If one word has become synonymous with successful food retailing today it’s convenience. Witness the major grocery multiples. A walk down any high street reveals the importance they now place on the channel, as they snaffle up convenience outlets and convert an increasing proportion of their estates to the c-store blueprint.

At the heart of the new face of UK food retail outlets is chilled. In some M&S Simply Food stores, for example, chilled represents 75 per cent-plus of the sales mix, and the conversion of One Stop to Tesco Express has turned chilled to a destination category for the outlet.

But while the big boys on the high street may look like they’ve got the market sewn up, the independent forecourt, with its mix of local and passing trade and extended opening hours, is also well-placed to benefit from the opportunities the category offers.

Mike Estlea, range manager for Budgens and Budgens Local franchise forecourt outlets, sees huge potential for chilled foods. “Even accounting for wastage, the chilled category is one of the most profitable in percentage terms, and can make a significant contribution to overall margin improvement – chilled can account for around 20 per cent of sales in a typical forecourt store,” says Estlea.

But the category is not without its challenges – especially in forecourt stores where the problems caused by constraints on space can be exacerbated by the absence of a category management approach to ranging and merchandising.

Scott Annan, managing director at convenience retail consultancy SRCG, says: “For traditional forecourts to meet this huge convenience shopper demand they must either massively invest with a group of manufacturers in a brand, or partner with a multiple retailer, such as Shell and Sainsbury’s or Esso and Tesco, to sell their brand.”

But how much autonomy must an independent relinquish to keep ahead of the game? Certainly, forecourt retailers now have to offer more than bread and milk and a couple of facings of pet food if they are going to get a significant share of consumer spend. Chilled ready meals, for example, are worth in the region of £951m (Mintel). TGI data supplied by Mintel in 2001 shows 18 per cent growth for chilled ready meals between 1997 and 2001. So, getting a slice of the ready meal pie is an almost guaranteed root to chilled business growth.

Ready meal ranges need not be limited to major brands. Like the specialist high street retailer, forecourt operator, Gary Whittle, has developed a unique selling point by collaborating with local independent suppliers. Alongside a range of Spar-branded products, Whittle’s Armagh forecourt store sells a range of meats, meat and pastry products and ready meals procured from local producers. Not only does the portfolio engender customer loyalty in the neighbourhood, it also transforms passing trade into regular customers.

However, big brands do lend credibility to the offer. Diary Crest’s flavoured milk brand, Frijj, for example, is listed by major operators BP, Shell and Texaco, and with the product available from Palmer & Harvey, independents can now emulate the inventories of the bigger players. The pay-off can be substantial – fresh flavoured milks are growing at more than 28.5 per cent year on year, according to AC Nielsen data.

Big brands and locally produced products offer the double whammy of excitement and consistency, but retailers should not neglect the provision of staples, warns Mike Estlea. “Recent innovations such as pro-biotic drinks and microwave snacks, along with prepared salads have all helped to grow the category, but it is still the core lines that count – milk, cheese, butter, yoghurt, fruit juice, pies, bacon and cooked meats.”

Budgens’ strategy is to offer as comprehensive an offer as possible, so consumers can rely on their local forecourt store for their total top-up needs. “You should never allow out-of-stock situations on commodity products,” says Estlea. “Milk, for example, is the top-selling commodity and should never be off sale, with a selection of sizes and varieties available at all times. It should be sited in a high visibility area and sandwiches and snacks should also be merchandised in high traffic areas to encourage pick up.”


Good merchandising can build retailers’ reputations and personal brands. It can also help exploit the halo effect of chilled and fresh to enhance the overall store image. At Budgens, for example, fresh juices are merchandised alongside sandwiches to reinforce the fresh image.

Such efforts, however, will come to nothing if the retailer fails to ensure availability. Research conducted at 2,000 c-store and forecourt outlets by Ginsters found that outside the traditional 12-2pm trading bracket, stock tends to be run down to avoid waste, and as a result the basket size is reduced. The research also found that when the preferred brand was not available, 39 per cent of consumers purchased an alternative, lower-value brand, and 27 per cent went elsewhere.

Unfortunately, the risk of maintaining full shelves is wastage, and in attempting to achieve the right balance retailers can be tempted to be over-conservative in managing their inventories. But to some extent, waste is a necessary evil if stores are to offer a good chilled range, says Estlea at Budgens. “An element of wastage is essential to help build the category. Availability in forecourt stores is critical, and if correctly managed wastage should not be a huge problem. In Budgens we count stock daily and can order and deliver fresh foods six days a week, which helps minimise waste. Daily code checks and price reductions also help to keep wastage to an acceptable level.”

Closer working relations with key suppliers can increase deliveries and up service levels – both of which can minimise wastage. Following its research into the needs of both retailers and consumers, Ginsters developed a Food On Demand model. Sophie Colquhoun, category controller at Ginsters, explains: “The Food On Demand model was developed to enable retailers to better satisfy the needs of today’s consumer, increase customer loyalty and repeat purchase. Existing business models didn’t provide the total service offering needed and were based on purchasing behaviour that has evolved a great deal in recent years.”

Evidence of the positive impact a collaborative retailer/supplier approach can have is the improvements enjoyed by forecourt retailer Steven Blackadder, who owns Kitchens in Burnley, Lancashire. “Retail sales were static at around £6,000 per month for the past year, but I always felt the store could do more. When Ginsters came to see me, what they proposed was a genuinely new offer,” says Steven. He has since devoted his sandwich and pastry offer to Ginsters products, and as a result is experiencing improved levels of service with deliveries twice a day, seven days a week, as well as merchandising support and point of sale. Sales of sandwiches are now in excess of £7,000 a month – a 17 per cent increase on previous sales.

Suppliers can also be the source of the sort of dual merchandising solutions that will help shoppers make the connection between different products and so increase weight of purchase. Raj Tugnait, marketing controller at Country Choice, whose clients include all the major fuel retailers, points out that both hot soups and sandwiches have high margins. Offered together as a lunchtime meal solution, they are a killer combination. “Both of these categories are extremely profitable,” says Tugnait. “After hot savouries, filled sandwiches offer a higher margin to the retailers and a better eat quality to the consumers.”

Ninfa Grazzini, senior brand manager at Heinz, agrees. Last year the company launched Soup Cup, a product which research showed was ideally located next to the sandwich fixture or front of store. “We trialled Soup Cups in store over a six week period, where it was sited in the chiller cabinet, on the soups fixture and on the instant snacks fixture. We found that sales of Soup Cups in the chiller cabinet were double those sited elsewhere,” says Grazzini.

The research confirmed the popularity of the sandwich/soup combination, so much so that Heinz has developed a joint merchandising unit for Heinz Sandwiches and Heinz Soup Cups that will sit inside the chiller cabinet. “The pre-pack sandwich market is worth £3bn per year, and 80 per cent of full-time workers are eating out of home five days a week. In addition, 63 per cent of soup is consumed at lunch and our research shows that 72 per cent of consumers who trialed Soup Cup ate it with a sandwich or bread,” says Grazzini.


Traditionally, shoppers in the forecourt channel have not been particularly price sensitive. This is changing thanks to the influence of the price wars being waged by the major grocery multiples. Today, all retailers, regardless of size, are having to look to pricing mechanics to help pull in the punters. Asda and Tesco leverage their enormous buying muscle to deliver low pricing, but an effective strategy for the forecourt channel is proving to be promotions.

Mike Estlea at Budgens says: “Promotions work well in encouraging trial. At all Budgens stores we have a fortnightly special offers leaflet which always features a wide range of chilled promotions that provide valuable additional sales. Consumers are very familiar with the meal deal concept – that is another successful way of gaining additional business as long as it’s not complicated.”

Promotions certainly play a large part in Gary Whittle’s store too. “Promotions are very important – Armagh is a very competitive town,” he says. “We use as many Spar promotions as possible and we put on a few of our own as well.”

It would be impossible for the independent retailer to compete head-on with the multiples in terms of price, but it is possible to compete in terms of the convenience of the shopping experience, reliability and quality. If forecourt retailers work to deliver as high a standard in chilled as possible they can increase footfall, gain customer loyalty and ultimately grow their businesses.

The prize is big – £5bn-plus – if only forecourt retailers aspire to the standards of BP Connect, Tesco Express or M&S Simply Food, says Scott Annan at SRCG. But, he adds: “The overall potential is tiny if we continue to offer shoppers 30-day shelf life, unknown brands sold from stores built to sell petrol and impulse categories.” The market is there for the taking, and with imagination and a solid sourcing strategy, forecourt retailers have every chance of delighting their customers and boosting their bottom lines.