As the first of the MRH/Co-op trial sites opened last month in High Road, Eastcote, west of London it was a great moment for MRH chief executive Karen Dickens and her team, who are on a focused mission to upgrade and grow the company’s network. The opening was a very jolly occasion, with children from a local primary school doing the honours, on an open day attended by local dignitaries and executives from MRH and Lone Star, the US private equity firm that bought MRH in January 2016.
Karen says it was an emotional day for her, bringing together her previous role in ExxonMobil overseeing the global launch of the Synergy fuel brand and the first big deal from an MRH perspective. "This represents an interim point in the MRH strategy," she says. "A lot has happened in the past year. MRH changed hands in January 2016 and since I joined in March 2016 we have put in place a new management team and a new three-pillar strategy."
The first part of the strategy is to optimise the existing estate giving all the sites a bit of a facelift, to bring them up to the minimum standards required as part of the new broom Karen is sweeping through the network, with retail director Graham Timbers and marketing director Anna Coules by her side.
"The MRH network is a top-notch estate, with well-located forecourts; but they don’t have as good a shop offer as they could have, and generally needed investment," explains Karen.
Chief among the upgrades is a new washroom on each site, a facility that will cost more than £1m to complete. So far they are installed at 200 sites, with the flagship prototype loo, on the company’s Feering site in Colchester, generating amazing feedback. Washrooms are one of the three main bugbears Karen has with forecourts the others are no gloves and the sight of bin bags and the team is delighted with the reaction. "Customers are writing in to say that they will choose to stop at an MRH site because of the washroom," says Graham. "Fuel volumes have gone up at Feering more than expected."
This is just the kind of reaction that Karen is looking for, and it’s all part of an intense programme to be the customer’s preferred choice. "We want customers to come back to us, to visit us more often, and to spend more of their money with us. We want them to be not only buying their fuel from us, but their sandwiches for lunch, and their meal for tonight and have a good customer experience." Hence the placement of the company name on all sites, in a range of designs, but clearly displaying the ’MRH Driving Retail’ logo, so that despite the similar fuel, shop and foodservice brands that appear on many modern forecourts, it is clear the site is run by MRH."We’re putting ’MRH Driving Retail’ on all our sites as we’re upgrading them, because we stand behind that as our promise in terms of customer service," says Karen. "It sounds a bit of a cliché, but we want to be the best in terms of fuel, forecourts, and customer service."
The second part of the strategy involves a review of the network, looking at what is the right customer offer for every site: "We’re developing sites, doing knock-down-rebuilds, building new-to-industry sites and shop extensions," says Karen. "Our rules are that we have the best offer on the forecourt, the best shop; foodservice if we have room; and adequate parking. Once we’ve done that, if we have the opportunity to put drop boxes, car washes or additional services on we’ll do it, but we’re not going to compromise on our base business."
Choosing the right shop and foodservice brands has been the subject of intense focus. "We’ve done lots of consumer research about what consumers want and what brands are available. The conclusion we came to was that we wanted multiple food services such as Subway and Greggs. Currently we have three Greggs, and 24 Subways. We’re also about to sign off on another food offer, which will be a completely new offer in forecourts."
A great deal of work is also under way to develop the right shop offer. The MRH team is settling on two, possibly three offers a supermarket and their existing Hursts brand depending on the results of a pilot programme. "We’re running a 20-site pilot programme to see what works for different forecourts seven of the 20 are with the Co-op; seven are new Spar concepts; and on the rest we’re looking at reinventing the Hursts brand ourselves, working with Palmer & Harvey," says Karen. "Hursts is our own brand, and it became pretty obvious to us that with the huge mix of shop sizes we have, which range from 40sq m to 200sq m, Hursts was always going to work for us in the long term. We also need to make the bottom line work for us as well."
The company is developing a new site at Petford West: "We’re going to put a huge Hursts on it with multiple food offers and a really strong transient offer," says Anna. "But there will be different Hursts offers on different sites, with a variation on the Hursts name to signify to the consumer what the offer is such as local or transient so they know what to expect."
A lot of work also went into deciding on the supermarket brand. "We talked to everyone and decided the Co-op was the one we wanted it’s the number one convenience brand in the UK," stresses Karen. "The Co-op relaunch last year really changed consumers’ perceptions and it’s now a fast-growing brand. The other thing we really liked about the Co-op was that culturally our two organisations and people fit very well together, particularly in the support of community and charities; and in the way they treat and invest in their people. This is the first franchise they’ve done. There is a great opportunity in convenience and they also recognised that the best way to extend their business was into franchising, with someone they could trust with their brand." A new team has been set up to manage the franchise which will involve high-intensity management and back-up in terms of training and technical support. The MRH/Co-op site staff have to have 15 days of training in a Co-op store. Commission operators have been specifically chosen to run the trial sites based on their mystery shopper scores. "We’re choosing people who’ve got the skills to do it, and also rewarding them appropriately, with enhanced deals," says Karen. (In fact the company is making itself a more attractive place to work with its enhanced deal for commission operators it has 232 on the waiting list and is also getting rid of zero-hour contracts.)
"We’re also using Co-op technology right the way through, including the intelligent reduction systems. If a product is not working it can be replaced quickly. If there’s a £1 bag of salad the system knows someone will buy it for 95p, where we would traditionally make quite brutal reductions to clear lines."
In terms of the forecourt offer, the strategy towards fuel suppliers means getting rid of the company’s own fuel brand Torq: "We now have a three-supplier strategy, which will be Esso, BP and Shell," confirms Karen. "We think the three brands give us the right balance of customers in terms of loyalty, product quality and premium grades."
The third pillar of the MRH strategy is growing its 480-site network: "We have five potential acquisitions that will close this side of summer," confirms Karen. "We’re expanding our profile, so we want our network to stretch from the islands of Scotland right down to Penzance. We want to have a presence across the UK to make sure our customer offer is the best in the market. We are a straightforward organisation and work closely with the people who are selling to us in order to accommodate their sensitivities. Our key company value is around loyalty, and because of our success, people are bringing opportunities to us."
MRH (GB): Founded by Graham Peacock and Susan Tobbell in 1997, and grew into the UK’s biggest independent retailer. The founding management team sold out to Lone Star in January 2016. Currently has 480 sites and 511 staff. Financial highlights for year ending October 2016: sales £2,114,600,000; EBITDA £89,000,000
Karen Dickens: chief executive officer MRH (GB) since March 2016. Previously held a number of senior managerial positions with ExxonMobil Corporation both in the UK and abroad, in a career spanning 29 years. Her roles included retail director for the UK; and she most recently ran ExxonMobils global fuels programme, launching Synergy.
Pilots: Opened first of seven trial sites with the Co-op last month at the company’s Eastcote, west of London site. The rest will follow at three-weekly intervals until the end of August, in Streatham, Hatton Cross, Downfields, Water Beech, Farringdon and Kingston. MRH is also piloting seven Spar formats and six Hursts as it reinvents its own brand in a variety of formats.
Fuel: MRH will have a three-supplier fuel strategy in the future, focusing on Esso, BP and Shell; and will be removing its own Torq brand.