One Stop, the convenience chain acquired by Tesco in 2003, has beaten its own expansion target for 75 new stores by 2013 with the acquisition of the Mills Group.
One Stop is buying 77 stores from the Mills Group, the Northumberland to Wales convenience store chain. The move will extend the One Stop brand to 598 stores.
Interviewed for Global Convenience Store Focus a year ago, One Stop CEO, David Turner, said there was potential to open 20-25 new stores per year for the next three years.
“There are many areas/towns were we do not have any stores. Basically, we would open anywhere there is enough demand and we can fulfill customers’ needs,” he said.
“I have never thought about there being an optimum size for the chain. We keep our business processes simple so we can cope with more stores without increasing unnecessary overheads.”
According to Turner, One Stop aims to be “best in neighbourhood”, offering value for money and fast and friendly service.
It has recently invested in revamping tired stores, updating fixtures and fittings plus back of house as well as looking at space allocation by category.
Now it is honing similar plans for the Mills stores, said Turner.
“This is exciting news for One Stop. Acquiring 77 Mills stores means we can introduce One Stop’s quality, range and value to the communities they serve. We’ll be investing in refurbishing the stores, creating an even better shopping experience, as well as bringing down prices. I am also delighted to welcome the staff in these stores to the One Stop team.”
The retailer has also focused on range development.
“We have improved our grocery and fresh ranges in particular and our sales mix has become stronger in these areas versus traditional CTN categories,” said Turner.
Ironically, it was Tesco’s acquisition of T&S in 2002 – bought as a vehicle for developing its Express convenience model – which inspired Mills to transform its CTN-based model into one providing more fresh foods.
“It was very clear that we had to change,” recalls Mills Group managing director, Nigel Mills. “The news, alcohol and services model was still making money but the future was starting to be dictated by the multiples who were bringing fresh and chilled products into the community.
“We added fresh and chilled and tins and packets to the CTN business. It became a full convenience offering focused on products and services.”
Interviewed in December 2008, Mills was also mindful of the changing market and increasing competition. “Consumers want value but the consumer expectation is even higher,” said Mills. “It’s about price, customer service and quality and if shoppers don’t get it they will go somewhere else and not return,” he said.
- The Association of Convenience Stores (ACS) has called for an investigation into the acquisition by the competition authorities. It claims shoppers do not commonly understand One Stop’s acquisition represents the latest takeover of a local shop chain by Tesco. The move will take the total number of Tesco-owned convenience stores to over 1,700, it says.
ACS chief executive James Lowman said: “The competition authorities have repeatedly failed to grasp the implications of the continuing growth of Tesco’s shadow brand.
“The OFT allowed the original acquisition by Tesco of over 1,000 stores without adequate scrutiny in 2002 and the Competition Commission failed to address the issue in the two-year grocery market inquiry. They must not make the same mistake again; we need a full and robust investigation into the implications of the continued growth of the One Stop format.“