer flyers delivered to nearby homes are also set to be retained.

At the same time, Haldanes’ bosses seem to have recognised that there is scope to increase footfall, sales densities and profits by tackling those areas where the Netto business model can be enhanced – what Richard Collins referred to as “putting the icing on the Netto cake.”

The checklist of planned improvements seems logical and well informed. Some involve making it easier for customers to carry out a full weekly shop: for example, by doubling the core range of branded traditional grocery lines to around 3,000 SKUs (compared to about 7,000 in a typical Haldanes); introducing an enhanced range of health and beauty products; and offering a full range of newspapers and magazines.

Other changes are intended to address barriers that might currently put shoppers off going to Netto, such as installing ATMs at all stores, accepting credit cards, offering home delivery, and investing heavily in customer service. The scope for offering additional services, such as BrightHouse-style consumer credit, is also being explored.

Example of proposed UGO marketing

Marketing activity – led by the Darlington-based agency Charles Hollywood – is also set to be beefed up, including a campaign featuring the famous strongman Geoff Capes (“due to the strength of the UGO deals”), a rugby league sponsorship deal, and seemingly infinite scope for UGO-related messaging puns.

Against the backdrop and excitement of the UGO launch, the lack of any new Haldanes-branded stores since early 2010 has understandably raised questions among commentators about the future of the eponymous fascia, particularly following the news that one existing Haldanes store (in Biddulph) will shortly be converted to the UGO brand.

However, CEO Arthur Harris was clear that the company’s long-term strategy is based around running three separate and “very important” fascias – UGO, with its discount offer; Haldanes, seen as a market town mid-size supermarket format; and a new convenience and forecourt chain, Haldanes Xpress.

Artist's impression of Hartlepool UGO store

The Biddulph shop, he explained, is a location where a large Sainsbury’s has recently opened nearby, and where the company sees a UGO store as being able to compete more effectively than a Haldanes. He also pointed out that the conversion will allow the full UGO fitout to be trialled before it is rolled out to the acquired Netto stores – a process that is expected to involve stores being shut for only 14 trading hours, and will see all 20 shops transformed over a six-week period between mid-March and the end of April.

Harris refused to be drawn on how much Haldanes had paid for the 20 stores, but revealed that the cost of refurbishing and converting them to the UGO brand would be around £2m in total.

Haldanes logo

Following the company’s recent purchase of a petrol forecourt in Scotland, and of a post office and convenience store next to the existing Haldanes shop in Tattershall, Lincolnshire, Harris also confirmed that the firm is in advanced discussions to purchase eight convenience stores that will be rebranded under the Haldanes Xpress fascia. An announcement on this acquisition is apparently expected within the next two to three weeks.

Additionally, the business is already looking at picking up a couple more stores for UGO in Leeds – not, it would seem, among the eight Netto stores that Asda still needs to divest. However, Haldanes hasn’t ruled out acquiring one or two more stores from the OFT disposals list in the coming months.

For the moment, indeed, it seems that the Haldane Group is set to continue growing by acquisition. In response to my question, Arthur Harris said that there were no immediate plans for any new-build stores, but that it was certainly something the business would hope to achieve in the future. As the business expands, he revealed that private label products, a groupwide loyalty card and a dedicated supply chain are all likely to be on the cards. For now, however, the company’s focus would understandably be on “bedding down what we’ve got.”

Closed down Kwik Save store

Given the painful and drawn-out demise of the last big British food discounter – Kwik Save – many of whose stores were in comparable locations to UGO’s, you could be forgiven for questioning the wisdom of Haldanes’ move into a similar market. Towards the end, however, Kwik Save’s flaws typically included dowdy stores, unremarkable customer service and prices that weren’t actually all that cheap – all pitfalls that the UGO team seems to recognise, and be keen to avoid.

Rather, a better comparison is probably with those family discount chains, such as Heron Foods and Farmfoods, that have grown up somewhat below the radar into successful and profitable grocery businesses. Up against stiff competition on several fronts – the big four supermarkets, Iceland, and the hard discounters – both have become successful through a steady process of store openings and acquisitions, and by giving customers want they want: keen prices, decent quality products, and clean, bright stores in convenient locations.

If UGO is able to mesh these same qualities with what promises to be its own distinctive – and hopefully profitable – take on the discounter format, there’s every reason to think that the concept will be a success. As long as it avoids the Kwik Save recipe’s sticky mess, UGO might indeed end up being the very tasty icing on Netto’s partly-baked cake.

Old-style BHS logo, Carlisle (14 Dec 2010)

Back in September 2009, Soult’s Retail View readers seemed to enjoy my exposé of an old-style WHSmith logo at the rear of the branch in Redcar – well over a decade after that logo was supposedly retired.

In November last year, the early 1980s ‘Woolworth’ logo that I spotted in Burton upon Trent also attracted some interest. So, it seems there’s still quite a bit of mileage in hunting out the shop signs that time – and the retailers who own them – forgot!

This time, BHS is the focus of attention – a company that has had a fairly bewildering range of name and logo tweaks over the last quarter of a century. Just as Marks & Spencer was widely referred to as M&S long before it started using that brand itself, the business previously known as British Home Stores only began labelling itself ’BhS’ (with the ‘h’ in lowercase) in 1986.

Although the ‘ribbon’ logo introduced at that time was replaced in 1995, Carlisle’s store – which I recently photographed, above – is one of a few unmodernised stores to still use it on its frontage.

BHS in Newcastle (7 Mar 2010)

The Newcastle store, which is about to close down, features the more recent ‘signature’ logo on a greeny blue background, and with the business name now written as ‘Bhs’ (only the ‘B’ capitalised).

This fascia was was used from 1995 until the mid-2000s, when new and refitted stores – such as those in Middlesbrough and Leicester – started to feature the signature logo on a new black background, coinciding with the introduction of other Arcadia brands instore.

BHS, Middlesbrough (24 Feb 2010)

BHS, Leicester (24 Aug 2010)

Since last year, however, the signature logo has been superseded by a new visual identity – still featuring white text on a dark background, but with the business restyled as ‘BHS’, all in uppercase lettering. This new look is yet to be introduced to many stores, but has already been rolled out across the retailer’s website, POS displays, instore signage and carrier bags.

New BHS logo from website (19 Jan 2011)

The new logo is certainly bold and modern, and seems like a deliberate break from the past – signalling that the brand-new BHS stores have quite a different feel from their predecessors. I do wonder, however, if it’s lost some of the personality of the old BHS logo, given that so many other retailers – Barratts or Warehouse, for example – use a very similar, understated uppercase typeface.

Still, it won’t be too long until we get to see the new logo and store design in the flesh at BHS’s relocated Newcastle store. On current form, Carlisle, meanwhile, may have to wait until the next logo revamp in 2025…

New and old logos

Last week’s news that the celebrated Wellworths store, in Dorchester, is being forced to change its name by Shop Direct reignites one of the most interesting threads to emerge from Woolworths’ collapse – the battle for the good bits of Woolies’ legacy.

The gist of this latest development is that Shop Direct – who, you’ll remember, bought the Woolworths brand from the administrators following the retailer’s collapse – was apparently content for Wellworths to keep its current name, provided that the business curtailed any expansion plans.

According to Wellworths’ statement, Shop Direct “initially supported the opening of the former Woolworths store in Dorchester as Wellworths, but then sought an agreement which would place limits on the growth of the business under the Wellworths name.”

It continues: “Regretfully, rather than accept those limits, Wellworths have decided to replace the Wellworths name with Wellchester over the course of the next two years.”

Wellworths store in Dorchester. Photograph by Nigel Mykura

Inevitably, the ‘well worth the money’ tagline will have to go too, with trade mark details on the Intellectual Property Office (IPO) website suggesting that it will be replaced with (the admittedly rather bland) ‘something for everyone.’ If one is being critical, it’s also fair to ask whether Wellchester – a name so obviously associated with the retailer’s place of origin – is the best brand for rolling out to other parts of the country. Still, the fact that the new name can still be abbreviated to ‘Wellies’ was surely part of the thinking behind it.

Screenshot of Shop Direct's Woolworths.co.uk site (2 Nov 2010)

No-one disputes that Shop Direct, like any other business, is entitled to protect its brand – but at what price? Time will tell whether the benefits of its actions outweigh what seems to be the overwhelmingly negative reaction from both the media and the public.

Writing on Twitter, for example, the editor of industry bible Retail Week remarked that “Shop Direct are idiots for making Wellworths change its name”, describing the move as “astonishingly petty.” His colleague, George MacDonald, agreed, branding the move “heavy-handed.”

Other Twitterers, such as dorset_flickr, voiced similar views, remarking how it was “interesting that such [a] big company feels so threatened by [a] name that isn’t [the] same – obviously Wellworths could go places.” Comments about Shop Direct’s actions on the Dorset Echo website have been similarly uncharitable, with the words “petty” and “heavy-handed” consistently used.

All this reaction matters, because these are the same people who will determine the success – or not – of Shop Direct’s own Woolworths.co.uk operation. Merely owning the Woolies name isn’t enough – Shop Direct needs to understand the heritage of the brand that it’s acquired, and to harness the goodwill that used to be associated with that name. Without that magic, the business is just Littlewoods with a different label.

Alworths fascia

Perhaps the nub of the issue is that Wellworths and the other fledgling ‘son of Woolies’ enterprises, such as Alworths and Smallworths, seem to have understand what people most liked about Woolies, and have embraced those cherished values of friendliness, warmth and convenience on the high street – values, indeed, that are challenging to replicate in an entirely online operation, however much pic ‘n’ mix you’re able to send out by City Link.

Instead of Shop Direct fighting battles for Woolies’ legacy – and Alworths MD, Andy Latham, is understandably coy about what the Wellworths decision might mean for his own chain – it could do worse than learn from the successes of its not-quite-namesakes.

Thank you to Nigel Mykura for the use of the photograph of Wellworths, which is © Copyright Nigel Mykura and licensed for re-use under the Creative Commons Licence.

Yet Another Sale

This guest post was written by Simon Barnett. Graham has kindly allowed me to write a few words on the subject of discount retailing. I have experience in this area and regularly contribute to a website about online discount codes.

Reading Graham’s post about his visit to Barnard Castle, I was struck by his observations of the discounting approach that’s been taken by the Edinburgh Woollen Mill chain of stores. Like many retailers, it seems that here is an example of a business that believes that the best way to succeed is by trading at the “bargain bucket” end of the retailing spectrum.

It’s clear that many retailers take such an approach because they believe that serious discounting will lead to a significant increase in sales and profitability. But such thinking may not necessarily ring true. Competing on the basis of price in this way has some inherent dangers.

Damaging the brand

In my local high street there are a number of stores that seem to have cropped up in the last few months. They are selling “everything for a pound”, or are already having a “clearance sale”. They probably won’t be there by Christmas. But they’ll be replaced by other stores with similar product ranges.

As consumers, what do we think of these shops? We may well think that there’s the chance that we can pick up a bargain. But we also know that they are unlikely to sell high quality goods. We probably wouldn’t choose to buy a High Definition television set, for example, in one of these stores. That’s because we tend to think of cheap goods as being of a low quality.

This encapsulates the problem that faces many retailers, both on the high street and when trading online.

If they discount too heavily then consumers will naturally start to question what is being offered. Are the products going to be safe? Will they last? Why were they so much more expensive to begin with?

Once consumers start to question the quality of products on offer, it’s a slippery slope for the retailer. Before long, customers will start to drift towards alternative stores when it comes to making quality purchases.

In short, the brand will have suffered.

Hitting profitability

But this damage to the brand is not the only danger. The problem with discounting too heavily is that it starts eating into margins. This means that the move is likely to be heavily reliant on a significant uplift in sales.

That uplift in sales may not be as dramatic as expected. Alternatively, it could occur but cause its own problems. A retailer would need to consider, for example, whether they would be able to handle a doubling of sales. Do they have the warehouse capacity, the staff numbers and the necessary stock levels?

If not, the increased costs could actually wipe out any gains that have been achieved through the improving sales. Or worse still, the slashed prices could actually cost the retailer more than is earned.

A failure to maintain the low prices, or to provide the required level of service, could lead to yet more problems. Disgruntled customers are often keen to discuss issues with friends, family members and, increasingly, using internet forums.

Understanding online retailing

The internet has allowed many new entrants to appear in numerous markets. It could be argued that it’s never been easier to open a store. It’s certainly never been easier to reach a wide audience.

This has led to many inexperienced business owners looking to the internet as some sort of cash cow. The reality, however, is often frighteningly different to their expectations.

Attempting to compete with other internet retailers by constantly lowering prices is a hazardous approach. Many larger retailers will have negotiated better deals with suppliers, ensuring that they have larger margins to work with. Sometimes a smaller store simply can’t compete on price. At least, they can’t if they wish to remain profitable.

The key to success is surely understanding that selling online isn’t always about pricing strategies. Consumers are actually willing to pay more if they believe that they are receiving high quality products and a good level of service. As mentioned above, negative stories soon spread online, but positive ones do too.

If a retailer can build up a good reputation online then they can actually charge a premium for what they have to offer. Does this mean ignoring pricing? No, but it does mean taking a realistic approach.

Provide great service levels

John Lewis, the UK department store chain, are famously “never knowingly undersold”. They promise to price-match with competitors. By doing so, they ensure that they are seen as offering a good deal. But they don’t desperately discount products. In fact, they won’t price-match with online retailers.

That’s because they know that some internet retailers are simply offering unrealistic prices. But it’s also because John Lewis don’t need to compete on those terms.

They’ve built up a strong reputation. Their staff are generally knowledgeable and customer-focused. These are the things that consumers will pay extra for.

Building a great business should be all about the customer. We all want to feel like we’ve got a bargain deal. But that’s not just about the price – it’s about the entire shopping experience. That’s something that some retailers are still learning.

Existing Kingston store

The much-blogged-about Swedish hardware retailer Clas Ohlson published its sales figures for June yesterday.

What’s interesting is that sales for the UK are now being stripped out from those of Finland, giving us a much clearer idea of how the UK business is doing. Total sales were SEK 442m, of which the seven UK stores accounted for SEK 15m. A year ago, the UK business delivered sales of just SEK 5m, with the June 2010 figures representing a seemingly impressive 176% increase – or 203% in local currency. Sales in Clas Ohlson’s home market of Sweden, in contrast, were unchanged year on year.

The trouble, of course, of eyecatching percentage figures like these is that they are not based on like-for-likes – in other words, the year-on-year comparison takes no account of any stores that may have opened or closed in the intervening period.

To give another example, this is why, at a time when the business is expanding rapidly, the John Lewis Partnership’s trading figures – which again show only the raw increase in sales, not like-for-likes – need to be interpreted carefully. There’s no doubt that both the eponymous department store chain and Waitrose are trading well right now, with the latter’s latest weekly figures, published today, showing a 13% sales increase compared to a year ago. It’s just that once you take out the effect of new stores opened in the last 12 months, the actual sales increase in the established stores is inevitably lower than the headline figure.

Clas Ohlson fascia

Apply this to Clas Ohlson, and you realise that while the June 2010 figures are for seven stores (two of which had, admittedly, only been open for a month), the June 2009 stats are for just two (Croydon and Manchester). On this basis, the threefold increase in UK sales is just about what you would expect, especially since two of the five new stores are the smallest in the estate.

By way of an alternative measure, what happens if we look at each country’s sales figures for June 2010 in relation to the number of stores?

• For the UK, sales work out an average of SEK 2.1m for each of the seven stores.
• Finland has 16 stores and a turnover of SEK 35m – so that’s SEK 2.2m per store, a little higher than the UK.
• There are 42 stores in Norway – with total sales of SEK 182m, that’s an average of SEK 4.3m for each shop.
• The rest of the stores – 56 – are in Sweden. If total sales are SEK 210m, that works out at SEK 3.8m per store.

What does this tell us? Well, it basically confirms the trends that Clas Ohlson highlighted in its own year-end report for May 2009 to April 2010. Here, the retailer notes that “the response from customers to the newly opened stores in the UK has been positive and the number of visitors to date has been higher than the Group average”, but that “the conversion rate and average purchase in the UK have been lower than the Group average, which is generally the case in conjunction with the penetration of new markets.”

Looking forward, the report explains how “Clas Ohlson anticipates that establishing its brand name and position in a completely new market will take time, and that the conversion rate, average purchase and sales will gradually increase in coming years.”

In other words, while the sales densities for the UK stores are indeed currently lower than those of the more established Scandinavian branches, Clas Ohlson’s message is that this is just a normal part of entering a completely new market, and that they’re in it for the long haul.

As more UK stores open, and the Clas Ohlson brand becomes more widely known among British consumers, it will be interesting to see how quickly the UK sales densities can catch up with those in the retailer’s more mature markets.

Upcoming PC World and Currys store in Northumberland Street, Newcastle (17 Jun 2010)

I was curious to read Retail Week’s recent article about the electricals retailer DSGi trialling a small-size dual fascia Currys and PC World store at Bluewater, following its successful introduction of two-in-one megastores in retail park locations such as Leeds, Fulham, Bristol, Hedge End and Merry Hill.

Though not mentioned in the article, anyone walking along Northumberland Street in recent weeks will have noticed that Newcastle city centre is getting a combined high street Currys and PC World too, replacing what was previously Currys.digital and, before that, Dixons. According to the signs on site, the new store is set to open on 12 August, following quite significant renovations to the property.

Northumberland Street scene, Newcastle (17 June 2010)

I understand, incidentally, that the first floor of the Currys building – until recently the Hustler Pool Club and Leo’s Restaurant – is to become a branch of Cotswold Outdoor, while Hustler’s and Leo’s will be opening up in new premises elsewhere in the city centre.

At the same time, DSGi is apparently not the only large footprint retailer looking at more compact sites in urban centres. The DIY market leader B&Q is reportedly set to “open small-format city centre stores in the UK after the success of similar pilot stores run by parent Kingfisher overseas.”

B&Q store. Photograph by David Wright

When it says ‘small’, it’s important to recognise that these will still be good sized stores – though more compact than B&Q’s present smallest sites, 35,000 to 40,000 sq ft is still double the floorspace of a typical Clas Ohlson store, one of the retailers with which a homeware-focused city centre B&Q might be expected to compete.

It does open up interesting possibilities for the types of unit that B&Q might bring back into use, particularly if the retailer is prepared to go for premises that occupy more than one level – former department stores, for example. However, with the first new format stores not set to open for 18 months or so, it will still be a little while before we get to see exactly what B&Q’s venture into town and city centres will look like.

Screenshot of holding page (15 Feb 2010)

Google ‘Vergo Retail’, and the likelihood is that you’ll currently find Soult’s Retail View among the top few search results. Indeed, since this blog launched in July, five of the top ten searches that people have used to find the site have related to the Liverpool-based department store operator, with the Ipswich store proving particularly popular:

• hollister newcastle: 262
• vergo ipswich: 252
• vergo retail: 145
• vergo retail ipswich: 84
• wilkinsons logo: 81
• clas ohlson: 63
• co-op department store norwich: 48
• hollister eldon square: 47
• vergo department stores: 47
• woolworths closing down: 47.

I suspect that the main reason why this blog has consistently shown up so highly in Google has been for want of much competition: other than a dedicated site for its famous Lewis’s store in Liverpool [broken link removed], Vergo has lacked any online presence of its own to date.

However, given the evident interest from people searching for information about its stores, I’ve always thought that Vergo has been missing a trick, and wondered how long it would be before a company website appeared. Consequently, even though it may mean that my own Vergo-related traffic takes a hit, I was  pleased to see that a holding page is now in place at