In the five years since Mike Taylor joined Budgens he has seen massive changes in the Features > Business, and he is now the man charged with driving through the final stage of the transformation from retailer to wholesaler.
When Taylor took up his initial role with the company as a development director it had a small franchise division, but the overwhelming focus of the business was operating its estate of Budgens stores. Five years on he has just been appointed managing director of the newly merged Musgrave Budgens-Londis, which delivers to more than 2,200 independent stores and has just begun selling off its remaining 160 company owned stores to independent retailers.
He says: “We had more of a retail focus because it was predominantly retail, but over time it has switched and our stated intention over the next three to four years is to have sold all of our corporate stores, and we will just be supplying independent retailers.”
But he adds: “For many of the support functions in the Features > Business, such as trading and marketing, while there has been extra focus on the independent retailer, a lot of the work is very similar.”
Another transformation Taylor is in charge of is completing the integration of Budgens with the Londis business that Budgens’ Irish parent company Musgrave bought last year. He has been helped in this process, he says, because it was a true merger of equals, rather than a larger company taking over another.
“It’s not as if we put a £900m business with a £100m business. Budgens turns over just in excess of £500m – a mixture of retail and wholesale – and Londis turns over roughly £520m, so it was two halves coming together to form a whole.”
The two teams have been united in a new head office under the Musgrave Budgens-Londis name and functions such as buying have been merged.
As a result, he says, the company will be moving away from its relationship with Nisa. “It is important that we are in control of our own destiny so while there are certain parts of Musgrave, such as our colleagues in Northern Ireland, who have an ongoing relationship through their cash and carry operation, we will be moving away from that dependency because we are taking control of our buying and our own promotions.”
Branded buying and promotions are now negotiated directly, and Taylor expects own label will be separated out from Nisa within the next two years.
A priority for Taylor is ensuring the 1,900 members of Londis, who voted overwhelmingly for the takeover by Musgrave, start to see the benefits they expected from the deal.
One of the biggest attractions for many Londis members was Budgens expertise in fresh and chilled, and the prospect of sharing in that. A pilot scheme is under way serving 30 Londis stores from Budgens’ Wellingborough depot, and work is under way at the other depots. But Taylor says one of the constraints is the Londis vehicles not being equipped for fresh and chilled.
“We have some big chilled facilities at the depots but you can’t put things like ready meals and chilled meat on our lorries, so we are in the process of developing our short life capacity.” The company is also working with central billing (drop shipment) suppliers so that retailers have access to supplies if it can’t supply them.
Prices were another key concern cited by Londis members and this has been confirmed through regional councils set up for retailers and by a comprehensive survey that was carried out.
Taylor says prices will be improved in certain key areas around alcohol and tobacco, and in bread and milk. He explains: “There is a lot of money not being spent with Londis by Londis retailers so we have to remove barriers. It is not advantageous for a retailer to have to go to the cash and carry because they can’t get what they want from us. We are finalising the changes and they should be in place in the next four to six weeks.”
The company is also working on plans so that all four of its depots – the Budgens one in Wellingborough in Northamptonshire, and Londis’s at Andover, in Hampshire, Thamesmead in south London, and South Elmsall near Pontefract in West Yorkshire – can service both brands.
The fresh pilot for Londis stores has helped in this respect says Taylor. “It forced us to capture data from Londis retailers, squirt it into Budgens and turn it into something Budgens can pick against.” Work on aligning the two systems so they can communicate on a much larger scale is expected to take about 18 months, but will result in a much more efficient system. At present Budgens stores on the south coast are served from Wellingborough, even though there is the Londis depot at Thamesmead, and Thamesmead serves Londis stores in East Anglia that are far nearer the Wellingborough depot.
One of the biggest benefits will be for Budgens as it opens up the whole of the UK to an operation that used to be restricted to a three-hour drive time of Wellingborough. From its depot at South Elmsall, Londis has been able to serve stores as far north as Fort William in Scotland and across into north Wales.
South Elmsall is already a huge facility servicing 900 Londis stores but it is about to get much bigger. Taylor says: “We own a piece of neighbouring land as big as the original site, with planning consent. This will give us the same size facility we have in Wellingborough, but because it is that much further north the reach is fantastic.”
Although Budgens has been restricted to the southern half of England until recently, Taylor says the levels of business achieved at York, Sheffield and Nottingham demonstrate there is not a southern bias and the business will travel. “We see massive potential for Budgens across the rest of the UK,” he adds.
And in the future this will consist of Budgens stores run by independent retailers. The process of selling the company owned stores has begun with half a dozen going in the last couple of months, but Taylor is not setting any targets for completion. “We do not talk about selling stores but finding the retailers, and we will wait until we find the right person,” he says. He is looking for individuals rooted in their communities who will be committed to their store. “They will take that store to another level and they will draw a really good income and build an asset that will be worth a lot of money when they come to sell it.”
Following the model adopted by Musgrave in Ireland, the company will have first refusal when the property is sold, and Taylor says there are stores in Ireland that have now had a succession of owners who have built up their asset and then moved on.
When Taylor took up his new post he was following a very high profile predecessor in Eoin McGettigan, who campaigned strongly on behalf of independent retailers. Taylor says he will continue that work, and has already joined the FWD Council, but the spokesman’s role will be shared with the new Musgrave chief executive Chris Martin, who will be spending more time in the UK. “We believe passionately in the future of independent retailers and in order to protect that future there is political campaigning we need to do.”