That old adage ‘the customer is always right’ was taken to heart by Tates Ltd, when a 2004 consumer survey told the company that its fresh produce offer was the weakest part of an otherwise solid Spar operator.
Acting immediately to turn a negative into a positive, Tates headhunted former Co-op executive David Morris to take the role of fresh produce trading controller and lead the company’s drive to raise standards, sales and profits in the fresh sector.
Three years on from the re-launch and with fresh produce sales up by more than 50 per cent on the 2004 figures, the strategy created by Morris and implemented robustly by the company has proven a huge success.
As Morris recalls, however, the process began with some soul-searching as well as positive thinking. He says: “I think that 2004 survey, which was commissioned by Spar UK, confirmed to people here what privately they already knew.
“Lots of improvements had been made in areas such as chilled foods and ready meals, but fresh produce had perhaps been neglected. The survey contained some major criticisms and, to be fair, the company took them all on board and in effect started again.
“When I came in I wasn’t told how to go about turning things round, I wasn’t handed a blueprint, I was simply asked to look at where we were in fresh produce at that point in time and to then improve our position as quickly and as positively as possible.
“I had a good starting point in terms of management colleagues and store personnel, who had great enthusiasm and commitment to the business, so I knew that if we got it right we had the people to really build our fresh produce offer.
“The most basic problem we had when I arrived was sourcing product - wholesale markets were used almost exclusively and although they can provide excellent produce, the consistency that’s imperative wasn’t there.
“So the single most important thing we did in 2004 was to switch our sourcing from markets to category suppliers and to begin building supplier partnerships that have become crucial to the growth of our fresh produce business.
“Hand in hand with that move was the decision to move from loose to pre-packed produce. We felt that fitted not only what consumers wanted but also helped us in terms of taking away the need for our stores to be master greengrocers.
“In that sense, the introduction of date coding has been vital to the success we’ve had over the last three years. Bringing in date codes was a big decision to make and difficult to implement, but it’s paid huge dividends for us.
“We also had to change the perception that while supermarkets did fresh produce fantastically well, independent convenience stores did not - that was an image problem that we’ve worked continually hard at to overcome.”
The “image problems”, certainly in the case of Tates’ group of Spar stores, has been resolved to great effect due to the company’s much-improved fresh produce offer, together with the marketing and promotional activities surrounding it.
Morris says: “Establishing ourselves as a quality supplier of fresh produce was a real challenge, particularly in the context of increasingly tough competition from the major multiples.
“But we’ve done it, partly I have to say by bringing supermarket thinking into the convenience sector, and now we’ve got stores where people will walk past a Tesco or a Sainsbury’s to shop at Spar.
“That’s due in part to good marketing and promotions, but the offer has to be right when the customer walks into the store and we’ve achieved that through providing a good range of produce from a variety of excellent suppliers.
“I can’t over-emphasise the importance of our supplier relationships, right from the early days of the re-launch when people who had never dealt with us before were having to take a leap of faith to buy into our new fresh produce strategy.
“At the start, for instance, we couldn’t be certain of the sort of quantities we would be needing or the sizes of packs we would require, so there was a lot of good will involved from the suppliers end and I’m certainly grateful for the way they stuck with us.
“We now have a two-way relationship that includes close consultation with suppliers in areas such as our fresh produce range, which is constantly being evaluated and updated - as the overhaul of our offer during the past year shows.”
In the last 12 months, Tates has expanded its ranges of prepared salads and vegetables plus organic and Fairtrade produce - sales in the latter two categories rose by over 500 per cent in that period - while adding new exotic lines and a range of snack fruit packs.
Product labelling was also revamped and has now been further updated to include, amongst many other items, shelf-edge stickers proclaiming the company’s Re:fresh accolade of Foods from Spain Convenience Retailer of the Year.
Morris says: “Our new-design labelling has given extra gravitas to the Spar image and also added to the appeal of our offer. We’ve made real efforts in point-of-sale, marketing and promotions and feel we’ve been leaders in these aspects of the business.
“We obviously use these tools to promote our produce offer, but when it comes to winning awards we also want to let customers know about achievements that will hopefully raise both the company profile and levels of customer confidence.
“We are proud of our Re:fresh award, one of several we’ve won in the last 18 months and proof that the strategy we put in place in 2004 - and which has been developed further in the three years since - was the right way to go.
“In the year of the re-launch, we grew fresh produce sales by 30 per cent, and that’s been followed by 14 per cent and 15 per cent rises in the last two years. With the marketplace as a whole growing only around five per cent a year, we can be very pleased with our figures.
“Not that we are going to lapse into complacency. We are doing well and we’re at a level that three years ago we could only wish we could achieve - but we were under-performing then and, despite our current position, we know there is still a way to go.
“Competition will intensify, especially with the major multiples coming into convenience store territory. We have to be ready to meet that challenge, and I believe that fresh produce can play a big part in helping us do that.”
AF BLAKEMORE - A SPAR PERFORMER
Tates is the company-owned stores division of the AF Blakemore group, a 90-year-old business which, since 1975, has been a key player in the Spar group, and as a wholesaler currently suppliesmore than700 stores across England and Wales. Tates has been part of the group since 1994, when AF Blakemore purchased the then Grimsby-based operation, which was comprised of around 100 stores. Tates’ headquarters are now part of the large complex that houses AF Blakemore’s central administration offices and distribution depot in Willenhall, just a five-minute drive from Junction 10 of the M6 motorway.
CRACKING THE CODE
One of the biggest challenges faced by Tates in the development of its fresh produce offer was the introduction of date coding, commonplace in supermarkets but not so in convenience stores until recent years.
David Morris says: “We felt that bringing in date coding was absolutely imperative if the company was going to move forward in the fresh produce sector, but it didn’t happen without some heartache along the way.
“Convenience store retailers are multi-skilled, but they are not fresh produce specialists, and date codes were a bit of a shock to some of them in the early days, even though we tried to make the introduction as easy as possible.
“If we had not taken this measure though, there is no way we would be in the position we are today. Date coding is now totally accepted and, alongside our supply base, it has been paramount to the success of our business over the last three years.”
COLLECTIVE RESPONSIBILITY
The collaborative approach which Tates takes with its suppliers is proving mutually beneficial, as is demonstrated by a number of joint initiatives carried out in the last 12 months or so.
Giving a higher profile to home-grown produce, in conjunction with award-winning grower Newmafruit Farms, paid dividends with year-on-year sales of apples and pears up by more than 15 per cent.
Following a review of the company’s capsicum business in May 2006, a new enhanced range was introduced by category partner Minor, Weir & Willis, with the result that sales rose by over 50 per cent.
Even more dramatic increases were achieved following last year’s appointment of a new stonefruit supplier, and their subsequent work alongside Tates to complete a dual task aimed at boosting sales in the category.
Counts of the pre-packed offer were re-configured and what had been an over-emphasis on peaches and nectarines was changed to give stronger promotion to lines such as cherries, apricots and plums.
As a result, overall sales in the category grew 168 per cent, plums were up 180 per cent and cherries 220 per cent - proof indeed that a well conceived and properly co-ordinated strategy can deliver mutual benefits to all concerned.
ALL ABOARD THE SHOWBOAT FOR CONVENIENT FRESH PRODUCE
Concurrent with re-launching its fresh produce offer in 2004, Tates began a programme of upgrading shop-fittings and revising store layouts to not only enhance the offer but also to create an improved customer environment within its Spar stores.
David Morris, above, says: “We have invested heavily in new fixtures, primarily the showboat which has worked very well for us, and we’ve also brought the fresh produce fixture from the back of the shop to the front.
“We wanted shoppers to feel good about coming into the store, and if they are happy with the fresh produce offer then they tend to feel good about the rest of the store. Our programme of shop re-fits is ongoing throughout the stores.”
MARK GETS FRESH WITH A KA
One of the most publicity-capturing of Tates many promotional campaigns in the last year was the 2006 Get Fresh initiative, which was run in conjunction with suppliers and whose major customer prize was a Ford Ka.
The Ka winner, Mark Airey of Kings Norton, Birmingham, was indeed a lucky man. With his wife away on a short break in Scotland, Mark nipped into his local Spar store to stock up on fruit and veg - and came out with a new car!
Running alongside the Get Fresh campaign was the equally successful Weekend Special initiative, providing customers with great bargains while also allowing suppliers to generate significant volume throughput at short notice.
The Weekend Special has recently been replaced by Fresh for Less, a week-to-week rather than a weekend offer that allows for stronger point-of-sale promotion and which Tates reports is working extremely well.
The company also runs regular in-store incentive campaigns, with last year’s Fresh Start initiative proving particularly successful with prizes on offer including a trip to Mexico, which took in the Spar International Congress.
Stores were judged on a number of operational functions as well as their sales figures - and with fresh produce sales up 20 per cent during the 12 weeks of the campaign, it is no wonder that Tates has this year been running Fresh Start again.
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