The next stop on the convenience journey

Kat Ward outside One Stop Fallin

One Stop has finally arrived in Scotland, and SLR paid a visit to its Fallin store to see what the Tesco-owned chain can offer Scotland’s independent local retailers.

by Kevin Scott

The first customers through the door of the new One Stop store in Fallin, near Stirling were likely unaware of the significance of their chosen shopping destination.

Finally, after months of rumours and a few unexpected delays, the One Stop brand has arrived in Scotland. The store in Fallin is one of four now operating – which is where the story gets interesting. One Stop is not only owned by Tesco but as well as company-owned stores it operates as a franchise model.

This relatively new concept to convenience retailing is certainly turning heads, and with One Stop now actively seeking franchisees north of the border, we’ve got a major disruption to the market.

Of the four stores opening in Scotland, two are company owned and two (in as yet undisclosed locations) are franchises. To put this in context, across the UK the company has 773 company-owned stores and around 100 franchise stores. And it’s growing fast.

Its plan for Scotland, according to Retail Director Mark Williams, is to target quality sites rather than pile on store numbers.

Being owned by Tesco has obvious implications – both in terms of buying power and perceptions. “One Stop is not a shrunk down Tesco,” says Williams. “We are much more of a traditional c-store model where around 50% of sales come from alcohol and tobacco. The format is changing though and we’re changing with it.”

Rewarding feedback

The store is a firm believer in feedback and tokens are given to customers after each transaction, offering the chance to win £500 in exchange for offering their feedback online. With a QR code on the token it couldn’t be easier to drive customers towards the site. Store Manager Kat Ward can then collate the thoughts of customers and run a report. The idea is act upon positive and negative feedback – but a few days into trading all notes have been positive.

The group has a four weekly promotional cycle, but the focus is more on everyday low prices, and the store is almost entirely bereft of price marked packs. A bold move in today’s retail environment, but one that Williams says is in line with the company’s philosophy. “We’d rather focus on value; we’ve got four pints of milk at £1, bread at £1, permanent two for £2 on soft drinks PET bottles. The value is there. Price deflation has hit retailer profits, no doubt, but lower prices do drive volume.”

The buying scale is clearly one of the main winners here – Williams says that although One Stop has its own buying team and operates separately to Tesco, that buying team do their utmost to ensure they’re paying the same price as Tesco, which leads to better margins for franchisees.

“We’re retail driven, not wholesale driven,” says Williams. “So promotions are not forced upon retailers. It’s more about what the consumers want and delivering that. We’re passionate about protecting our brand.”

Partnership is a word repeated often. Managers of company-owned stores and franchisees work closely to refine the service offered. Head office are willing to take on board the ideas of franchisees too. “We see our franchisees as entrepreneurs,” says Williams. “We’re good at building with our retailers, combining our expertise with theirs. We’re always looking for ways to improve.”

Fallin’s store manager is Kat Ward, a Tesco veteran with 30 years’ experience. “It’s been great seeing the store taking shape and seeing how the customers react to it,” she says.

Kat says that the store is already ingraining itself into the local community with a charity food bank, a drawing competition for school kids and a gala day planned for early July.

“They’ve had some really nice things to say about the store. It’s bright, clean, friendly. It may be one of four stores in the town, but we’re sure we can provide a strong, competitive offer.”

To the store itself and the refurbished pub has an odd footprint, but it’s one that works as a c-store, particularly when there’s a bold approach to merchandising, with the company categorising by mission. Instead of ‘Soft Drinks’ and Confectionery’, we’ve got a ‘Celebration Zone’, a ‘Kids’ Zone’. With only 3% of c-stores across the UK adopting mission management, it shows progressive thinking.

“The thinking behind mission shopping is to get customers to buy more,” says Williams. “29% of people only buy one item – we want to change that. It’s all about that one extra item, that’s where the growth will come from.”

Getting creative with a Kids Zone

One of the more innovative merchandising solutions in the One Store store in Fallin is the Kids Zone. Created as part of the mission approach to merchandising the store, the Kids Zone in particular stands out – as customers get used to the format, children will know there is an area of the store dedicated to everything they want most – from confectionery and soft drinks to stationery and toys. And with a decent line of Lego products at up to £8, there’s a fantastic opportunity to drive high basket spend – if mum and dad can be talked into it. This fits in perfectly with the store’s philosophy of working every customer to increase the number of transactions with one extra product in the basket. Attractive Lego products with high price tickets is an inventive way to achieve that.

Closest to the door is an impressive range of chilled and fresh produce along with milk, opposite bread, enabling the top-up shop to be carried out with minimum fuss. Williams is confident a small meal deal section will be a success, though there’s a lack of hot food to go… for now.

It will be fascinating to see how the brand develops over the remainder of the year. There’s some reticence when pushed on where new stores will open or when, but what’s certain is that once more doors open, store numbers and enquiries from retailers about franchises are only going to go one way.

“We choose them and they choose us,” explains Williams. Only if the offer works for both parties will One Stop commit. That means stores around 1,250-2,500 sq ft, turnover north of £13,000 and a willingness to commit to a five-year deal. In exchange for that, One Stop will offer £50,000 on a refit – and if that much isn’t required, the remainder will be banked to be drawn on whenever the retailer needs to invest.

There is no minimum order on ambient and just 15 cases on chilled. In total, 95% of stock must come from One Stop, with the remaining 5% being spent on local products. “That figure is a bit misleading as we have a number of Scottish-only lines, so the 5% is for really local products, which creates a bit of complexity, but we believe it’s important that stores meet their local needs,” says Williams.

The franchise model is certainly one to watch – from the support it offers (everything from being shadowed by a Launch Support Manager, to a week’s training in EPoS and other logistical processes) to the standard of stores and the wholesale prices.

“The way the industry is going, now is the time for franchise. We’ll really expect it to grow,” says Williams.

The next six months will go a long way to determining whether he’s right.