It is pleasant sometimes to discover good news among all the terrible ongoing 2020 events, and the One Stop franchise operation – based out of Brownhills in the English Midlands and featured in our Symbol, Franchise and Fascia supplement in the last issue – is a unique proposition in the world of independent chains and groups.
One Stop has been ownedby the Tesco Group since 2003 and is supplied by Booker. It can boast an estate of over 700 “company” stores, and to that is added a growing Franchisee element, now totalling 200 or more, which increasingly attracts independent retailers, either to their first fascia or away from another.
The franchise branch of the business has seen non-stop growth over the last six years and One Stop is now preparing itself for further expansion based on a model that sees fully-fitted new stores increase their weekly sales by an average of more than 14 percent in their first quarter of operation under the One Stop banner.
Some retailers whose names are very familiar to Asian Trader readers – such as Sunder Sandher and Aman Uppal – are One Stop people.
John Miller, Head of Franchise, and Mark Everitt, who is in charge of finance for the whole One Stop operation, hooked up with us for a long chat and began by outlining their roles in the organisation.
For Mark, One Stop is almost family. “I’ve been at One Stop now for – ooh, too long! Twenty-three years,” he admits. “Yeah, so man and boy. I am the finance director and that’s my background, but I also look after technology, I look after franchise and I also look after the distribution centres, and estates. So those are my five areas of expertise here at One Stop.”
John arrived by a more circuitous route, and for seven years was a director at Londis, which was sold to Booker in 2015 – before Booker itself merged with Tesco in 2018 under the direction of Charles Wilson, who has just retired.
What is it like being semi-independent but still part of Tesco – what are the advantages and downsides, I wonder, and how does the “Chinese wall” operate?
“It’s incredibly useful and insightful to be part of the Tesco Group,” says John, as we turn to confront the elephant in the room – the lockdown crisis and pandemic – during which time the Convenience channel came into its own while suffering bigly, too. Being allied to Booker when all that was going on must indeed have been reassuring.
“If you think back to the first two weeks, it was a real challenge for every retailer in the country. Social distancing measures weren’t in place and we were seeing chaos in supermarkets and so on. We had the ability to make use of all the good work of the Tesco Group,” he says.
“And being part of Tesco, we saw it there first – pictures of panic buying, mad shopping, etcetera,” adds Mark. “We probably didn’t see that for the first week, and what that allowed us to do was gear ourselves up accordingly.”
“So we were sitting as a business and understanding a number of things, with insights from Tesco and Booker into what they were doing, and also having 200-odd franchise stores and about 700 company stores, we were getting direct feedback from a sales team,” John explains.
One thing that quickly becomes clear is the way that One Stop makes efficient use of data to stay on top of what is happening: the One Stop franchise stores are on full stock and order with the rest of the estate and share the same EPoS system.
“That means we can get a really fast picture of what’s happening on the ground: what’s happening with stock, how do we resupply quickly, what areas are starting to sell. And that meant we could work together quickly as a leadership team.”
Throughout the crisis they had daily two-hour business calls – GOLD calls, as Mark terms them, so that everybody was kept constantly up to date.
“Once the supermarket shelves were empty, obviously, and everybody had run out of product, suddenly the convenience stores got hit,” he says. “I remember running a report the first week which basically said we had sold 20 per cent more than we had shipped in that week, so in five weeks’ time we would have no stock left, in theory.”
That didn’t happen in the end, and a two-pronged strategy developed of keeping staff and customers safe by putting in PPE at whatever cost, and also making sure that franchise stores were treated exactly the same as company ones.
“We did exactly the same for Franchisees as we did for our core: we didn’t treat them any differently,” says Mark. “So we gave them all those screens for free, the sanitisers free, we gave them masks free, everything. We just sent them all out on allocation, and the reason for that was that we wanted our Franchisees to be safe and we wanted their customers to feel safe.”
There was a lot of grumbling across Convenience concerning undersupply during the pandemic, and One Stop dealt with it by being up-front and using data to remain on top of the emerging situation.
“I think that when supply started to become a challenge for everybody, we felt it was much better to be completely honest with our customers,” John says. “If we weren’t going to get any stock in or would be OOS of something, we would communicate that, which at least gave Franchisees the option to go out and source other product.”
“I think we are in a good place with supply,” Mark nods. “We saw suppliers who were limiting down their range to make sure they could manufacture something – and our job is to adapt to that, to temporarily remove products that are no longer available and put products in their place so that there are more facings of the products you do need.
“We made it very clear we did not want to profiteer out of this, or want our Franchisees to profiteer out of this,” he adds. “I think what makes me proud and hopefully makes John proud is that we didn’t have Franchisees upping the price of bread and milk, and products that were scarce.”
Did treating the franchise stores as equals and staying on top of the crisis through data management mean the sharp edges were knocked off a very bad situation?
“I can’t remember a single complaint about a late delivery or anything like that,” says John. “Obviously we have had certain lines that have not been on deliveries, but wherever possible we’ve really managed the volumes incredibly well.”
So everybody including franchisees was treated as family, then? “That’s where we are a little bit different to the symbol group market,” John agrees.“Our levels of loyalty are round about 96 per cent and that only changed in a very small way, to be honest, even throughout Covid.”
Growing a franchise the family way
Symbol groups need rules and they need to be enforced or the whole thing falls apart, and this accounts for a lot of the churn we see in the world of independent retailers as they switch between one or another fascia, either by choice or because they are asked to leave. One Stop by all accounts is almost immune to this and I am interested in finding out why, and what role the franchise model plays in its apparent stability and steady growth.
“It’s about everyday relationships, and John does a great job on that,” says Mark, who joined One Stop when it was T & S back in the 1990s. “T & S made that transition from being a buying company to being retailers, and it was all around what the customer wants and what is right for the customer, not ‘I’ve got a great margin on this so I’ll try and sell it,’” he continues, adding the key point that I discover probably defines One Stop: “You know, we are not in this to chase store numbers, and that meant we were able to look at it from the viewpoint of what was right for customers.”
John chimes in with his own vivid experience of the difference in approach between them and others in the symbol scene.
“I’ve been around the trade for a very long time,” he says, “and over the years, whichever company I have worked for, whether it’s a wholesaler, a symbol group, or now a retail franchise, everybody always comes up to you (whether it’s an awards ceremony or a function in the City), and the first question is always how many stores have you got.
“It always frustrated me a little bit, and I would answer, ‘Is that really important?’ As in, it’s about having the right number of stores. I’ve been in places over the years where somebody would say, ‘Oh, I’ve got 2000 stores.’ Well, you might have 2000 stores, but 1000 of them might not be very good and 300 of them don’t place an order every week!”
So it’s a case of never mind the width, feel the quality – meaning the quality of the retailers and stores admitted to the family, and the kind of trusting relationships built up slowly for secure growth.
And data, of course, the key that fits the lock of success.
“The departments throughout our business are all working together and in tandem, so we are getting so much feedback from the stores about what is and isn’t working,” says John. “We have the data to make the right decisions. We are not dealing with having to link with 18 different types of EPoS and we can’t pull the data back …”
“About seven years ago we completed an acquisition of a great business,” Mark recalls. “And when the acquisition was complete there was a stark realisation that the complexities we suddenly faced were immense. We didn’t have data, we didn’t have the supply chain, we didn’t have this or that, we had to jump over so many hurdles, and … and … and … and you just think ‘Wow’, and suddenly realise – and this was a small group.”
It was the realisation that actually, most organisations were like that, that proved the inspiration for the One Stop model.
“That was the foundation stone of [our] franchise,” confirms Mark. “John was at Londis at the time and we had a pilot store in Swindon. John came to look at it and said, ‘Yeah, I could buy into this.’ Because in reality this group we were buying didn’t know what they were doing on pricing, because they were on their own. They didn’t know what was on their range, the pricing was wrong and they were charging too much; the supply chain wasn’t right …
“And suddenly we twigged then and thought, ‘Hang on, we’re doing this [for the company stores], so why can’t we do this for independent retailers who want the help on ‘What do I price? What do I put next to each other? How does my planogram work?’ All that stuff that they try and have to do themselves, we really did for them.”
Secrets of success
Slow growth and efficient incorporation using data – especially across multiple sites – is what provides the engine for the One Stop franchise model. That, and knowing your people very well indeed.
“What we are seeing now,” says Mark, “is people who had one store open their second, open their third. And you’ve seen recently in the press we have just shared the story on the Wilsons [brothers Danny and Craig of the Wilson Group] who have opened their tenth store. We have worked in collaboration with the Wilsons for six years now on their estate and what is right for them. This isn’t just around supplying product: we go in and help them with all the expertise.”
“I have a saying, which is, ‘The right retailer, the right store’,” says John. “You can’t have the right store with the wrong retailer and vice versa. We are very careful about how we recruit, and we make sure that they really understand what a retail franchise is. We get them to go out and visit other stores and see other retailers, talk to them, and just understand the differences in the ways of working.”
This means you can’t just pitch up and sign a One Stop contract. You have to build a relationship and get to know one another before taking it further. John admits that it is a pretty disciplined model to work with: families have rules, too, after all.
“A lot of people say it will be dictatorial, and I’ll just be a glorified store manager,” John rehearses. “But it is not dictatorial and that is the furthest thing from the truth. Actually, it’s probably one of the most collaborative groups that I have ever worked with in my career.”
It seems to me the franchise model involves a relationship built on more than ordinary levels of trust, and I remark that it is interesting that the retailers they have signed up are sticking with them.
“We have just started to renew a lot of contracts,” says John, “and I would say 97-98 per cent of those stores have renewed for another five years. And when you are growing a business from nothing, which is what we did over the last five years, we have been really successful.”
From zero to 200 in five years is certainly remarkable.
“That’s all really down to the work we do up-front,” John answers. “The process of signing a new Franchisee can take between three to six months; it can go as quickly as people need. It’s a little bit longer than the normal, ‘We’ll rock up, put up a fascia, whack in a till and get your order in next week online,”he explains.
“It’s slightly different because what we are doing is a full business review. We are looking at the business to make sure we can add value.If I think back to my old daysbefore joining One Stop, I was more interested in how much you were going to spend with me. That is kind of irrelevant now. Now what I am saying is: ‘How much are you taking? How is that going? And can I grow your sales?’ If I feel I can’t grow sales in a business, or my team feels that way, then we wouldn’t recommend you to join us.”
It feels like we are getting to the nub of it now, and Mark clarifies the thinking:
“We’ve got values as a company,” he says, “and one of those is that we treat people how we would like to be treated ourselves. Secondly, we basically treat all Franchisees the same. It isn’t like ‘You are doing the highest turnover and therefore we are going to treat you differently.’”
There is a relentless stress on quantum of cash, and this is an interesting idea that needs restating, because ignoring it is the downfall of many a business. It is no coincidence that the One Stop model, believes that overall sales levels are the one key metric for health of a store.
“What we are always looking at is how we can grow profitability, drive sales, what needs to happen in the store to do that. What can we spend the £50,000 on and how can we make the store better?” asks John.
“Over the years I have seen lots of businesses – nothing to do with One Stop – that tend to struggle,” he continues.“What happens is the retailers start to make less profit [for whatever reason], and the first thing they say to themselves is, ‘I need to make more profit. How am I going to do that? I know, I’ll put up my prices.’ And as they put their prices up the cash goes down, because the customers go elsewhere.And that is a diminishing return, whereas we drive sales and margin.”
Once a retailer has signed on with One Stop they are guided through the setting-up process by specialist launch support managers (LSMs), and then later on are overseen on a weekly basis by a BDM (business development manager).
“Our LSMs have all run shops, they’ve all been managers, and now they’ll train, they’ll guide and everything else,” says John. “The BDMs are all proper business-people, they have been in retail and have all the experience necessary.”
It’s a model that can be replicated and standardized and is why retailers are able so often to increase the number of One Stops they operate.
The growth of the franchise seems steady and “organic”, vie internal growth and word of mouth, united by patient acquisition of new members. “People move from symbol group to symbol group, they all get pretty much similar things. But at One Stop it’s different,” says John.
“Our main profile is low-to-mid affluence suburban neighbourhoods, and that’s what we operate in,” he sums up. “The beauty of One Stop is, we know what we’re good at and we know what we need to stick to. We don’t need to try and do things that are completely different.”
“What is happening is that people are coming to us, and saying, ‘I was speaking to so-and-so and they said what you do now is brilliant and this, this this, this …’ Mark says. “We get a lot of recommendations where people who are running successful stores will tell other people about how good we are and why they should move. There are people now coming to us that we saw four or five years ago, and it wasn’t quite right for them back then.”
As they really do say in Hollywood: word of mouth is the best advertising you can buy.