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Winning formula

The standout winner of two categories at the recent Checkout Convenience Awards, the collaboration between BP Retail and Marks & Spencer Simply Food, looks like it is here for the long-run, writes Steven Maxwell

Sales of branded products in the BP Connect/M&S Simply Food outlets have”grown significantly”

It may at first glance not seem the most natural of alliances, but the joint venture between oil giant BP and the housewife’s favourite high street retailer, Marks & Spencer (M&S), is by all accounts one of the success stories of the past two years.

The introduction of Simply Food outlets into BP forecourt stores, now in 11 locations in England and Scotland, has, by the reports available, been largely welcomed by the travelling public.

Launched last October after an 18-month gestation period, the trial offers a M&S-branded section alongside BP’s own Wild Bean Café and standard forecourt impulse lines.

Appearing in BP Connect forecourts from Hammersmith to Newcastle, the format offers new bakeries and patisseries, hot food to go, ‘eat over’ delis and upgraded restaurants. A decision on whether to roll-out the format to the 170 other BP Connect stores is likely to be made in late autumn this year.

The collaboration scooped the title of Best New Convenience Store Format, sponsored by Insight, and for BP the award for Best Convenience Forecourt Retailer, sponsored by Gallaher, at this year’s Checkout Convenience Awards with judges hailing it as a revolutionary format and a “standout winner”.

But what makes it really unique is the fact that it marks the first occasion that M&S-branded products have been available alongside other branded goods in the same store.

With high street retailers increasingly being pushed to the margins by supermarket expansion – after all Tesco is now not only the UK’s number one grocery retailer but can lay claim to dominating the non-food sector as well – it could be argued that such collaborations are likely to become increasingly common.

BP claims the format has already proved its effectiveness, pointing to its own market research, which it says shows, “overwhelming support” for the stores among its customers.

Although it is still relatively early days, the multi-national says customers are responding well to the high quality M&S fresh food alongside a mix of other brands and says indications so far are that sales are exceeding expectations.

A spokesperson for BP says the firm’s forecourt stores had previously been able to offer hot food/beverages and impulse, but were unable to add fresh to the format prior to the deal with the retailer.

“M&S provides that fresh element – we could not replicate the fresh food side of the business. It is a tried and tested high street brand which combined with BP’s convenient locations and six million customers a week provides the right recipe for success in convenience retailing.”

Dan Munford, partner at Insight Research, who said the collaboration was a “standout” winner at the recent Checkout Convenience Awards, argues the venture is of “global importance”. He believes it is a “great example” of an oil company collaborating with a food retailer in order to get the right message across to the shoppers.

“We’ve seen this all over the world – in France with Total and Casino – although that was not quite as successful, I would say.

“The thing about Marks & Spencer’s contribution and the store concept overall is it combines classic impulse with radically different food values. It’s a convenience marriage made in heaven.

“It’s never been done this well before, so overall it’s a first globally,” he adds.

The success of the format, argues Jamie Rayner, research director at ID Magasin, is in part down to the use of “clear merchandising,” which enables shoppers to find what they want to buy fairly quickly.

“It’s very exciting to be able to use Marks & Spencer as an offer,” he says.

“Everyone knows that you pay a premium to use a forecourt store and having Marks & Spencer there provides a very good fit. I think it’s something we’re going to see more of,” he adds.

Retail solutions provider srcg, which approached Marks & Spencer after being hired by BP to review its fresh food offer, has been in close contact with the project as it developed and remains one of the biggest advocates of the collaboration.

Director, Scott Annan, says sales in the pilot BP Connect/Marks & Spencer Simply Food stores have gone up to “+ 100%” and within that sales of branded products in the forecourt outlets have “grown significantly”.

“That’s not just come from Marks & Spencer’s products, although a huge proportion has. But more traditional fuel convenience brands have also grown in the stores,” he says.

Most analysts agree, however, that Marks & Spencer took something of a risk by allowing another company to take charge of its brand, despite previous collaborations with Compass in railway stations.

“Any partnership like this is going to be harder to manage than one player just doing it on their own, but it would appear to me as an outsider that it’s a partnership where a great deal of flexibility has been shown by both companies, to their credit,” says Munford.

Annan at srcg argues, however, that while there is “always a risk” of a negative impact on brand values, this was diminished because Marks & Spencer already had experience of working with its railway station partner, Compass.

“If you or I walked into a Marks & Spencer and a railway station Simply Food store, I don’t think you or I would see a difference,” he argues.

However, Marks & Spencer has already admitted that the railway stores have faced some difficulties, as they have the highest footfall but the lowest spend.

Annan, who describes BP Connect stores as being at the “top end” of BP service stations, says that standards at the firm’s leading store at Hammersmith Flyover, in London, are as good as anything he has seen.

“I think the risk is minimal plus all of these people have been trained in Simply Food stores. If you were to let it grow unfettered, then yes there would be a risk, but at the moment I don’t think that is likely,” he adds.

Despite the apparent success of placing Marks & Spencer-branded goods next to other brands in the BP stores, Annan remains unconvinced such a strategy would succeed in M&S’s traditional high street setting.

“Where M&S products have been put alongside other branded products in a roadside environment, it would appear to work. For that format, if I was either of those companies, I would be happy to roll that out to all the Connect forecourt stores in the country.

“But my personal view is (this approach in other Marks & Spencer stores) would not work.Ultimately, though, that’s a decision for Mr (Stuart) Rose and Ms (Jill) Bruce,” he adds.

Whether the project is rolled out further is squarely down to the two companies, says Munford, but thus far the consumer would appear to be voting with their feet in favour of the project.

“Look at the queues in the stores – it’s obviously popular and if it’s liked by consumers, then the potential for further expansion is definitely there,” he adds.

But where next for Marks & Spencer? Could a return to Europe be on the cards, five years after the retailer closed the doors of its Parisien outlet?

Annan believes there is an opportunity for the firm, certainly under its Simply Food guise, to return to continental shores.

“I think there’s an opportunity there. If you look at when it pulled out, I’m sure it was the right thing to do. If you look at the growth as far as food is concerned, it is in all the right areas,” he says.

Annan believes there is an opportunity for Marks & Spencer to “export” back into Europe, but he argues that one of its key strengths – a “brilliant” supply chain – could be “messed up” if the retailer moves back into the Continent.

With BP connect forecourt stations all across Continental Europe, the potential for expansion is there, but it could encounter problems, he warns, if it tried to stretch too far away from UK shores.

“Getting to Dublin, as it already has done, is not a problem, but as much as I’m sure consumers would love it, Marks & Spencer wouldn’t be able to open a food store in say Istanbul, because most of the stuff has a three-four day shelf-life. So it needs to draw an arc around the area it thinks it can manage,” he says.

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