Retail Chinn-wag: Leader Price launches new concept and broadens offer to revitalise flagging sales

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Chinn: strategic introduction of branded lines

In a regular new column, Verdict retail analyst Simon Chinn, assesses the latest grocery store formats and concepts around the globe

Leader Price is renovating its store estate and adapting its traditional hard discount model by introducing national-brand products in a bid to improve the chain’s ailing performance, which saw its like-for-like sales drop 6.1% in the first half of the year.

Earlier this year parent Groupe Casino began the roll out of a new look format for its discount chain Leader Price. The modernisation was long over due, with many stores suffering from the gloomy and dull shopping environment of a traditional discounter and looking rather outdated compared to the many modern convenience and small supermarket concepts that have sprung up in France in recent years.

The new concept has been adapted to have a much more appealing atmosphere through the introduction of new colours and lighting onto the shop floor to brighten the environment. A fresh produce area occupies the space upon entering the store, a similar arrangement that has worked well for convenience chains such as Carrefour City/Contact.

As part of the revamp process, the company introduced a new logo for the chain, parting ways with the old blue, white and red design in favour of a simple pure red logo set against a white background. While not a drastic change from the old version, the logo redesign helps distinguish the renovated stores from its old store estate.

In addition to revamping the Leader Price store concept, the company is also broadening the product range available in stores. Throughout the second half of 2010 Leader Price will gradually introduce a range it describes as innovative private label products including yogurts without thickening agents and preservative free jam. Adding such products to its mix will help Leader Price create a point of difference to its main competitors.

In a further bid to revitalise flagging sales at the chain, the company is set to change its discount tack dramatically and introduce a number of branded products to its stores. Its product range has traditionally been entirely own brand but in late July it began to offer 100 national-brand products such as Nutella in 260 of its stores. This month (October) it will extend the range of branded products to 250 items and roll them out in all 600 Leader Price stores. The introduction of the lines is likely to be strategic, focused on areas where brand loyalty is highest. Being part of the giant Casino enterprise should have its benefits allowing Leader Price to leverage some of the buying power of its parent company for such products.

By the end of the first half Casino had converted 31 stores to the new concept, which had all registered significant sales uplifts. The retailer plans to accelerate the deployment of the new concept in the second half of the year. By 2012 it aims to have renovated the entire store network of around 600 stores. Its first half results indicate the recent changes Leader Price has made to both its stores and product range are gradually bearing fruit.

While like-for-like sales fell a whopping 10.8% in the first quarter, this decline had improved significantly by the end of the second quarter with like-for-likes down just 1.8%. Though the new concept would have contributed to this improvement to some extent, for the time being it is too early on for it to be a real driver of change. Other factors have contributed to the chain’s slight revival, such as a competitive repositioning of its pricing and ramped up advertising emphasising its low price points to appeal to frugal customers. While these initiatives have contributed to the slight improvement in Leader Price’s performance in the first half of the year, the sales uplifts at converted stores bode well for the company’s second half as it accelerates the roll out of the new concept.