In the words of CEO Colin McLean, CJ Lang had been underperforming for some time – reporting a drop in turnover in 2018 and had “lost its way”. McLean, part of a new management team, spearheaded a new strategy to find its way back to success.
This strategy seems to have paid off so far, in its results for the year ended 30 April 2020, its 2019/20 turnover increased by 3.4% to £194.2m while underlying pre-tax profits doubled to £1.5m.
The results included the impact of the very early stages of the coronavirus pandemic however finance director Craig Tedford said the business saw year-on-year sales growth of around 18% during the first six months of the current financial year. “What’s happened over the first six months of the financial year is the spike has reduced but we’re seeing a new norm and new steady. During the first half of our current financial year, we’ve seen our sales up to about 18% growth year-on-year, and our independent business is growing faster (19%) than our company owned stores (16%).”
Of the results, McLean said: “The onset of COVID-19 at the end of the last financial year, and the subsequent months that followed, have seen the retail landscape completely change. Our primary focus has been the continued wellbeing of our staff and customers and we have invested in our stores, distribution centre and offices to ensure that we have created safe environments for all.
“Prior to the onset of COVID-19 our business was already growing, buoyed by the development of our food-to-go offer; a continued focus on improving and implementing consistent store standards; the development of our independent retailer customer base; and improvements to our offer in order to meet the changing customer needs within convenience retailing.”
Speaking to ConvenienceStore ahead of this week’s virtual conference chairman Jim Hepburn outlined the difficulties the business was seeing and how it has changed. “If you go back three years, the business was declining about 2 or 3% a year in terms of top-line growth. We were not necessarily investing in areas that were driving growth. But over the last three years we’ve completely changed the management team, refocused the business and changed the strategy.
“The turnover we’re announcing this year was the turnover we had seven year ago, but with twice the profitability we had then. This business had lost its way, by bringing in a new executive team, we’ve changed the way the business thinks and re-engaged the Spar business with our communities and customers in Scotland. We’ve grown our independent customers 25% over the course of the last two and a half years.”
‘Sleeping giant’
McLean adds that CJ Lang was “very much a sleeping giant” and “we’re [the management team] trying to deliver its true potential with these results the first step of that journey”.
McLean explained some of the areas of focus for the business including enhancing its digital presence via a new website.
“It’s part of our strategy, that we launched before Covid-19. One of the key links missing from the business was that digital piece and how we re-engineer the business. We looked at best practice across wholesale and consumer, and we’ve put together something we think is very different to what we’ve had before. This is just the start of the digital journey.
“Our processes are fairly archaic in some places, we’ve very paper driven if you’re an independent retailer in Spar Scotland. We’re too dependent on processes that were designed many years ago.”
McLean said that the business will also be looking at price for the consumer. “Value is going to become a bigger part of the equation. As part of our strategy that we announced a couple of years ago was to put the customer first and we recognised that the price perception of the Spar brand was an issue we had to face into.”
Hepburn adds that while Covid-19 changed the pace of their strategy, it didn’t veer them off-course. “The plan that we’re following, Covid has pushed it a bit further down the road but basically it’s the same road.”
McLean adds that the team is utilising every weapon at its disposal to ensure the strategy pays off including taking advantage of the push towards localism. “We’re working with Scottish suppliers as part of how we differentiate to others on the high street. It’s a similar formula but it works. The beauty of Spar is that you can pull in the best of what the central office is doing, or Spar International or actually you can do the bits from Scotland really well. We’re trying to modernise the brand north of the border as it had lost its way.”
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