UGO store, Eston (4 May 2011)

The 20-strong chain of UGO supermarkets is to be snapped up by “a well-known and established brand name”, I understand.

Subject to legals being completed within the next couple of days, all the stores traded by UGO Stores Limited will transfer into the ownership of a new – and as yet unnamed – operator. All store staff will transfer under TUPE to the employment of that operator, though a number of staff at the current UGO head office are expected to lose their positions. It’s not clear whether the UGO brand will be retained, or whether the stores will be rebadged under the new owner’s established fascia.

Signage at UGO store, Eston (4 May 2011)

I understand that UGO’s owner, Arthur Harris, had previously entered discussions, in September, with a national retailer that had expressed an interest in acquiring a major shareholding and substantially investing into the UGO business, in order to secure its future and expansion. However, I’m told that the potential purchaser pulled out of that deal on 11 January – a day ahead of the planned completion date – leaving UGO in what Harris has described as “a very difficult trading position”.

Today’s news comes almost exactly a year since UGO’s press launch, when the fledgling chain’s bosses announced their plans for the tranche of ex-Netto stores that they had acquired. Pledging to be “the icing on the Netto cake”, UGO took over 20 of the 47 sites that Asda was required to divest for competition reasons following its takeover of the Danish hard discounter, including four North East stores at Stanley, Ashington, Eston and Hartlepool.

UGO store, Stanley (2 Dec 2011)

After what Harris admitted were some early “mistakes”, there were signs of improvement instore – in terms of product, offers, price and customer experience – when I visited four of the Hull and Barnsley sites back in November. More recently, however, there has been continued speculation about the business’s prospects, with several Soult’s Retail View readers reporting depleted stock levels at their local stores.

Basket POS at UGO Monk Bretton (11 Oct 2011)

While the ex-Netto stores taken over by Asda and Morrisons seem to have been a big success – taking advantage of those retailers’ existing scale, pricing muscle and familiar brand – UGO, as a small and new operator, has struggled to make a lasting impression, despite doing a good job with its POS materials and local marketing campaigns.

UGO ad in Hull Daily Mail, October 2011

Price, ultimately, seems to have been one of the major factors behind the chain’s struggle to maintain sales: adopting a Netto-style hard-discounter model was always an ambitious idea, yet UGO’s supply arrangements – with 85% of stock sourced from Nisa – just didn’t give it the room it needed to be highly competitive on everyday pricing.

Harris – who will play no future part in the UGO business – believes that the overall economy has also been a factor, however. Speaking to me today, he said:

“I believe there is very strong evidence to show that the sector has worsened dramatically since we embarked on the UGO journey a year or so ago. It was always going to be a challenge but one I feel we would have achieved in normal trading conditions.

“I wish everyone who was part of UGO and gave everything to achieve that challenge all the very best for the future and thank them again for their huge commitment.”

Trinity Square, Gateshead (18 Dec 2011)

It may have taken over a year to get started following the Get Carter car park’s demolition, but building work at Gateshead’s Trinity Square is now proceeding apace.

Construction of the £150m development only began at the start of November, but the speed of progress has been impressive since I photographed the first section of steel frame less than two months ago (below), close to where the car park entrance ramp used to be.

Start of construction at Trinity Square, Gateshead (4 Nov 2011)

That part of the scheme now towers over the adjacent three-storey New Century House (formerly the Co-op department store; now Argos and other shops), giving a first sense of the development’s scale along West Street – what is currently, to all intents and purposes, Gateshead’s main shopping thoroughfare. As well as the steel frame, concrete floors and staircases are also starting to go in.

Trinity Square from West Street, Gateshead (18 Dec 2011)

Further down West Street, another section of Trinity Square is taking shape opposite the existing Iceland and Heron Foods stores.

Trinity Square from West Street, Gateshead (18 Dec 2011)

Overall, it’s possible to start making out the shape of the scheme on the ground in relation to the numerous artists’ impressions that the developer, Spenhill (a subsidiary of Tesco), has made available, even if the images do make West Street look unfeasibly wide. When complete, the development will include a 175,000 sq ft Tesco Extra store, an additional 170,000 sq ft of new retail and leisure space (comprising up to 42 shop units and kiosks), over 750 parking spaces, and a 993-room student village. I understand that several well-known retail names are already lined up for the scheme, though one or two are likely to be relocations from older or overrented space elsewhere in the town centre.

Artist's impression of Trinity Square from West Street. Image courtesy of Spenhill

Unsurprisingly, the Trinity Square development has both its fans and its detractors. When I blogged about the scheme back in July last year, one reader, Seamaster, lamented the demolition of Owen Luder’s iconic car park, while James lambasted my assessment that “the Tesco store is properly integrated, visually and physically, into a wider scheme that is bold and modern.”

Anyone who follows my blogs or tweets will know that I’m not always an enthusiast of Tesco. However, from the perspective of both a retail commentator and a Gateshead resident, I stand by my positive view of the development. For me, the scheme’s unashamedly modern design and scale is much more successful, for example, than the strange modern-classical hybrid adopted by Newcastle’s recent Eldon Square extension (below).

Clayton Street frontage, Eldon Square (16 Feb 2010)

The potential of a monolithic Tesco development also seems to have been avoided, both in terms of physical connectivity and the mix of uses.

Jackson Street, Gateshead (18 Dec 2011)

With regard to the former, the plan and images show additional shops lining West Street and High Street, as well as a new store-lined street that will connect West Street to High Street via the new town square. Together with a further pedestrian link, to Jackson Street (emerging beyond Hutchinsons in the photograph above), these connections should ensure that Gateshead town centre’s existing businesses – including recent arrivals such as Poundland (in the former Woolworths) and Wetherspoon’s – benefit from the extra footfall that the development is bound to generate.

Overall, Spenhill predicts that the scheme will result in an increase in the town centre’s retail turnover potential from £74m to £160m, and that Gateshead’s RetailVision CentreRanking will “improve by over 500 places”.

New Poundland store, Gateshead (21 Sep 2010)

In terms of the mix of uses, the development also seems to get things right. In addition to the retail space, the introduction of leisure uses and a sizable student housing component should help to address two of Gateshead town centre’s other flaws – a very limited bar and restaurant offer, and next to nothing in the way of town centre housing, both of which currently create an eeriness and lack of activity at night.

Poster at Trinity Square, Gateshead (18 Dec 2011)

For now, however, Gateshead shoppers still have to wait a few years longer before the development is complete. The latest issue of Gateshead Council News reports that the current Tesco store will close in mid-2012, with the new store (on much of the same site) opening in spring 2013, and the student housing being completed in summer 2014. A temporary Tesco (probably in the Metro format, given the unit’s size) is expected to operate from the old Kwik Save site in the High Street in the interim.

Former Kwik Save, Gateshead (18 Dec 2011)

Apart from the buzz that the students on site will bring to the scheme, Trinity Square will mean that Gateshead’s other residents also finally have a town centre that is a viable place to shop and go out in, rather than always having to head to Newcastle or Metrocentre.

At a time when Mary Portas and others are encouraging us to support and regenerate our local high streets, bringing Gateshead town centre back to life – through a bold mix of retail, leisure and housing – must surely be a good thing.

Closing-down poster at Newgate Street Co-op, Newcastle (2 Dec 2011)

Newcastle city centre’s Co-op supermarket is to close down this month, bringing to an end nearly a century-and-a-half of Co-operative presence in Newgate Street. Posters in the windows and instore – which I spotted while passing by yesterday – reveal that the store will ‘cease trading as a Co-operative’ at 6pm on New Year’s Eve (31 December).

Former Co-op department store, Newgate Street (16 Feb 2010)

The food hall is the last remaining part of the former Co-op department store, which closed in 2007, and there has been speculation about its long-term future ever since – both in terms of its competitive position and the expected redevelopment of the building in which it sits.

For many years, the Co-op was one of a handful of supermarkets in Newcastle city centre – alongside Marks & Spencer’s food hall and the now-demolished Safeway (previously Presto) in Clayton Street – and had the advantage of the biggest range and longest opening hours of the lot.

Sainsbury's Local, Gallowgate, Newcastle (10 May 2011)

More recently, however, competition has intensified, with Waitrose opening in nearby Eldon Square and Tesco Metro taking a unit roughly where Safeway used to be in the redeveloped Eldon Square South. Reflecting the national trend of big grocers moving into convenience, the city has also seen a proliferation of smaller supermarkets, including two Sainsbury’s Locals (in nearby Gallowgate and at Central Station) and a Tesco Express (Eldon Garden), as well as a recently opened Londis Metro in Grainger Street.

While the environment around it has shifted, the Newgate Street Co-op has failed to keep up. Even two years ago, I described the rump supermarket as feeling “unloved and behind the times”, noting the “bored-looking staff, long queues (as usual), and numerous broken light fittings that create an overall feeling of gloom.”

Old 'Food Hall' signage, Co-op, Newgate St, Newcastle (9 Nov 2009)

Despite the apparent lack of investment or attention to detail inside the store, last year’s replacement of the old ‘Food Hall’ signs with ones bearing the new ‘Co-operative Food’ identity suggested that the Co-op might, in fact, be planning on staying around for a while. Indeed, even when long-awaited plans for the building’s re-use for retail, hotel and leisure were approved earlier this month, it was stated that the Co-op’s food store would be retained as part of the scheme, despite plans for a new (but much smaller) Co-operative Food store, in the old Envy unit in Market Street, having come to light a week earlier.

New Co-operative Food signage (20 May 2010)

Nevertheless, the Co-op food hall’s surprise closure in Newgate Street is likely to facilitate the Redbox-designed plans to revamp the iconic building that it occupies. The shop’s strange position within the property – largely the result of having to screen it off from the abandoned department store and stair towers – would always have necessitated some reconfiguration and resulting disruption to business.

So, what of the redevelopment itself? First of all, it’s important to appreciate the extent and interest of the existing property. While the Grade II-Listed Art Deco section facing Newgate Street – built from 1931-32 to replace the original 1870s premises, and extended by three bays in 1959 – is the most familiar part of the old Co-op department store, there are also some noteworthy Grade II-Listed buildings around the corner in St Andrew’s Street.

St Andrew's Street buildings, former Co-op, Newcastle (9 Nov 2009)

As David Lovie notes in his useful (but now quite old) ‘The Buildings of Grainger Town’ book, these were built in 1902 as an extension to the original 1870s Co-op store, so are the oldest surviving part of the property. Happily, these will be given a new purpose as the entrance to the 231-bedroom Travelodge that is set to occupy the upper-floor space within the 150,000 sq ft scheme.

St Andrew's Street buildings, former Co-op, Newcastle (9 Nov 2009)

According to the useful project update on the architects’ website, a gym is expected to occupy the basement, while the ground floor will house six retail or restaurant units. Interestingly, the piece – which also assumed, at the time, that the Co-op supermarket would remain in place – states that “all tenants but one have already committed to the scheme”, which will no doubt prompt all sorts of speculation about who might occupy the space.

The property’s location next to The Gate leisure complex means that restaurants or bars are an obvious choice, but its position in relation to recently opened big-name stores - opposite Debenhams and New Look, and close to Next – makes fashion retail a possibility.

All in all, then, it’s difficult not to be positive about the plans for the property. A historic building is going to be brought back into use after five years of near-vacancy, while the promised ground-floor uses should help generate street-level activity and footfall in Newgate Street. Meanwhile, any loyal Co-op shoppers look set to be catered for by a small store elsewhere in the city centre.

For all that the present Co-op supermarket is unlikely to be widely missed, I hope that the rather clinical head-office posters announcing the store’s closure will be replaced in due course by something more bespoke. After all, when a business has traded from the same site since the 1870s – supported by generations of Newcastle families – shoppers surely deserve a warmer expression of gratitude than a passing ’Thank you for your custom’.

Tindale & Stanton logo

A family-run bakery and supermarket supplier based in County Durham has been saved from closure.

Bakery Products Limited has acquired the assets and goodwill of Hobson Foods Limited (in administration), which traded as Tindale & Stanton. The new business will continue to trade as Tindale & Stanton Limited from its existing premises in Burnopfield, near Gateshead. Bakery Products already owns the Woodhead Bakery in Scarborough, which it rescued from administration earlier this year, and has gone on to become a major supplier to the UGO supermarket chain.

Woodhead store in the bakery's native Scarborough (24 Jun 2011)

A familiar brand to many in the North East, Tindale & Stanton is a long-established, traditional baker originally founded by Bill Tindale. Serving the region for over 25 years, there are two main parts to the business: supply of a full range of bakery products to local retailers, fish and chips shops and cafés via its modern refrigerated vehicle fleet; and a wholesale division supplying a number of national supermarket chains and retailers with branded pies and baked goods.

In August this year, the company unveiled a ‘beef and broon’ pie, made with locally sourced Mordue ale and Northumbrian beef, and sold in Asda stores across the North East – part of a range that the new owners intend to retain and grow.

In recent years, however, Tindale & Stanton has also faced some challenges. After the business collapsed into administration in 2008, former managing director Peter Frankland formed Hobson Foods to rescue the business’s production facilities in Burnopfield and Gateshead, and 160 of its 300 jobs. A year ago, the smaller Gateshead bakery was closed, with its 16 staff transferred to the headquarters on Burnopfield’s Hobson Industrial Estate.

Last year, the business reported a slightly increased pre-tax profit of £122,689 on sales of £7m for the year ending May 2010. I understand, however, that recent sales have suffered as a result of lost business following Asda’s takeover of Netto. Tindale & Stanton was previously a major supplier to Netto, accounting for annual sales of £2.5m – or more than a third of its total turnover.

Netto store in Gateshead

Commenting on the acquisition, a spokesperson for Bakery Products told Soult’s Retail View:

“When Hobson Foods became available, we saw a unique opportunity to save a successful business that shares our traditional family bakery ethics.

“Tindale & Stanton will complement and enhance the current range offered by the Woodhead Bakery. The two businesses have strong synergies in that each is well known and respected in its respective geographical area with a focus on quality, range and value for money

“The acquisition also facilitates economies of scale through shared management and resources and opens up a variety of new opportunities to grow the Bakery Products business.

“It is planned that the 122 Tindale & Stanton staff in place when the acquisition was agreed will retain their positions. However, we understand that, regrettably, a small number of redundancies have taken place over the last few weeks.

“This is the start of a brand new era for the business which we firmly believe has a very bright future.”

As I reported earlier this month, Woodhead-branded bread, cakes and pies have already been selling well in UGO, with customers seemingly appreciating the freshness, value and local provenance of the products.

Woodhead bread products at UGO Boothferry (11 Oct 2011)

As well as securing a successful wholesale business, the purchase of Tindale & Stanton – whose products are already sold in UGO shops – provides further interesting vertical integration opportunities for the 20-strong UGO supermarket chain as it seeks to lessen its reliance on Nisa-sourced products.

Soon-to-be Heron Foods, Wallsend (15 Nov 2011)

After much speculation, family-owned frozen food specialist Heron Foods has revealed itself as the new occupant of Wallsend’s former Woolworths store.

Following my visit two months ago, I reported that the property at 2-4 High Street East – vacant since the shortlived Well Worth It moved out – had gained a ‘let agreed’ sign. Then, by a fortnight ago, the shutters had been painted blue and the Well Worth It signage removed, revealing traces of old Woolworths lettering underneath.

Former Woolworths, Wallsend (22 Sep 2011)

Former Woolworths, Wallsend (4 Nov 2011)

Now, following a helpful Twitter tip-off from @waiteIT, I was able to pay a return visit to see the store’s new Heron Foods signage in place. It’s just a coincidence, of course, but the building’s blue and yellow cladding is a much better match for Heron Foods’ corporate colours than it ever was for Woolworths’.

When I visited, there was no indication on site of when the store would open, and the publicity-shy retailer’s web presence – just an ‘under construction’ page – means that information on Heron Foods and its 160+ (and growing) stores can be hard to come by. However, one quick call to the head office number and I was able to find out that the Wallsend store is set to open this coming Monday, 21 November.

Heron Foods website (17 Nov 2011)

The reuse of any former Woolworths is good news, but the arrival of a new supermarket on Wallsend High Street makes the story doubly significant. As I’ve noted before, Wallsend town centre was dealt a blow when the Co-op supermarket closed in 2009, and Morrisons – who had bought the site – aborted plans to open in its place. The recent conversion of the town’s Netto to Asda has partly helped to plug the gap, but its location, in Hadrian Road, means that there are limited footfall benefits for the High Street proper.

With the planned redevelopment of the Forum shopping centre – including a new, large supermarket – not expected to complete until at least 2013, Heron Foods’ move onto Wallsend High Street is a canny one. Its value offer – increasingly featuring dry as well as frozen goods – is likely to appeal to cost-conscious local shoppers, while the decent-sized ex-Woolies store is big enough to feature a wide product range.

The retailer will surely be hoping that by the time any new competitor opens, Wallsend’s shoppers have already got themselves into the Heron habit.

Sainsbury's Local (formerly Woolworths), Hessle Road, Hull (11 Oct 2011)

While tearing around Barnsley and Hull visiting UGO supermarkets last month, I was pleased to be able to work in an unexpected ex-Woolworths. Not knowing Hull very well at all beforehand, I hadn’t realised that the UGO supermarket in Hull’s Eton Street was close to Hessle Road, where numbers 306-310 – today’s Sainsbury’s Local – once housed a Woolies store. The property’s blank upper-floor windows and ground-floor vinyls do present a rather disappointing face to the street, but the Sainsbury’s store itself seems popular enough.

I believe Hull had as many as five Woolworths stores in the past, but only one of these survived until the retailer’s demise in 2008-09. The large city centre Woolies at 4-5 Whitefriargate was one of the first in the country (store #6), opened in 1911 but closed down on 7 April 1984. Today, the building houses the fashion retailer Peacocks.

Sainsbury's Local (formerly Woolworths), Hessle Road, Hull (11 Oct 2011)

Hessle Road (#169), above, opened next, in about 1924, followed by Holderness Road (#710) around 1938, and another city centre store, at 59 King Edward Street (#919), in 1956. Hull’s final Woolworths, in Anlaby Road (#957), opened in 1957.

However, while the King Edward Street shop survived until the end, the three other stores all seem to have closed by the late 1980s. The store at 455-457 Anlaby Road is also now a Sainsbury’s Local, while the landmark premises at 272-284 Holderness Road are divided between Heron Foods and a branch of Lloyds TSB.

Staff of Hessle Road Woolworths in 'The New Bond', October 1937

As elsewhere, the relatively early closure of the Hessle Road Woolworths seems to reflect the street’s changing status as a shopping destination. Rather like Byker’s Shields Road, which also lost its Woolies in the 1980s, my understanding is that Hessle Road was once one of Hull’s prime out-of-town retail thoroughfares. Today, like Shields Road, it’s no longer the major draw that it was, but it continues to play an important role in meeting the retail needs of its local community. Most notably, the northern variety store institution Boyes continues to trade from the site at 226-234 Hessle Road where it first opened a drapery shop in 1920.

Sometime after Woolworths closed, 306-310 Hessle Road hosted a branch of the Hull-based convenience chain Jacksons Stores, part of the same long-established company that had boasted at least six grocery or bakery shops in Hessle Road by 1936. Following the sale of the business to Sainsbury’s in 2004, Jacksons’ 114 stores, including Hessle Road, initially became Sainsbury’s at Jacksons, before later being rebranded to Sainsbury’s Local.

Woolies at 306-310 Hessle Road may be long gone, but today’s occupant is, in its own way, just as much a part of the area’s long retail history.

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.

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.

Waitrose Jesmond... in Grimsby (23 Aug 2011)

Map blooper stories are always good value, whether it’s because they’ve erased Wales or located Shrewsbury in the middle of a river. Now, potential John Lewis Partners in Lincolnshire may be disappointed to find that Waitrose is not, in fact, about to open a store on their doorstep.

The Partnership’s jobs site highlights upcoming Waitrose locations, including the store in the upmarket Newcastle suburb of Jesmond that is due to open in November. The 7,500 sq ft shop will be the North East’s fourth Waitrose (after Hexham, Eldon Square and Ponteland), but the first to open under the ‘Little Waitrose’ convenience banner.

Existing Waitrose convenience store, Leeds (21 Jan 2011)

However, it seems that not everyone at the Partnership is quite as clued up about the North East. According to the map, Jesmond has been shifted 116 miles down the coast, and is now somewhere near Grimsby in North East Lincolnshire.

I know Grimsby is a major centre for the food industry, but surely the idea is to transport produce from there to the Jesmond store, rather than the other way round?

Interior of Asda Supermarket, Gateshead (8 Aug 2011)

While some communities on Tyneside – among them North Shields and Wallsend – still have to wait a little longer for their Netto stores to be turned into Asdas, the process of converting 147 ex-Netto sites into Asda Supermarkets is continuing apace. Stores in Westerhope, Lemington and Gateshead are among those that have been transformed in the last couple of months.

Following on from my ‘undercover’ visits to ex-Netto UGO stores on Teesside and an ex-Netto Morrisons in Tamworth – all among the 47 stores that Asda had to divest for competition reasons – Asda invited me, and my camera, to check out one of the stores that it’s kept and converted over to its own fascia: the shop at Old Fold Road, a mile or so from the centre of Gateshead, which serves the recently built St James’ Village housing development as well as more established, working-class communities in the Felling and Sunderland Road areas of the town.

Asda Supermarket, Gateshead (8 Aug 2011)

The focus of this first blog post is the store’s transformation from Netto to Asda, looking mainly at the revamped shop’s layout, ranges, and look and feel.

As well as letting me look around, Asda also challenged me to carry out a full weekly shop in the store and to test the much publicised Asda Price Guarantee: the company’s pledge to be “10% cheaper on your comparable grocery shopping” compared to Tesco, Morrisons, Sainsbury’s or Waitrose. I’ll blog about my shopping trip – and reveal whether it was indeed cheaper – in a second post to follow soon.

Asda Supermarket, Gateshead (8 Aug 2011)

...and in its former guise as Netto (28 May 2010)

So, what is the store like? Externally, as you might expect, it’s little changed – just like the ex-Netto Morrisons and UGO stores that I visited before. In this case, the Netto signage has been replaced by the new ‘Asda Supermarket’ brand – signalling the store as a smaller-than-usual Asda – while the bright yellow window vinyls have been replaced by similar ones in pale yellowy-green.

The store also retains the slightly unwieldy separate entrance and exit lobbies that were so beloved of Netto stores, and that got me similarly confused in Eston.

Asda Supermarket, Gateshead (8 Aug 2011)

However, once you enter the store the extent of the interior transformation becomes clear. The entire shop was gutted and refitted in the impressively short two-and-a-half weeks betwen Netto closing and Asda opening, and it does now feel like an entirely new store.

Interior of Asda Supermarket, Gateshead (8 Aug 2011)

Configuring the space to accommodate the sheer increase in SKUs – from Netto’s 1,800 product lines to around 10,000 now – would always have made the shop look different. However, Asda’s investment in new shelving, floors, ceilings and wall finishes replaces the slightly dowdy Netto shopfit with a feel that is bright, clean and modern.

Interior of Asda Supermarket, Gateshead (8 Aug 2011)

Though the deep red walls bring to mind the latest Wilkinson storefit, they (and the matching signage) do work well in bringing some warmth and colour to what could otherwise have felt like a crisp but slightly sterile interior.

Red wall finish and signage, Asda Supermarket, Gateshead (8 Aug 2011)

Inside the store, the logical layout of the entrance area is evidently designed to assist shoppers who are just popping in for one or two items. Newspapers and bestselling magazines are on the left as you go in, followed by a ’Food to Go’ section featuring sandwiches, drinks and snacks.

Newspapers, Asda Supermarket, Gateshead (8 Aug 2011)

'Food to Go' section, Asda Supermarket, Gateshead (8 Aug 2011)

On the right are flowers, four self-service checkouts, three regular checkouts, and the kiosk beyond.

Checkouts, Asda Supermarket, Gateshead (8 Aug 2011)

Given the store’s compact size, the kiosk has to perform multiple functions, serving as the customer service desk as well as housing the usual cigarette display and National Lottery terminals. Crucially, it’s also the ‘Click and Collect’ point – a key part of Asda’s strategy to push its non-food offer and build multichannel traffic.

Less logically, spirits are also located at the kiosk – presumably for security as much as convenience purchasing – though their absence from the main wine and beer aisle does make it awkward to buy spirits as part of a full shop.

Kiosk, Asda Supermarket, Gateshead (8 Aug 2011)

Entering the main body of the shop, customers are faced with what seems to be a relatively compact fruit and veg section relative to the ex-Netto UGO and Morrisons stores that I visited.

Fruit and veg section, Asda Supermarket, Gateshead (8 Aug 2011)

However, the multi-tiered shelving units allow a deceptively wide range of fruit and veg products to be fitted into the space, as well as helping to create a colourful and eyecatching display.

Fruit and veg section, Asda Supermarket, Gateshead (8 Aug 2011)

In fruit and veg, as throughout the store, value messages are key – Asda, for obvious reasons, is clearly keen to reassure former Netto customers that the prices on everyday items haven’t suddenly gone up.

Fruit and veg section, Asda Supermarket, Gateshead (8 Aug 2011)

Perhaps trying to tap into the current success of single-price retailers like Poundland, banners and shelf-edge labels highlight items costing £1, while hanging arrow signs draw attention to specific offers or ‘SuperPrices’ more generally.

'SuperPrices' sign at Asda Supermarket, Gateshead (8 Aug 2011)

Apart from fruit and veg, the store’s other major focus of both fresh products and visual theatre is the instore bakery, with an adjacent hot chicken counter.

Instore bakery, Asda Supermarket, Gateshead (8 Aug 2011)

Instore bakery, Asda Supermarket, Gateshead (8 Aug 2011)

Wisely, the bakery is placed in a traditional back-corner location rather than near the entrance as it is in Tamworth’s ex-Netto Morrisons, ensuring that there’s plenty of room both to circulate and to admire the attractive display.

Instore bakery, Asda Supermarket, Gateshead (8 Aug 2011)

On the downside, the store does lack a meat and fish counter, like the one Morrisons has squeezed into the old Netto in Tamworth; for me personally, as a fresh fish fan, that would limit how often I’d use this particular store for my full weekly shop. To be fair, however, I’m not necessarily the core demographic that this particular shop is catering for, and I’m sure Asda has done its homework in tailoring the store’s offer towards the everyday needs of local shoppers.

Oils and bread aisle, Asda Supermarket, Gateshead (8 Aug 2011)

The heart of the store is its aisles of ambient products, and it’s here – in categories such as oils and bread – that the increase in both branded and own-label SKUs is really noticable.

The upcoming blog post about my Asda shop will talk in more detail about how far I was able to get all the items on my shopping list. Generally speaking, though, it’s hard not to be impressed by how much Asda has squeezed into the space, including quite a few categories that never used to be represented in Netto.

Magazines and greetings cards, Asda Supermarket, Gateshead (8 Aug 2011)

I spotted, for example, a pretty extensive display of magazines – complementing the newspapers and bestselling magazine titles by the door – as well as a decent range of reasonably priced greetings cards.

Babywear aisle, Asda Supermarket, Gateshead (8 Aug 2011)

The overall extent of the non-food range is also surprisingly broad given the store’s limited space. It includes stationery, babywear and underwear, as well as books and entertainment, though the latter two did have quite a lot of gaps at the time of my Monday morning visit.

Books aisle, Asda Supermarket, Gateshead (8 Aug 2011)

I was also interested to spot a display of non-food ‘SuperBuys’, featuring an eclectic range of luggage sets, scooters and toasters. The deals – and the deliberately ‘home-made’ look of the signage – are obviously a nod towards the store’s Netto heritage.

However, most of the featured items looked like the same Asda-branded products that you’d come across in a larger Asda store, meaning that the SuperBuys lacked some of the sheer randomness and element of fun that make the hard discounters’ non-food deals so popular.

Non-food 'SuperBuys', Asda Supermarket, Gateshead (8 Aug 2011)

Nearing the end of my circuit, the store conforms to supermarket layout norms by locating the frozen foods and alcohol furthest from the entrance. Unsurprisingly, the frozen section eschews Netto-style chest freezers in favour of upright ones – similar to those seen in Eldon Square’s Waitrose and other compact supermarkets – to ensure that the maximum number of products can be fitted within the space.

Frozen aisle, Asda Supermarket, Gateshead (8 Aug 2011)

Frozen aisle, Asda Supermarket, Gateshead (8 Aug 2011)

Though lacking the aforementioned spirits, the alcohol section is also impressive in its range, and compares favourably with the old Netto offer – including, I was pleased to see, a cabinet of chilled beers and wines. Selling drinks that people can consume straight away seems like an an obvious move, and more often than not the major grocers’ convenience stores do it. However, I’m always surprised at how many larger supermarkets don’t have a chilled drinks cabinet, including M&S – surely the ultimate impulse purchase grocer, and the place where you stock up on your way to dinner parties.

Beers and wines, Asda Supermarket, Gateshead (8 Aug 2011)

To put things in context, it’s worth flagging up that I’m not usually an Asda shopper, partly because the store nearest to me – at Metrocentre – is overwhelmingly huge, full of children, and a nightmare to drive to. When I do shop there, it’s more often than not to check out the George clothing or other non-food ranges rather than to do a full shop – for which I prefer to go to Waitrose or Morrisons. Asda might well be cheap – more of which in my next post, of course – but at the vast and busy Metrocentre store you do pay for it in increased stress levels.

Having said all that, it’s hard not to be impressed with the new Asda Supermarket at Old Fold Road. The transformation from Netto is remarkable, and Asda’s investment in the store – and, by extension, the local community – is admirable. The attractive store environment, improved ranges and lovely staff – including ex-Netto colleagues supplemented with new recruits – are all big pluses, as is not having to walk around a huge store to find everything that you want.

'Asda in your Community' display, Asda Supermarket, Gateshead (8 Aug 2011)

Living two-and-a-half miles away, it’s fair to say I probably wouldn’t go back to this particular store on a regular basis. However, if I lived in the area, I’d certainly have no qualms about using the store for either convenience purchases or the bulk of my weekly shop (though preferably on a weekday, when I took my photos, rather than the more hectic Saturday afternoon when I carried out my actual shop).

Interior of Asda Supermarket, Gateshead (8 Aug 2011)

Last week, Retail Week reported that Asda had seen sales uplifts of 50% in its converted Netto stores, and that there were now plans to open 250 more smaller Asda Supermarkets instead of the 100 that had been originally envisaged. It’s not hard to see why sales are buoyant, given the improvement in the shopping environment and offer; indeed, staff at Old Fold Road told me that while former Netto shoppers were still happily coming in, they were also seeing plenty of new people who had never set foot in the store while it was Netto.

In recent history, big supermarket takeovers – be it Somerfield buying Kwik Save, Morrisons snapping up Safeway, or the Co-op buying Somerfield – have rarely gone to plan, typically resulting in disgruntled customers and haemorrhaging of combined market share. However, if Asda can maintain the early momentum across its converted estate – keeping existing Netto shoppers happy while simultaneously attracting new customers from its rivals – this might finally be a retail takeover that delivers on its promise.

Notice at Netto North Shields (8 Aug 2011)

I paid my first visit to an ex-Netto Asda Supermarket last weekend – more of which in the coming days – but meanwhile the process of converting 147 Netto sites by the end of November continues apace.

North Shields is one of the many Netto stores that’s been mentioned in the 60-plus-strong comments thread attached to one of my earliest posts about Asda’s acquisition of Netto, back in January. Passing by on Monday, I noticed that the store is now in the midst of a ‘Clearance Sale’, ahead of its closure as Netto on Saturday 20 August. After a two-and-a-half week makeover, it will then reopen, as an Asda Supermarket, on Wednesday 7 September.

Netto in North Shields (8 Aug 2011)

Back in June, the Chronicle newspaper ran an article under the headline “Supermarkets ‘are swamping North Shields’”, in response to one independent trader’s frustration over the growth of the big multiples in the area. While it’s true that North Shields has large Tesco and Morrisons stores on its outskirts, the town centre, to be fair, has been fairly poorly served to date.

Co-op in North Shields (8 Aug 2011)

Alongside Netto in Saville Street, the town’s main thoroughfare of Bedford Street plays host to branches of Heron Foods, Iceland and a decent-sized Co-op. However, many shoppers seeking a better balance of range, quality and value seem to head across the Tyne to South Shields’ Asda or Morrisons, judging by the carrier bags that I spot every time I use the Shields Ferry.

Morrisons, South Shields (30 Apr 2011)

Of all the Netto sites that Asda has acquired, North Shields’ has the advantage of occupying a modern building with dedicated parking, yet in a very central location right opposite the town’s Beacon Shopping Centre. If the store’s conversion to Asda encourages more people to stay in North Shields for their weekly shop then that’s certainly something to be welcomed.

Promotion for Tamworth's new Morrisons (17 Jun 2011)

With a visit to an ex-Netto UGO in the bag, and one to an ex-Netto Asda in the offing, it seemed only fair to check out an ex-Netto Morrisons while I was in Tamworth a couple of weeks ago.

As I explained when the news was announced back in January, Tamworth’s Netto is one of 16 initially divested by Asda to Morrisons, with another two – in Salford and Dunstable – added since. The Haldane Retail Group has acquired 20 sites, which it has now converted to its UGO fascia, while Iceland and the Co-op have each bought three. This means that of the 47 Netto sites that overlapped with existing Asda stores, only three remain to be sold in order for Asda to meet its obligations to the OFT.

New Morrisons, Tamworth (17 Jun 2011)

Former Netto, Tamworth, before conversion to Morrisons (4 Apr 2011)

Tamworth’s new Morrisons was built as a Kwik Save in the 1990s, briefly became a Somerfield, reverted back to a Kwik Save fascia, stood empty for a year, and then reopened as Netto less than three years ago. From the outside, the store is little changed from its previous incarnations, though the ‘Tasty Bread’ caption and imagery next to the entrance gives a flavour of what has changed inside. Meanwhile, prominent signs, banners and billboards ensure that the store is highly visible to passing motorists.

As you enter the shop, an instore bakery occupies the space immediately on the right. The location was presumably dictated by the building’s layout and compact size, but it did mean that there was some congestion as shoppers entering the store with trollies tried to get past customers browsing the bread and cakes. At the bottom of the store, there are also small but attractively presented meat and fish counters. So, not the full ‘Market Street’ offer, clearly, but a significant step up from what Netto used to offer in the same space.

There's no missing Tamworth's new Morrisons (17 Jun 2011)

Indeed, the major impression of this Morrisons store is just how much bigger it feels than when it was trading as Netto. It’s perhaps only half or two-thirds of the size of a typical converted Safeway, yet it’s clear that this is a shop where people can do – and are doing – a full weekly shop. The store was doing a decent business when I visited on a Friday lunchtime, with plenty of cars in the car park as well as shoppers arriving and departing on foot.

It’s the first time for a couple of decades – when Sainsbury’s left Ankerside to move out of town – that the Tamworth Co-op supermarket in Church Street has had any significant town centre competition, and it will be interesting to see where Morrisons steals its trade from: the in-town Co-op, Farmfoods or Iceland; the out-of-town Asda or Sainsbury’s; or the much larger, purpose-built Morrisons a couple of miles away in Wilnecote.

Paying for my goods at the till, I was pleased to see that the staff were all smiling, happy and talkative – always an encouraging sign. Indeed, I ended up having some banter with the guy at my till when he started to question whether I was old enough to buy the bottle of wine that was in my basket. This 37-year-old was quite content for the checkout guy to guess that I was 23 – young enough for me to feel flattered, but old enough to actually be allowed to buy the wine.

Overall then, my impressions of this compact Morrisons store were good. It was clean and well stocked, and shows that Morrisons can work effectively in a smaller than usual format. On the other hand, by not having all the instore features – most notably a full ‘Market Street’ – that normally make a Morrisons so distinctive, I couldn’t help feeling that the store lacked just a little of the usual Morrisons ‘personality’. As Morrisons rolls out more smaller stores – as well as its new M Local convenience format – perhaps it can do a bit more to make sure that these Morrisons really feel like a Morrisons.

UGO offers leaflet

Interview headlines:

• UGO stores need to “trade better” but are not “at danger level”
• IT and ordering issues will be addressed
• More UGO stores planned – new Leeds store “in negotiations”
• Own-brand bakery products to be stocked at UGO imminently
• Admits that “full weekly shop” idea was a mistake – “fine-tuning” required on product and price
• Main plan now is to “bed down” UGO

The first part of my interview with Arthur Harris focused on the collapse, earlier this month, of his Haldanes chain. For me, however, a key reason for meeting Harris was to talk about his fledgling UGO business, and – hopefully – to provide some reassurance to the staff who work at those 20 ex-Netto stores.

Here, again in his own words, Arthur Harris talks about how UGO has performed so far, and his plans for its future.

GS: I’ve received lots of emails and comments about from people at ex-Netto UGO stores asking me “Are we safe? Are we going to be all right?” Are you able to give any update on how trade is doing at your twenty UGO stores compared to your initial targets?

AH: I think we’ve made some mistakes, transferring. I think we’ve taken some assumptions probably incorrectly. At the moment, I think we need to get the UGO stores trading better than they are now, and we are looking at every fix possible to do that. Are they at danger level? No, they’re not at danger level today. I don’t know what else to say really. The stores need to trade a little bit better.

I think the Netto model was very much to push goods at the managers to sell, and so it was decided at head office what was being sold when and where to put it. And we probably expect our managers to have a little more input into that, and so we have had issues, ordering issues, and we also have issues with IT.

So, this is not blaming the managers at all for this, it’s an area we hadn’t realised would be so problematic, in both the IT, and from a managerial point of view. That needs fixing, and it will be fixed very shortly. That will help us no end.

We’re embarking upon much more aggressive marketing, once we’ve fixed that. There’s a period with this ordering that’s a major issue, and we need to bed that down, because we’d look very stupid if we embarked upon a huge, aggressive marketing campaign and couldn’t actually back it up once it happened with the consumers.

So, yes, we’re disappointed – I think that’s the right word to say at this moment in time – but there are some major fixes coming on board to put that right. I think we’d have been even more disappointed if we’d have let Haldanes suck it dry of any more money, because I was supporting Haldanes from different businesses of mine, and we supported it quite heavily.

GS: So, you’re basically saying that if trade were to continue as it is now, and you didn’t do anything, you’d have a problem later on, but you’re pretty confident that what you’re proposing to do will sort it out?

AH: We have learnt a tremendous amount with the Haldanes debacle. We sat back and let things happen with Haldanes that went on for quite a period. We will be very much more reactive quickly now, and make fixes quickly, and do things a lot quicker.

We believe, long term, it [UGO] has a good future. We don’t want to stop at 20 stores. We are out there in the market at this moment in time looking for outside investment to come in to expand the group, and that’s investment in the group which includes the bakeries [Scarborough-based Woodhead Bakery, acquired in April] and UGO and everything.

We believe we’ve got a fantastic group. The bakeries give total vertical integration into this, and as from next week we anticipate that the bakeries will start delivering into the UGO stores, with their own produce, which really does make a huge difference to what we’re doing.

Within the bakery we also own something called The Pie People. We own the intellectual property rights on a pie called The Wedge. We sell it to Morrisons – 30,000 or 40,000 of those a week to Morrisons – and to other catering service people, such as 3663. And we sell a vast amount of those.

We do believe we’ve got a fantastic product there, and through The Pie People the plan is that we will expand The Pie People onto railway stations, in booths, and at major events… and also into shops where there’s good footfall. We aim that we will probably open our first Pie People within the next six months, probably in York.

GS: Having your own vertical integration links to the issue of price and availability, and those were two of the things I noticed when I visited a couple of UGO stores in Hartlepool and Eston, a week or so after they opened.

AH: Can I tell you – I’m not a retailer, OK. By default, at this moment in time, I’m supposed to be, but I’m not. I don’t understand it. I employ people, like Richard Collins [Chief Operating Officer] and his team, in the operations side, who are specialist retailers and have been retailers for years and years.

I can understand why I would go out and buy Woodhead’s Bakery, and I can understand that if we can make six sausage rolls, say, for 39p and sell them in a UGO store for 99p, I get 60p across the group. That’s easy, I can understand that.

Where to put those sausage rolls in a shop to sell them, and how to get them to the shop and everything else, isn’t my cup of tea at all. And people look at me strange when you have all these supermarkets and things and say you’re not a retailer. It’s not something I either want to be, enjoy or understand, but I know how to put the deal together.

GS: Two of the big things that you flagged up at that press launch were the fact that UGO would have low prices, and the fact that you could do a full weekly shop.

AH: I think we’ve made a mistake. I think the mistake we’ve made is that people actually don’t want to do a full weekly shop in Netto or UGO. They want good value and to be able to do their full weekly shop at their Tesco, their Asda, wherever, and come to us for their discount and good quality stuff.

What we did notice before, and I think we’ve kept going quite successfully, is that they wanted to come and get the fruit and veg and fresh from us, from a Netto, and they still do that, but we definitely tried to persuade them to do a full weekly shop, and it isn’t what they want to do. And to be fair, I think your blog says it, our prices, we buy from Nisa, and our prices are OK, but probably not where we would want them to be, and probably not where our shoppers would want them to be.

So we have a bit of fine tuning to do now.

GS: I’ve had emails and comments from staff and shoppers and the main thing they keep saying is that UGO is too expensive compared to Netto.

AH: I’ve got to say, I think it’s a little bit perception at times, and I think at times they’re not comparing it against anything because… they’re comparing it against something that wasn’t there before, with Netto, because Netto didn’t have a lot of the products that we’ve put in.

However, I think we’ve got to backtrack, and say, we’ve tried to force a shopper to do something that they actually don’t want to do. So we’ve got to go back, probably to the old Netto option, of putting a lot of products in there that are discounted. So that’s where we’re going.

GS: I understand you’re in negotiations for a new UGO in Leeds… Is that a store that’s currently trading as something else?

AH: No, it’s not, it will be a new store. So we have plans.

When we’ve just made 600 people redundant, and 600 people have lost their jobs, I’m very reluctant to talk in a buoyant way, because I think it’s probably immoral to do that. However, the two aren’t connected, have never been connected. We always ringfenced Haldanes because of the problems we had with the Co-op, apart from putting money into Haldanes [from other Group businesses] to try and keep it going.

But we do think there’s a good future in UGO, we do have to get it right, we have made some mistakes, and we believe that we can get it right.

GS: And presumably there’s also a future for Haldanes Xpress?

AH: We don’t see any problems at all with Haldanes Xpress. We’ve got a superb deli that’s in Folkestone. It’s at a services called Stop 24, the nearest motorway services to the Channel Tunnel.

Stop 24 has been slow to get going itself, and we’ve taken a little bit of a gamble going in there, but we believe that with everything that’s going on there – there’s a new big lorry park going in, customs are putting their offices in there – we think that that’s getting busier by the day.

The deli is a big deli offer, it’s a 60-seater deli eatery, with all homemade foods in there. Pastas, lasagnes, homemade burgers, that sort of thing, and homemade cakes. And along with a convenience store.

GS: Is your plan to open more convenience stores over time under the Haldanes Xpress banner?

AH: I’d like to open more deli eateries as well, and that’s all in our plans. The main plan is to bed down UGO, and the bakery, and get a solid base to expand upon. That is the plan. We’re not going anywhere else. There’s no bigger picture than to bed everything down now, to get everything working correctly. We won’t be expanding any more, doing anything stupid.

I don’t think we have done anything stupid, but I think the UGO deal is just so, so much better, so much better, than the Co-op deal. The stores are in so much better shape, the fabric of the stores is so much better, the refrigeration is so much better. Everything about it is so much better than what we took over from the Co-op.

And if we make a mistake with this, we have to put our hands up and say it’s our fault.

Arthur Harris, Haldanes CEO

Interview headlines:

• Three Haldanes stores could still be saved
• Harris pledges to carry on his legal action against the Co-op
• Blames collapse on Co-op’s alleged failure “to come to the table”, but admits some “mistakes” with Haldanes
• Haldanes estate was losing £100,000 a week
• Uplift in trade at ex-Haldanes stores converted to UGO – more would have followed

As boss of the collapsed Haldanes supermarket chain, which finally entered administration last week, it’s fair to say that Arthur Harris isn’t the most popular figure in retail right now – especially in Scotland, where the chain had many of its stores.

While three Haldanes shops continue to trade for the moment, 20 others have closed, resulting in 600 job losses. In some now-closed locations, such as Kelso, staff had built up decades of service as their store had passed from one owner to another over the years. Those who are now out of work are, unsurprisingly, angry and devastated.

Haldanes store, Belper (23 Dec 2010)

As you’d expect, my previous blog posts about Haldanes have received their fair share of comments from ex-staff and customers. At the same time, I’ve also had many emails from employees and shoppers at both Haldanes and sister chain UGO. Some have expressed frustration, or anger; others have merely been seeking information, particularly with regard to the future of UGO – a separate company, unaffected by the present administration, but run by the same executive team, and part of the wider Haldane Retail Group.

Last week, I met with Arthur Harris while he was visiting the North East, with the aim of getting answers to these and other questions. In short, I wanted to understand what had gone wrong with Haldanes; what was happening with the administration; and what it all meant for the future of UGO and the Group’s other businesses.

Signage at UGO store, Eston (4 May 2011)

While some of the Scottish tabloids have focused on Harris’ apparent penchant for fillet steaks and overseas holidays, I wasn’t interested in that – I just wanted to gain a real, in-depth insight into the past and future of his retail businesses. Through my questioning, and his – pretty candid – answers, I hope I’ve achieved that.

Where possible, I’ve left Arthur Harris’ comments in his own words, but there are some quite significant parts of the interview – mostly relating to Haldanes’ action against the Co-op – that I’ve had to edit or omit in order to avoid getting myself into any legal difficulties.

In this, part one, of the interview, we discuss Haldanes’ collapse; a second, forthcoming, post will focus on Harris’ future plans for UGO, which, he maintains, “has a good future” as part of “a fantastic group.”

Administration of Haldanes

Haldanes store interior (28 Apr 2011). Photograph by Bryan Roberts

When I spoke to Harris last Monday (20 June), Haldanes had yet to formally appoint administrators, so I asked him to give me an update on the present situation.

GS: Where are things as we stand? Obviously you filed the administration order on the 9th.

AH: There’s a period of time between filing that and the administrator – P&A Partnership – taking his appointment. The notice runs out on Wednesday [22 June], and I have now got the papers for the appointment. We’ll have a board meeting tomorrow, and then Haldanes will either go into administration tomorrow or Wednesday.

GS: So why did the stores close so soon? There are lots of examples where administrators are appointed and they try and sell the stores as a going concern.

AH: The majority of the stores are in the landlordship of the Co-op. We’ve been taking advice throughout, and immediately an administrator actually takes his appointment he has to pay rent on the stores. So it was for the benefit of the creditors; it was easier for us to sell the stock through when we were still in control.

The administrator would have had to have shut down the stores immediately, and lay the staff off, so it was purely for the benefit of the creditors that things stayed open.

GS: What was the reason for Biddulph and Broxburn UGOs closing? Was it because they were still owned by Haldanes Stores?

AH: Yes. They weren’t part of the UGO chain, they just happened to have a UGO fascia. They were owned by different companies. The same as now, we’ve still got Haldanes Xpress, with a Haldanes fascia on it down in Folkestone [at Stop 24 services], but it isn’t part of the Haldanes administration.

GS: And what’s the deal in Crieff? I was reading about other businesses being locked out.

AH: There are some sub-tenants in Crieff. The MP for the area, a Mr Gordon Banks, his constituency office is a sub-tenant. There’s a couple of other small businesses, and they’re all up and running again. I spoke to Mr Banks personally and we got him sorted and up and running again. All sorted.

GS: There’s also been talk that four of the Haldanes stores might be bought by other retailers?

AH: It’s three: Tattershall, Wigton and Crieff. We had interest in one other – Tranent – and the administrator thought he may have to keep it going to actually realise that interest. I’ve said I don’t want to keep it going because I can’t guarantee it’s a profitable store – it isn’t, it’s a lossmaking store – so he’s going to pursue other ways of doing that.

As for the other three, the three at the moment are selling through any stock which is available from the other stores, it’s being brought to those three, and those three will probably be sold by the liquidator.

At the end of the day, despite what’s written in the papers, we’re devastated with this. Absolutely. There’s no way I wanted to do this, and I’ve begged the Co-op to come to the table. And if we could have saved this… I’ve put £2m in, and I was quite prepared to write that off, if the Co-op would have met me and discussed a way forward.

GS: And what can you say about people being paid?

AH: Once you file this form for administration, everything stops effectively. Bank accounts stop; everything stops. You’re not allowed to pay people at that point.

However, on the basis that we have stock to sell through, we have to stop people and then say to them “Look, would you mind working to help us sell the stock through for the benefit of the creditors.” At that point you can pay them.

All the staff will get paid. We have paid them the portion from when we said we were filing the notice to them finishing last Tuesday. And that has all been paid. Every penny of that has been paid, as we said we would do.

They will get paid the earlier bit, from the Government, and they will get their redundancies and everything else from the Government.

GS: And the administration also covers Ruston Retail Limited. What does that do, or did?

AH: It didn’t do anything at all. It just held leases on the second part of the deal with the Co-op. It didn’t trade, never traded, it just was a leaseholder.

Harris reveals details of alleged Co-op “breaches”

Noting the ongoing public dispute between Harris and The Co-operative Group over the 26 stores that Haldanes originally acquired from the Co-op, I asked him what the appointment of administrators would mean for this legal action.

AH: I’m so incensed with it that, if the administrator decides not to take it on, I’ve asked if I can buy the case off the administrators, which I would do, and carry on the action against the Co-op.

In response, I put it to Harris that one of the things that had made it difficult to report and to understand his dispute with the Co-op was the lack of information about what, exactly, the Co-op was supposed to have “breached”. I asked him, therefore, what, if anything, he was able to add.

He, in turn, handed me a copy of the ‘Particulars of Claim’ that had been lodged with the High Court of Justice on 10 May (the day before his extraordinary press statement was released), detailing each of the specific “breaches” that Haldanes alleges were made. As you would expect, the document makes interesting reading, but, for obvious reasons, I’ve declined to reproduce any of those allegations here.

Mistakes with Haldanes’ management, fascia

Haldanes logo

When the appointment of administrators to Haldanes was announced, Arthur Harris was clear in pointing the blame, as he saw it, at the Co-op. He claimed that the Manchester-based business had “chosen to either ignore or refuse all of our requests to meet”, and that “this has left us with nowhere else to go.” I was keen, therefore, to quiz Harris on the wider issue of how the Haldanes business had been managed.

GS: Because of the lack of information about the legal action, people have been querying, well, “Is it really all the Co-op’s fault, or is it because these guys haven’t run Haldanes properly?”

AH: Listen, we’ve made mistakes. We would be stupid to say we haven’t made mistakes.

A lot of people were saying that the mistakes were made in the early days. Actually, although I was involved, I was a Chairman. I’m not a retailer. Arthur Harris, per se, is not a retailer. I’m a creative dealmaker. I’ve done that for a number of large companies, and banks, over a long period of time. I was offered this deal, and then hence I offered a share in it to a retailer.

However, it became very evident that mistakes were made in those early days with the people that we had, and so we had to have change.

Harris also told me that, in hindsight, the Haldanes fascia hadn’t worked in some of the locations that he’d acquired from the Co-op, and that more locations would have been rebranded as UGO:

AH: One of the things that we got wrong with Haldanes, I think, was that the fascia that we put up as Haldanes was a bit upmarket for some of the areas that we were trading in.

One of the first comments that we ever got, when we opened Prestonpans, which was the first store we opened, was from a member of staff who said: “That’s fantastic – it looks like Marks & Spencer’s but with cheap prices.”

We thought that was a really good comment, at first; actually it turned out to be a horrendous comment, because I think the perception from the outside, before people even got in, was that it was going to be expensive. So that was one of the mistakes we made.

The plan was, if we could have got the Co-op to the table, was to convert quite a number of these stores into UGOs, and to give them a bit more chance. The whole Haldanes estate was losing about £100,000 a week, so we took the stores that were marginal to try to turn those round into profitable stores.

And then we thought, as we get going, and we do deals with the Co-op, we always believed, and my lawyers always believed, that we would end up talking and doing a deal with the Co-op.

So, the plan was that maybe we would have had to ditch one or two stores, but we would have converted some into UGO, and made them profitable stores.

GS: And had those two stores that you converted, in Biddulph and Broxburn, seen an uplift?

AH: Yes. Absolutely. If we could have done a deal we would have definitely saved the group. No question about it.

The Co-op’s view

As always, there are two sides to every story. For its part, the Co-op has made no further comment on Haldanes’ situation since the decision to seek an administration order on 9 June, and, as I understand it, has no plans to add to its original statement:

“The Group regrets that Haldanes has taken the decision to seek an administration order.  

“Haldanes is substantially indebted to the Group due to its failure to pay rents owing to us. We have acted in good faith throughout our dealings with the business, including providing significant financial support during its start-up phase. Any legal action will be contested vigorously.
 
“Most recently, we carefully considered a proposal from Haldanes that we provide further financial support to help them through their current difficulties. We regrettably decided, however, that given what appeared to be the levels of the issues facing Haldanes, we could not proceed.”

Link to Part 2 of the interview – Harris: “We believe, long term, UGO has a good future”

Netto, Birtley (24 Jan 2011)

The Co-operative Group has announced today that it is to acquire the Netto store in Birtley, Gateshead – one of the six remaining sites that Asda is required to divest following its takeover of the Danish supermarket chain.

The OFT-approved deal is good news in that it secures the future of Birtley’s only supermarket, along with two more Netto sites in Whalley Range, Manchester and Stanton Hill, Nottinghamshire. It means that only three more Netto stores – in Wallasey, Keighley and Barrow-in-Furness – remain to be divested by Asda.

The Co-op has exchanged contracts on the newly acquired stores, which David Roberts, Director of Property for The Co-operative Food, has described as “a valuable addition to our portfolio and another important step in our expansion plans.” The sale is expected to be completed later this year, and the 42 staff employed across the three stores will then all transfer to The Co-operative Group. Until then, my assumption is that Asda will continue to trade the divestment stores under the Netto fascia, as required by the Office of Fair Trading.

Closed down Somerfield, Birtley (24 Jan 2011)

The deal also marks the Co-op’s return to Birtley after a two-year absence, when it traded – briefly – from the Somerfield site across the road. Occupied historically by Presto, Safeway and then Somerfield, the Co-op sold the store that it had acquired to Morrisons in April 2009, only for the Bradford-based chain to close it down. The site remains empty today, hence the especial interest in the fate of Birtley’s Netto, the town’s last supermarket standing.

Today’s news is a reminder of how the Co-op is continuing to grow its supermarket empire following its £1.565bn acquisition of Somerfield, back in March 2009. The Group currently has a 2,800-strong food store network, and intends to add another 300 outlets over the next three years, which will employ 7,000 people.

Recently opened Co-operative Food store in the Strand, London (6 Apr 2011)

50 store openings are planned for 2011 alone, with nine – including three in central London – opened to date. Edinburgh, Glasgow, Southampton, Liverpool, Manchester and Swansea are apparently among the locations that will see new Co-op stores before the end of the year.

The latest UK grocery market share data from Kantar, released this week, continues to show the Co-op firmly in fifth place, its 6.9% share well ahead of Waitrose’s 4.3% but some way behind Morrisons (12.0%) in fourth. However, the Co-op’s present-day share is still somewhat lower than the 7.7% share that the separate Co-op (4.4%) and Somerfield (3.3.%) businesses held at the time of the takeover.

While disposals to other retailers – as required by the OFT – obviously account for some of the drop, a report in Retail Week last year suggested that sales had “collapsed” at former Somerfield stores following acquisition. Data cited by Retail Week showed a 13.3% drop at unconverted stores in the month to April 2010, and a 14.1% decline at stores converted to the Co-op fascia. In contrast, trade at established Co-operative Food stores was up a healthy 1.6%, month on month.

The Co-op argued that lowering prices at Somerfield to match its own accounted for some of the decline; equally, there was always going to be some cannibalisation in creating such an extensive combined store estate. In addition, some consumers who liked Somerfield will no doubt have switched to other supermarkets rather than stay at the Co-op, though other Co-op-loving shoppers may, of course, have moved in the other direction. It’s a complex picture, and with the Somerfield fascia now all but disappeared from the market share data, it will at least be easier to keep track of the Co-op chain’s true performance relative to its peers.

Netto, Old Fold Road, Gateshead (28 May 2010)

Less than six months after the carve-up of the Netto estate was confirmed, the Danish supermarket fascia is well on its way to disappearing from the UK retail landscape.

Haldanes – currently distracted by the collapse of its eponymous chain – was the first to complete conversion of its 20 acquired stores, with all now trading as UGO. Meanwhile, Iceland and Morrisons are in the midst of revamping the Netto sites that they acquired, with some stores – such as the new Morrisons in Tamworth, which I hope to visit later this week – already trading.

Former Netto, Tamworth, before conversion to Morrisons (4 Apr 2011)

Asda itself, of course, has the biggest job, with 147 ex-Netto stores set to be switched over to its new Asda Supermarkets fascia. The first conversions – including Stainforth, below – opened last month, and I’m told by Asda’s PR people that the rest will be finished by November – an impressive rate of more than five conversions a week.

Here on Tyneside, three stores – in Westerhope (Stamfordham Road), Lemington (Northumberland Road) and Gateshead (Old Fold Road) – closed their doors as Netto last Saturday (11 June), and are each set to reopen as Asda Supermarkets on Monday 27 and Tuesday 28 June following a £500,000 refit. For stats buffs, that’s around five times the reported cost of converting a Netto to a UGO.

Early conversion of an ex-Netto in Stainforth, South Yorkshire

However, where Haldanes’ UGO stores are very much an adaptation of the existing Netto fitout, Asda’s revamps are more extensive, involving stripping the stores back to their shell.

In terms of what the converted stores will offer the customer, Asda’s PR – like UGO’s – flags up the key themes of low prices, improved ranging and greater convenience.

On price, Asda’s main headline is that “all newly converted Netto stores will charge the same low price as every other Asda in the UK” – a simple, effective and powerful message that is likely to resonate with shoppers. It should also avoid scaring off loyal Netto customers with prices that are too high, a potential problem that fellow blogger Steve Dresser and Soult’s Retail View readers have highlighted in relation to UGO.

UGO (former Netto) store, Hartlepool (4 May 2011)

On range, Asda again echoes UGO in pledging that customers will be able to “complete a full weekly shop”, with each of the new stores featuring the the full breadth of Asda’s own-label food ranges, including Smart Price, Chosen By You, Extra Special, Good For You, Free From and Organics. However, the increase in product lines (SKUs) from 1,800 to 10,000 rather puts UGO’s 3,000 (or even the now-defunct Haldanes’ 7,000) in the shade.

Finally, in terms of convenience, Asda Supermarkets’ longer opening hours, extra services (PayPoint, National Lottery, cash machines), and the provision of a collection service for online orders should all go some way to increasing footfall and basket size from Netto levels.

Former Somerfield, Adelaide Centre, Benwell (28 May 2010)

Before the new Tyneside Asda stores open in a couple of weeks’ time, I should probably try and check out the recently opened Asda Supermarket in Benwell’s Adelaide Centre. This store opened on 19 May, but is a former Somerfield site rather than an ex-Netto.

Given this acquisition, I was curious about the implications for the Netto at Mill Lane, less than a mile away, which is among the 147 stores that Asda is supposed to be keeping. Tucked down a side street and housed in a corrugated shed, this is hardly the most glamorous of Netto sites, yet it provides an important service to a community that otherwise lacks much in the way of affordable grocery store provision.

I’m assured, however, that the Mill Lane Netto will still be converted to an Asda Supermarket in the coming months, though as yet there’s no confirmed date for when that changeover will take place. I will, naturally, give an update as soon as I receive further news.

In the meantime, do feel free to share your experiences of visiting any newly opened Asda Supermarkets. Whether you’re an ex-Netto shopper or someone who’s been attracted from elsewhere, I – and your fellow Soult’s Retail View readers – will be keen to hear your reactions.

Haldanes store interior (28 Apr 2011). Photograph by Bryan Roberts

Following on from yesterday’s news regarding Haldanes filing for administration, I understand that the four stores