The Co-Op have big ambitions in the food-to-go space. QSR sat down with Mark Pettigrew, Director of Format, Range, Space and Merchandising at the Co-Op to find out how they plan to take on the competition.
QSR Media: Where and why do you see value in the food-to-go space?
Quite simply because all the insights we look at make it clear that over the next 3-5 years it’s going to provide one of the biggest growth opportunities in what is a challenging market. Customers are demanding more and more from us in this space too. Not just during traditional times of day such as lunch time- they’re also looking for solutions first thing in the morning. And with school children, we see that increasingly they will take their breakfast on their way to school rather than at home. So, there are a lot of opportunities across segments in the morning. Beyond that we’re seeing demand stretching into late afternoon and evening.
It doesn’t matter who you’re looking at, whether it’s a food retailer or food service, all of them recognise where their strengths lie and all of them are working at times of day when they’re weaker.
QSR Media: When you talk about your strengths and weaknesses, where do you see your offer as strong and where do you need to improve?
We certainly recognise ourselves as having strength at lunchtime, and what we’re working on is how we can become strong in the morning and how we can make food to go more relevant in the evening.
We think breakfast offers a huge opportunity, and that’s something that we’re looking to strengthen. We’ve made some progress on this front but we still have more to do. We also see opportunities in making the layout of our stores work better- for example by bringing things together such as coffee, hot food, and patisserie. They are the anchors by which we can drive footfall. We’re working hard on a transformation program. The afternoon is something that we need to turn our attention to now – including simple meals for the evening. And to a degree, some of the lunch time offers stretch into the evening. We know we need to do a little bit more development on that sort of meal for the night on-the-go.
That’s an area where we’re coming from behind a little bit in the convenience world. It is something that we are really keen to develop through 2018.
QSR Media: What changes have you made to drive food-to-go sales in your stores?
We’re quite fortunate. We’re not open all hours, but open at 6 or 7 in the morning and closing at 11, so trading hours haven’t been impacted. We have made fairly significant changes to our blueprint though. What we’ve been focusing on for the last 18 months is creating an area within our stores where all those elements I’ve talked about come together – your sandwiches, chilled soft drinks, snacks, hot food, coffee, and patisserie. They tended to be separated for a variety of reasons, and we’re working on fixing that. The other thing that we’ve done in the past year is to make sure that we’re competing with similar stores in the industry. We were behind, particularly in the chilled drinks and sandwiches area, so we have re-balanced our space to make sure that in all of our stores, we’ve got a really good offer for those products.
QSR Media: So how much are you spending to make your food offering competitive?
It’s not really an investment in money, it’s a trading off space. We’re sacrificing some of the declining areas to invest in the growing ones.
QSR Media: So what areas are losing space in your stores?
Things such as newspapers and magazines – that’s a declining market because of digital. Some of that space has been used to invest in hot foods.
QSR Media: Who do you want to be competing against in the space?
It kind of depends on location. We significantly overtrade in the area of food-to-go for some of our store types. If you look at sandwiches alone in the marketplace, we are a smidge behind Marks & Spencer. From a quality perspective, we benchmark ourselves against the best in the market which is Marks & Spencer. From a range perspective, we look to compete versus other convenience retailers. But as we start to pay attention to hot foods, hot drinks, and patisserie, we’re starting to look a little bit more now to the food service providers to benchmark to that area. So, I guess it’s safe to say that we benchmark against different competitors depending on the product being referenced.
QSR Media: So, for the hot food space, who do you want to be up against and where will you be pitching yourselves?
We need to do the simple things really well so that our stores can deliver to our customers day in, day out. Therefore, we benchmark ourselves against retailers that are really great at that sort of thing. We look towards who sells a really simple offering with a simple operating model. But increasingly, as we try and give more depth to our range, we’re looking at some coffee shop chains. As they start to move into developing their offer from morning until late in the afternoon, they are coming up with really good innovations. I think we can learn from that and see if there’s something we can replicate and follow.
QSR Media: What does that mean in practice?
Heated meals on-the-go. If you look at what’s happening at pretty much all the coffee retailers, they are very strong in patisserie and coffee, obviously. Between 7 in the morning and 12 o’clock, they’re really strong, but fall off after that. If you look at what they’re doing to address this, they’re doing much more development around salads, and hot food. That’s a really interesting part of the marketplace that we’re looking to try and develop ourselves in 2018.
QSR Media: Does that mean you’ll be looking at brand collaborations to get the best of all worlds?
We’re definitely looking at some partnerships with other brands.
QSR Media: Are there any exciting product launches that you can talk about that you’ll be coming out with?
New product development will continue to focus on some of the areas I talked about early on which is around needing to be better in the morning, continuing to innovate at lunch time and strengthening our evening offer.
We will use free range eggs from a quality perspective, and also provide strong and high quality products in a way that works well with the farmers and also looks after animals. For us, it’s not just about innovation around the products that customers see in the stores, but it also ensuring that we’re doing a good job in being a responsible, ethical retailer.
QSR Media: What about Brexit? Does that impact your supply chains or your plans at all?
I think it impacts everything at the minute, absolutely. It doesn’t matter whether you’re a retailer working outside of the UK, or whether you’re dependent on the European resources market, it’s absolutely impacting us as it is with other retailers.
QSR Media: What role does technology play in the new look of food-to-go outlets?
I think it’s fair to say that we’re looking to mature in this area at present, and we are establishing a digital structure next year. For now, the main reason for using digital is mainly for communication to customers. One of the things we need to focus on is finding that emotional connection with customers. Digital is kind of helping us with that. We’re using digital to help customers get in our stores more quickly.
We’ve been working on how to change our communication throughout the day. We have clear messages to customers in the morning, which we change for lunch, then again in the evening. That’s where it’s really helping.
QSR Media: Can you comment further on creating that emotional connection to get customers excited about the Co-op brand? How else are you trying to drive that?
The other way we’re trying to drive it is through being great all day and every day. What we’ve been working on this year is to simplify our operating model to focus on things that we’re really proud of. By doing that, you build trust with customers and you get benefits from it. The second way is the way you communicate in stores.
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