Format Experiences

The retail experience has been different across Musgrave’s varied retail formats, too. As a grocery supermarket, Supervalu has benefited, albeit with a shift in the product mix (and margin) to more traditional categories such as pasta, rice, home baking, household, hygiene products and alcohol and tobacco.

Centra’s community or neighborhood stores and forecourts have also enjoyed sales uplifts, catering for larger baskets, while still providing good value.

Forecourt locations with a stronger foodservice offer and/or high convenience have not traded as well, however. Fewer fuel customers had a knock-on effect in terms of footfall, with fewer people buying lunch on the go, for example.

In Spain, where Keeley describes business as a microcosm of the Musgrave Group, with retail, cash and carry and foodservice operations represented, the patterns have been broadly similar to those in Ireland. While neighborhood/community-style stores have done well, trading in coastal locations—Musgrave has strong representation in the Levante region—has been challenging as stores depend more on tourism.

Foodservice has suffered similarly, although the climate has enabled more outside dining versus Ireland. “That’s been made up in cash and carry and increased sales to small convenience retailers selling on to local communities,” Keeley said.

He reports that Musgrave’s foodservice business has dipped 29% and that it has not reduced its service levels. The company has also been facilitating this process with the launch of new software, which has allowed foodservice operators to get online very quickly, capturing customer orders and payments.

Keeley stated that “Credit control is a huge concern—if they have no cash flow it will be hard to continue to trade. We pride ourselves on building long-term, stable relationships, and our customers have appreciated the approach we have taken.”

New Normal

Musgrave is looking to the future—the likely trends and market opportunities. “It’s an overused phrase, but there definitely will be a ‘new normal,’” Keeley maintained. Hybrid working patterns are likely to prevail with a mix of home and office working. Similarly, there will be a mix of out-of-home and home dining. “I do think that people miss the experience of eating out—not just getting the food but that people will still search out experiential food opportunities. Food retail has an opportunity to step up,” he said.

For foodservice, the pandemic has driven growth in takeaway and aggregators with food, previously destined for people who dine out, now delivered to homes. Tapping that trend, Keeley revealed that Musgrave is trialing dark kitchens with two restaurants at a convenience store and at one of its food emporiums. “We are making that space available to those restaurants—it provides a new geography and is much more profitable for the operator as there are no front of house or insurance costs,” he said.

We talk about ‘growing good business,’ but what that means for us is having businesses that are commercially successful but also do good in the community.

Other trends poised to bounce back include premiumization, and health has also become a key issue, as consumers become more conscious of what they eat and the provenance of their food. Keeley said Musgrave has seen significant growth in plant-based products, for example, and has signed an exclusive partnership agreement across Ireland with The Happy Pear, the leading vegetarian and vegan food brand in the country.

“While people will be accessing food in multiple ways—at the convenience store, supermarket, by online delivery and in restaurants—the one common thread will be convenience. Consumers will have the expectation to access food where and when they want it,” Keeley said.

Brexit

Trade deal or no trade deal, Musgrave anticipates changes in the supply chain due to Brexit. Keeley shared that the business has been preparing for Brexit for four years on the basis of a no-deal, worst-case scenario. It has built additional warehouse space for product to ensure availability, for example.

On a positive note, Musgrave benefits from sourcing policies—it only sells 100% Irish meat and poultry in Ireland and adopts a similar position in Northern Ireland.

How the Northern Ireland protocol will operate remains to be seen, Keeley said. Product coming through ports could be delayed by customs, which would hamper customer satisfaction. And with no trade deal yet, a question hangs over the possibility of tariffs, too. “It’s a competitive market, and it’s difficult to call what would happen with prices,” Keeley said. “I think tariffs would cause the industry to say ‘is there another way?’, such as changing the supply chain and shipping directly from Europe not via the U.K.

Sustainability

While COVID-19 may have temporarily stalled sustainability issues like single-use plastics in retail and hospitality, it remains staunchly on Musgrave’s agenda. “We can’t let the pandemic get in the way, and we are absolutely committed to driving a sustainability program, and we are proud to be leaders in that space,” Keeley said.

The business has already introduced loose fruit and vegetables and compostable bags and has a target that all its own brand and in-store packaging will be recyclable, compostable or reusable by 2025.

For Gen Z it is even more relevant, but there is a say-do gap, Keeley maintained. “When I talk to my own kids, I tell them Musgrave was the first to introduce compostable coffee cups, but they challenge me that it’s not reusable,” he said with a smile. “The next generation vote with their feet—there’s no let up, and we won’t let up.”

This article was reprinted with permission from Global Convenience Store Focus, a newsletter from Insight Research. To subscribe, visit here.