Let’s get it out of the way. Now there are 110 plus stores in the Smile Store’s estate, does chief executive Jeremy Symonds ever get calls from the multiples? “Err, they keep in touch,” he responds with a grin. Moving on, Smile Stores is on the acquisition trail itself and added 25 Nugent Westward stores to the chain in February this year. With further stores - both greenfield developments and established businesses - in the pipeline, Symonds is confident when he says there will be 120 Smile stores operating across the South West by the end of the year. A core (18) are centred in and around Bristol, with another 11 established in Bath. Only a couple operate in a village situation; the majority are based in the neighbourhood.
Symonds has no plans to move beyond the south. He says: “We see the South West as very attractive for convenience trading. There are great cities and towns and we are on target to grow to a good range of stores across the area. The key strength for a c-store operator is still location. “There are enough basket shoppers in the area to shop with us. Indeed, our average purchase per customer has increased from a basket spend of £3.50 to over the £5 mark.”
Smile Stores is living proof that nothing beats being a regional specialist close to the ground where store acquisition is concerned, particularly the greenfield developments the group has been clever at targeting.
As an example, Smile store will open in a start-up community alongside a new school, college and doctor’s surgery this year. Symonds confirms: “Good stores are very hard to come by, so we get extremely excited about winning a contract and taking a unit on amid fierce competition.”
He explains the Smile estate is a mix of freehold and leasehold and admits the cost of expansion is rising all the time because of the multiple interest in the sector. “A good independent store will cost a lot more today than it did three years ago,” he confirms.
The bulk of Smile’s growth in store numbers has come via a concerted store-by-store acquisition programme and the company has developed a workable strategy for integrating stores. As such it prefers to have core competencies in-house. “A good, solid structure”, affirms Symonds. Smile runs its own finance, property, operations, personnel, IT and buying departments and employs upward of 1,200 people.
Says Symonds: “As our business has grown, we have been very aware of the structure, whether in the buying or the operations departments; there’s certainly been a need to ensure the right people have been in place to develop sales. “I think in convenience terms it is essential the independent sector has the support supplied by the symbol groups. On your own, you can’t secure good enough marketing or promotions to push sales.”
Given the scale of the Nugent acquisition, the deal was planned very carefully by Symonds and the team at Smile. He explains: “It was easier because it was a family-owned business with a similar culture to our own. We kept a very tight lid on the acquisition so the people involved were the first to know. “We wanted to provide security by being there when it happened. The first thing we did, on day two, was to invite all Nugent managers over to our offices in Yeovil for a brief presentation and refreshments. “It’s good for everyone to meet, relax and exchange a few words. I hope it allayed fears and concerns and put people’s minds to rest. Everyone has to be able to work without fear. It’s important to recognise that in every business there are very good people.”
Supply is the priority for Smile in any acquisition but never more so than when it bought Nugent Westward and in one hit boosted its numbers by more than 25%. Clearly it helped to have its sister company, Key Lekkerland wholesaler T&A Symonds, sharing its offices at Yeovil and running the distribution out of the same site. Deliveries go into most stores two or three times a week, but not chilled. This comes via a number of different suppliers including Kerry Foods Direct and Nisa Chill; fruit and vegetables come from both local and national suppliers and is a mix of loose and pre-packed. Each store links into the warehouse via a new Piccolink automatic ordering system, although every manager can override this to call in additional stock when promotions go fast, and to take account of the weather, for example. Rob Ball, who has worked for Smile for 10 years and manages a busy Smile on Bristol’s Cheltenham Road - one of the main arterial routes into the city centre - thinks the ordering system is great. He says it scans all new barcodes automatically - “a huge time-saver” - and that the ‘real time’ ordering helps him maintain availability. Like Rob, Symonds sees availability as the system’s most important business benefit.
He says: “If people visit their local store to buy six items only, they must have availability at all times. It’s the key in building loyalty - probably more so than price.”
For Smile and T&A Symonds, the new ordering system has additionally allowed for a massive cut in stockholding, especially on tobacco. The 25 Nugent stores aside, it’s been a massive undertaking to refit and rebrand the estate to Smile and make a big, bold brand statement to hook in the shoppers of the South West. Average store size, for example, has risen from 1,500sq ft during the Newshop era to 2,000sq ft today in order to accommodate the Smile range, merchandising and promotional package. The lion’s share of Smile stores have CCTV, air conditioning, the lottery, an internal ATM - “we prefer self-fill to recycle cash” - news and magazines, chilled, fruit and veg, frozen (sold from low level open cabinets), a hot food offer with Bake & Bite if appropriate to the location, and an off licence. All outlets also play in-store radio.
“At Smile, we set our own standards and take a category management approach in our offer to provide the right range of products for our customers, supported by an excellent promotional programme,” explains Symonds. That programme includes local leaflet drops, shelf talkers to highlight Star Buys and information for managers with recommended promotional display ideas. Symonds adds: “South west shoppers do look at us as having a very competitive offer. We promote against virtually all the categories.”
Each store is ‘zoned’ to facilitate the speed of shop and colour-coded in bright contemporary colours - grape purple on licensed, Mediterranean blue for DVD and video hire and sell-through, for example. Fresh is always positioned at the front end of the store and Smile has in place a ‘clear window policy’ so consumers can, says Symonds, “clearly identify what’s going on in there”.
The royal blue and red Smile fascia is striking and strident, and at the biggest sites, the central Smile curves out toward the consumer in a friendly welcome. Where possible, the company uses the main store fascia to highlight opening hours and its website. Beer and wine is the company’s biggest growth category and, if at all possible, is sold chilled. At Rob’s store in Bristol, for example, the category is sizeable and given extra emphasis, theatre and promotion to lure the local students.
To keep one step ahead, Smile runs its own test-purchasing scheme for alcohol and age-related purchases. “It’s such an important category for us, we have to be really hot on it,” says Symonds. He reports no hassles as yet with renewing licenses for the existing estate to comply with the changing law. Smile continues to offer its customers a home news delivery service, but to keep a tighter rein on this tricky category, Smile has just taken on a dedicated category manager. Symonds explains: “If you don’t manage stock in this category carefully, with our number of stores you can very quickly suffer big losses. “In the presentation of our offer I would say we are as good as other outlets with a good convenience offer,” says Symonds with care. “However, we have been doing some very encouraging work on our product range.”
The work helped to deliver very respectable like-for-like sales of 4% at Christmas 2004 and will go some way to helping the chain ride out any more damp summer seasons.
In terms of the look of stores, Symonds allows himself a certain pride. “I think our stores are the bee’s knees. It’s about time we won an award!”