Slowly but surely, and using a tried and trusted formula, Peregrine Retail is making its mark in the South West of England.
Six years after it was formed as a joint venture between Forelle Estates, which wholly owns the business, and a management team headed by John Mason as managing director it now has five sites, the latest two of which were opened within a month of each other in February and March this year.
The latest one, Budgens of Wellington, in Somerset, is modelled on the company’s site in Bridgwater, which was opened in August 2011, and features a striking curved canopy.
"The design criteria for Bridgwater was to create a bit more interest and impact, and develop a forecourt that would stand out from the crowd, and still look fresh in about 10 years’ time," explains John, whose background includes 10 years as property director at One Stop and four years at the Symonds Group.
"Four years on, Bridgwater still looks fresh and a bit different. Wellington, built on a greenfield site, is a carbon copy. Both sites are on one-acre plots, with a 250sq m retail area, although at 100sq m, Wellington has a bigger Subway area."
Peregrine Retail was formed in 2009. Its first acquisition was an ex-Watson’s Fuels forecourt Windmill in Ringwood, Hampshire, on the A338. "We bought it with the sole purpose of redeveloping it to make a larger store," says John. "It already had a fairly good fuel volume of about 4mlpa, which has since grown to around 6mlpa.
"We then purchased a greenfield site in Bridgwater, which we redeveloped and opened in 2011. Our next development was Blackhorse Garage, Bristol, which opened in June 2012. It had been a 24-hour garage in Bristol for 30-odd years, owned by the same family. It had a relatively small shop of around 90sq m. We tripled that in size it’s now 270sq m. Even though the shop was quite small, shop sales were about £25,000 a week, but have now shot up to around £50,000 a week. Then we didn’t open anything until this year."
For 2015, first came the site in Kingsclere, Hampshire, which was originally a fuel site but had been closed for three years. It was dilapidated so underwent a complete knockdown-rebuild. Then came Wellington. Both the new sites are already doing over 100,000 litres a week, and on track to do more than 5mlpa in year one, with Wellington heading for a possible 6mlpa as it’s already over 110,000 litres a week, "which has surprised even us", admits John. All the sites are Shell-branded with Budgens stores.
"Shell is the top fuel brand in the UK at the moment certainly the biggest brand in terms of site numbers," explains John. "And the V-Power brand is the strongest premium fuel available at 10% of overall fuel sales, higher than the 6% we achieved for BP’s premium brand Ultimate in five years on our first site."
On the store side, John believes the Budgens brand and offer is absolutely right for the business: "The chilled and fresh offer is second to none in the convenience sector. Admittedly we were beginning to lose faith with the brand a little, but since the announcement about the buyout by Booker we’ve had a very good meeting with the chief executive Charles Wilson. He was very open and honest about his belief in the Budgens brand and his intentions to improve margins for retailers, improve the range, and his intention to provide these improvements quickly, by which he said between three weeks and three months, which I would say is very encouraging."
While there have always been great opportunities in the convenience store sector, John believes that in the past five years, in order to have a business which is as competition-proof as possible, he’d probably only open a good forecourt site with a good solus position, hence he prefers greenfield developments.
"We’ve chosen all our sites very carefully so that, as much as possible, they’re robust against any competition coming along. With a standalone convenience store, even if you have one in a good position, there’s nothing to stop any of the big-brand c-store operators opening up in the neighbourhood. Whereas having built a site like Wellington, the prospect of another forecourt being opened anywhere nearby is virtually zero because the cost is prohibitive. Development cost for this type of site is around £2m and that’s after you’ve bought the land."
The second key consideration is having a good residential catchment: "We look for something that will do sufficient business straight away, but has potential in the future, as in Bridgwater and Wellington. If we found lots of these types of developments, we’d do 10 of them. But you’ve got to get the right sites for the right money it’s a tricky formula. We’d rather do them in small numbers and hopefully get each one of them right."
The company will be opening a sixth site next spring a second one in Bridgwater, which John describes as one of the biggest growth towns in the South West, with a huge amount of commercial and residential development planned.
Meanwhile, the Peregrine team has certainly got it right with Wellington: "We expected relatively slow growth early on, but inside a month we were doing over 100,000 litres a week it was just a field before so the business came virtually instantly, attracting both the transient and residential customer, with the fuel/convenience/hot food offer.
"There is a local population of 10,000, but no corporate hot food offer until you get into Taunton, which is seven-to-eight miles away. The first reaction we got from many customers was ’thank goodness there’s a Subway here, saves me going to Taunton’.
Costa Coffee is a huge business for Peregrine, with each of its five sites having two machines; and Bridgwater which is doing around 180-190 cups a day, not including Subway, which does in excess of 100-plus pushing towards a third. "The power of that big Costa Coffee cup sitting on the edge of the forecourt can’t be underestimated," stresses John. "The amount of growth potential is still huge."
Wellington is certainly an impressive development, but despite all the modern facilities which includes a good car washing operation a key element of the company’s potential to grow is customer service, stresses John.
"It’s almost a given that you have the right range, the store is clean and tidy, and you have fuel in the ground; but after that the customer service aspect is absolutely key. Businesses like Waitrose gain so much advantage by offering good customer service. If you get it right, people will come back."