The forecourt sector is fantastically exciting, according to the new managing director of the symbol arm of Budgens, Paul Mildenstein. He joined the company in September from convenience group T&S stores, which was acquired by Tesco. His background covers spells in the drinks, restaurants and coffee sector and includes franchising experience with Pizza Hut and Costa. His remit is to give the Budgens brand a shot in the arm, considerably raising its profile in the highly competitive world of convenience retailing. He believes service stations are well-placed to accommodate the Budgens ‘comprehensive range of quality fresh food in the local community’ offer.
“We understand how shoppers want to shop, and for me, petrol forecourt retailing certainly gives the whole notion of local and neighbourhood retailing a massive stimulus,” he says.
“Typically c-stores have had to close in quieter locations, but if you could bolt on additional services – such as fuel, post offices, lottery and so on – then you start to provide a business that can sustain, flourish and develop in smaller communities.”
Budgens has a long history of servicing the community. John Budgen opened the first Budgens store in Maidenhead in 1872, and the company now operates more than 230 stores, ranging in format from supermarkets to convenience stores. The majority of the sites are company-owned and run, including more than 100 supermarkets – with the exception of one super-
market in Soham, Cambridgeshire, which was recently acquired by Forecourt Trader of the Year winners Jonathan and Rebecca James. It was the first corporate site to be acquired and run independently, an event described as an opportunity rather than a change in strategy. The Budgens corporate stores trade under a number of different concepts from Budgens Express to Budgens Village.
Mildenstein’s symbol network currently consists of 55 outlets, which currently trade under the Express, Quickstop or Local banner. In future the branding will be simplified to either Budgens or Quickstop (the very small stores). The network includes around 20 forecourts, but these are predominantly company-owned Q8 sites, which trade under the Budgens Xpress banner.
Budgens has some catching up to do when compared with its competitors: “We’re nowhere near getting on the scoreboard in terms of outlets in the convenience sector when you look at Spar, Costcutter and Londis. These guys have got 1,000 to 2,000 units. We’re nowhere near that big.”
However, there are definite plans to get bigger. Two years ago Budgens was acquired by the Musgrave Group plc, a non-quoted, family-controlled company, which is Ireland’s largest food and grocery distributor. It pioneered the concept of franchised supermarket and convenience store retailing through its SuperValu and Centra symbol retail groups, and currently has a network of 620 independent retail franchises throughout the Republic of Ireland and Northern Ireland.
The company has been much featured in the news recently following its bid to buy Londis – currently thwarted – although the intention remains. If the proposed deal had gone through, the Londis name would be retained alongside that of Budgens, although purchasing and retail development would come together under one roof.
“Musgrave has a vision to become the number one wholesaler in its marketplace,” stresses Mildenstein. “But the growth will actually come outside Ireland, because while the company is not exactly at saturation point, it is very dominant. Wholesaling is for us the future of our retailing platform in the UK. The expertise and the model has been proved in the southern and Northern Ireland, and my remit is to prove it in the UK.”
Budgens has one distribution centre in Wellingborough which services all the retail and franchise businesses. “That, in some respects has limited the distribution of the Budgens brand – you can’t reach all points of the globe from there,” says Mildenstein. “Our brand and our shops are therefore predominantly in the south east, south west and home counties.”
While the emphasis is on growth, this is not going to be at the expense of quality. Mildenstein is currently tightening up procedures to enhance the company’s professional approach.
“It’s not a numbers game, it’s a quality game. The more quality we have I believe the faster we will grow. The last thing I want is a high-maintenance business where we are forever trying to help people who probably shouldn’t be in this sector of business. I want people to join the business knowing it’s going to be successful for both of us. We’ve got brand values which are representative of what our customers want from convenience retailing – such as freshness, quality and value as well as speed and ease. We design those things into the brand proposition and therefore select retailers who don’t want to design them out when they move into partnership with us.
“What can happen is that people want the sign above the door and they want the supply chain, but they fail to capitalise on all the added value the brand owner can bring with that.”
Mildenstein believes getting the right retailer is more important than getting the right premises: “The site obviously does come into it, but a good retailer will always tend to choose a good site. But a good site, doesn’t guarantee a good retailer.
“The first step when taking on a new retailer is to understand whether or not they have the right belief in the business. But their existing standards will tell you whether or not they’re an individual we should be working with. Then we’d look at their business and make an assessment – we have a desktop model which is incredibly accurate – to help them understand what value we believe that site could deliver based on our current profiling. The model will give the retailer an understanding of his profitability. We give a likely investment expectation to bring it up to Budgens standard, which is enough for him to work out whether it is going to be a success. We work closely with financial institutions to give preferential financing on equipment, building work and so on.
“We pay for signage, but there is a small chunk of investment we expect from the retailer in order to bring their premises up to the standard we think is the Budgens model. And good franchisors will ensure their brand proposition is as strong as it needs to be, so that it doesn’t dilute overall – you wouldn’t buy a Budgens product in a rundown, dusty store with no light bulbs working. The right surroundings reassure the consumer that they’re getting a Budgens experience, and it reassures us that the retailer is very serious about managing our brand.”
As regards the deal itself, there is a contract, but no upfront fees, confirms Mildenstein. “All we ask is a participation level so that we can both do business together, as we reward by participation.”
Mildenstein is keen for retailers to use local products and services where appropriate, in order to put something back in the community: “It’s great taking money out of a community as a retailer, but it’s as important to put it back in again.”