Morrisons Tests New High-End C-Store Concept

Discussion
Apr 18, 2011
Bernice Hurst

Before Morrisons bought Safeway in
2003, it had 119 stores in the north
of England. After the purchase, Morrisons
extended to the length of the country
(plus Scotland), added 480 stores
and became the U.K.’s fourth largest
supermarket. At the time, The Guardian pointed out that "Safeway
is an upmarket retailer, while Morrisons operates on a pile-it-high and sell-it-cheap
policy." The
purchase of Safeway increased Morrisons’ market share from 3.2 percent
to 12.4 percent.

As recent stories (and RetailWire discussions) show,
further expansion is now on the front burner.

The Daily Telegraph reports
that Chief Executive Dalton Philips expects to begin "a trial of a new
convenience format in the first half of next year" based on "past
success that was built on being different, in the offer we bring to customers,
and this will continue in any new areas for business development."

Additional
detail is provided by the Yorkshire Post, which covers the
target area.

The first of three M Local outlets, it says, will open "in
the affluent town of Ilkley as part of a drive to attract a more upmarket audience." Described
as "one of Yorkshire’s most wealthy areas," the idea is to "test
the concept with a wealthier audience than the average Morrisons store attracts."

"Many of the group’s upmarket ranges" will be stocked and
the store "designed to appeal to commuters coming home in the evening
who want to buy something for dinner" offering a focus on fresh food.

Morrisons
is keen, however, to ensure its convenience stores appeal to a wide demographic.
Julian Bailey, head of media relations, told the Yorkshire
Post
, "We
think there is a gap in the market for a convenience store operator that sells
fresh food well. At the moment there isn’t the variety and quality of
fresh food that people are looking for."

Just-food deems the convenience sector, "fast growing … ripe
for growth — and the leading players are scrambling to build a presence in
the channel" but adds, "some industry watchers" reckon online
grocery could be considered more convenient. A story likely to continue giving.

  • Morrisons clear to buy Safeway – The Guardian
  • Morrisons plans convenience stores as outlook darkens for shoppers – Telegraph
  • Morrisons goes upmarket in launch of convenience stores – Yorkshire
    Post
  • Morrisons tests "M local" convenience store branding – Marketing
    Magazine
  • Talking shop: what is the future of convenience – Just Food
  • Discussion Questions: How big is the opportunity for c-stores in upscale areas in the U.S.? How might c-stores in affluent areas differ from those in less prosperous neighborhoods?

    Please practice The RetailWire Golden Rule when submitting your comments.

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    7 Comments on "Morrisons Tests New High-End C-Store Concept"


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    Steve Montgomery
    Guest
    10 years 17 days ago
    In general high end communities are not good locations for c-stores for several reasons. The c-store industry has five drivers–fuel, beer/wine, packaged beverages, cigarettes/tobacco, and for some foodservice. Of these categories people who live in upscale areas definitely need fuel, but with the ability to pay at the pump are not likely to go into the typical c-store. They may consume beer/wine and packaged beverages but these items are likely purchased at the supermarket or a specialty store. This is especially true for wine as most c-store don’t carry higher priced wines. Cigarette/tobacco consumption is lower in this demographic. Finally there are a very limited number of c-stores that carry foodservice items that would likely appeal to this consumer. Certainly not a product mix destined for success in upscale areas. All that being said, there is an opportunity if the c-store was positioned as a specialty foods store that just happened to sell fuel. Higher-end items, more of the nature of a Trader Joe’s or Whole Foods (who at one time looked at building smaller… Read more »
    Bill Emerson
    Guest
    Bill Emerson
    10 years 17 days ago

    If you take out the term “c-store” with its connotations of cigarettes and beer and consider a notion of specialty prepared and packaged premium foods (ala Whole Foods and TJs), you could be on to something. Upscale customers like convenience as much as anyone. The challenge here is the occupancy costs (high), the relative size of the market (small), and the level of expectations for quality and service (high).

    An interesting idea, but tough to pull off. It will be fun to watch this play out.

    Ed Rosenbaum
    Guest
    10 years 17 days ago

    I agree with the responses from Steve and Bill. C-stores succeeding in upscale areas is going to be an “uphill climb.” Repeating again, people living in upscale areas do not use convenience stores to purchase much more than gas and an occasional newspaper. Not that my memory survey has validity; but I am reminded of my recent visits to the Owings Mills suburb of Baltimore. There is a C-store located near an upscale neighborhood. The majority of customers, are maintenance and lawn trucks from nearby buildings and those servicing the area.

    Ryan Mathews
    Guest
    10 years 17 days ago

    Add my voice to the chorus.

    C-store? Probably not.

    Small, boutique retail format? Could work.

    This isn’t to say they don’t like Slurpies in the Hamptons, just that it would be an uphill fight (as earlier noted) to open up a mini chain of c-stores there.

    Anne Bieler
    Guest
    Anne Bieler
    10 years 17 days ago

    There is definitely room for smaller high end stores that have convenient prepared foods and fresh produce, etc, in upscale neighborhoods. With right mix of quality, assortment, and service, this could be an important move with returns. Key is location, solid execution, and understanding local shoppers. Anything that gets the shopper what they want without crowds, and check out lines will get attention–fresh, high quality food will bring them back.

    M. Jericho Banks PhD
    Guest
    M. Jericho Banks PhD
    10 years 17 days ago

    Who am I to second-guess The Guardian, the Daily Telegraph, the Yorkshire Post, and Just-food? Success for an “M Local” is likely in Ilkley. Especially against an average Morrisons store. Who could disagree with that?

    During my years with 7-Eleven we had many locations in or near upscale U.S. neighborhoods that did just fine. Down the hill for our coffee in the AM, and back up the hill to home after work with our franchisees’ fresh and frozen entrees and Playboy magazines. Nacho delivery was often an option for well-heeled customers. Many of our Japanese franchisees, in fact, specialized in upscale delectables such as restaurant-quality sashimi and sushi.

    Don’t count C-Store franchisees out. They’re clever, resourceful, diligent, and entrepreneurial. Given the opportunity, they will succeed anywhere.

    Kai Clarke
    Guest
    10 years 16 days ago

    This is a poor proposition for C-store expansion. C-stores are all about location first, basics second, and then selection. Upscale C-stores are seldom the model that succeeds. Instead, a reduced size grocery store might be the better definition here. Smaller footprint, reduced selection from a grocery store is a more appropriate positioning of this model instead of a larger, upscale C-store.

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