Inside Track by Peter Martin
Marks & Spencer is not the best advertisement for high street retailing these days. Even its legendary food business has seen like-for-like sales falls of over 2% this year.
So why is Compass Group, the UK’s and the world’s biggest caterer, putting so much faith in the M&S brand?
Compass’s joint venture with Marks & Spencer will see it open six new M&S Simply Food stores at travel sites in Britain before Christmas, bringing the total to 24. As Chris Copner, UK managing director of its retail arm Select Service Partners, revealed at this week’s Restaurant 2004 conference, it plans to continue the roll-out adding 15 new stores every year. Some time in the future, it even plans to take the M&S brand to its airport locations in western Europe.
SSP opened its first Simply Food in London’s Victoria Station in 2001. Last year it launched its first motorway operation at the Moto services at Toddington. This year it added its first airport site at Manchester. Terminal Three at Heathrow will acquire a Simply Food next month.
Compass’s enthusiasm for Simply Food is first and foremost financial. It makes more money for it than a conventional fast food or restaurant business that it would normally operate. The current 18 stores have total sales of over £100m, an average of over £5.5m a site. The Simply Food at Waterloo station is said to take over £10m.
What makes it work in the time-strapped food-on-the-move market so well is its convenience and flexibility. It taps into both the eating-out and eating-at-home markets, being used by consumers to buy food to eat while their travelling, later at the office or to take home at the end of the day. It also has the promise of quality that comes with the M&S brand, and because of the nature of travel sites it doesn’t have to compete on price.
With Compass, Simply Food has the benefit of both location and occasion, something it doesn’t necessarily have when being operated on a suburban high street by Marks & Spencer itself.
Franchising its brand out to Compass may well prove a real long-term winner for the retailer, especially as Compass is now talking about expanding the Simply Food offering to include other M&S products including clothing – making it the complete one-stop convenience shopping solution for busy travellers. Whether selling food or any other goods, convenience is increasingly king.
Compass makes no secret of the fact that it is now looking for the next M&S to develop, and while it will look at creating its own concepts working with established brands is always an attractive alternative. US brands like Panera Bread and Gordon Biersch, for example, have both been spoken of as future possibilities for the UK market to fill particular gaps in its portfolio.
