Investing in the future

What has been the most recent investment in your business?

Paul: We’re right in the middle of our latest project. We’re currently refitting our Budgens Sawston store, replacing the shelving and adding energy efficient LED lighting. It’s to help create a bigger emphasis on fresh at the store.

Donna: Last August we had to rejig the shop in order to fit in the new post office, which involved installing a new counter and epos system. These changes came only a short time after a major refit of the entire store so it all happened very quickly.

Conrad: I’ve installed Subways in my two Eurospar stores over the past eight months, which has involved a massive refit to make the space required for the units.

Harj: We’ve undergone a mini refit of the store to include changing the end bays and store graphics.

How long did the project take from the initial idea to completion?

Paul: Michelle and I have meetings about the direction of the business on a monthly basis and the store refit has been part of our discussions for more than a year. But realistically it all started properly about six months ago and it will hopefully be finished in the next couple of weeks.

Donna: Including the time it took for the Post Office to decide if our store was suitable, about six months. A lot of that was waiting for a final decision. Once that was made, it didn’t take long at all to get the work done.

Conrad: Both sites took about six to eight months from conception to being completed, including the approval processes.

Harj: It usually takes about three months from deciding to do the project until it is completed. Once everything has been planned out, it all moves quite quickly.

Was the investment part of your long-term business plan, and how often do you make such a plan?

Paul: We did another one of our stores about three years ago and we felt that now was the right time for this store to be refitted. Every year we make a plan for each of our stores and this was the plan this year for Sawston.

Donna: No, it actually came out of the blue. We do have a three-year business plan but then the post office opportunity came up suddenly so we had to move quite quickly to get our plan for it together.

Conrad: My long-term business plan is quite broad and always evolving! Introducing Subway has been planned for some time and was a major goal of mine for the business.

Harj: It’s part of my long-term business plan to give the store a refresh every three or four years. It’s factored in to my annual business plans for those years.

What was the main reason for the investment?

Paul: We want to focus more on fresh food and the store needs to reflect that. It was also time for the store to be refreshed. It had been a while since any major work had been done on it and it was in danger of looking outdated.

Donna: The post office in the village was due to close and it was important that it stayed in the area for the community. We would have had to change our counter to accommodate it anyway so we felt it was important to do it properly and make it look as good as the rest of the store.

Conrad: The investment was to future-proof the business. Most investments can be boiled down to either cost-saving or growing the business, and installing Subway at our stores was the latter. With the multiples bearing down on the convenience sector, it’s important we add as many strings to our bow as possible. It’s also important to put markers down as well; there’s only enough people in these areas for one Subway site so it’s important that we have it at our store.

Harj: It’s important to refresh the store every three years or so, otherwise you risk it getting stale and turning customers off. It should be part of every retailer’s plan.

What support did your symbol group/wholesaler offer?

Paul: Musgrave has been very supportive. When we decided to go ahead with it, we met up with the development team and they helped with the planning process and in putting us in touch with their store- fitting teams. The refitted store had to meet the brand standard so it was important to get their input.

Donna: Best-One took a look at our plans and gave us some ideas. We were able to bounce ideas off each other and take the best of them. We had a mini open day when the post office opened, which they supported as well.

Conrad: Blakemore were very supportive with our ideas. They’re fantastic when it comes to supporting new ideas and they recognised that a project such as installing a Subway is good for the business and is something that’s worth getting behind.

Harj: Nisa were great and offered us a lot of support. They were the main driving force behind the project and their development team helped us out a lot, especially on the sales data and category management.

How much did the project cost and how did you finance it?

Paul: It cost about £100,000 and we financed it completely ourselves.

Donna: The whole project including a new counter and epos system cost £30,000 to complete, which we financed ourselves. We did consider approaching our bank for a loan, but in the end it turned out we could afford it without their help.

Conrad: Altogether it cost £250,000 to install Subways at both of its sites. One was financed through a bank loan, while the other was financed through an AF Blakemore loan.

Harj: This refit cost about £12,000 and was financed by the Nisa store development fund, where 0.5% of what we buy from Nisa goes back into a pot which is then used to pay us back for projects such as a refit.

How quickly do you expect an investment like this to make a return?

Paul: When we refitted our Sawbridgeworth store it took about 12 months to make a return on our investment, but we expect the refit at Sawston to take 18 months to pay back. Introducing LED lighting will help a lot and reduce our energy costs by about 20%, although installing them was 20% of the cost of the refit.

Donna: It should take a couple of years to pay back. We’ve done a lot of work on the store over the past four years and it’s starting to pay off now, but this particular investment will take two years to pay back.

Conrad: This level of investment will take us five years to pay back, but has already massively improved footfall.

Harj: We expect these types of refits to increase sales in the store by 10% when completed, so that would help pay it back completely within six months.

Do you have a good relationship with your bank and feel you could approach them for credit?

Paul: We do have a good relationship with our bank. Michelle and I meet with the bank manager every six months or so to discuss any big projects and they’re usually quite open to our business plans. It helps that we’re not a problem customer for them so they don’t have any issues with us.

Donna: Not especially. We switched banks recently because they weren’t supporting us and while our new bank has been helpful, we haven’t approached them for anything major yet. I’d rather we accomplish our plans without involving the bank.

Conrad: Yes, our bank is quite open to our business plans and the manager has recently spent a day with me to get a better view of the business. It’s a great attitude for them to have and it allows them to see first-hand where any money will be spent plus how the business is growing.

Harj: We’re a cash-rich business so we have quite a solid relationship with our bank and feel we can approach them with ideas if we need to.

What’s the next big investment you plan to make in your business?

Paul: Our next investment will be a refit of our third store in Chingford. That will be done in a couple of years and then Michelle and I will turn our attention back to Sawbridgeworth to see if it’s time for a refurbishment there.

Donna: When you’re looking around the store, you’ll always see another project, but our next plan is to replace the freezers at the back as they’re due to be upgraded.

Conrad: We’ll be doing a major refit of another one of our stores in the next 12 months. I want this refit to be big so I’ll be doing a lot of research in stores abroad to see what’s new in the sector and to implement some of the ideas I pick up there.

Harj: We’ll be looking at the home-delivery side of the business as that’s the only area that really needs some investment. That’ll be over the next year or so and will help us to become an even bigger part of the community.