Traditionally known as a high street baker, Greggs has transformed its business model since 2013, when it ushered in a new strategy.
Designed to make it a “winning brand” in the fiercely competitive food-to-go space, the blueprint has rejuvenated its fortunes, with a seismic shift to widen its proposition delivering like-for-like sales and profit growth.
In full-year figures revealed earlier this week, Greggs enjoyed a slight uptick in pre-tax profit before exceptional items to £81.8m in 2017, as total sales climbed 7.4% to £960m.
Greggs is far from finished, though, and continues to focus on the four pillars of creating great tasting fresh food, enhancing the customer experience, improving its supply chain and installing “first class” support teams as it bids to continue growing the business.
But how have Newcastle’s kings of the sausage roll emerged as one of the food-to-go winners, despite immense competition from the likes of Pret, Eat, Wasabi, Itsu, Leon and a plethora of convenience stores?
Retail Week highlights five things retailers can learn from Greggs.
Move with your customers
“Becoming the customers’ favourite for food-on-the-go” has been at the core of Gregg’s strategy for the past five years.
With that in mind, it has had to listen and adapt quickly to consumers’ eating habits and dietary preferences.
While the business has made a concerted effort to “nurture and protect” its reputation in traditional bakery categories such as sandwiches, savoury bakes, cakes and its famous sausage rolls, it has also broadened its proposition in order to create “new reasons to visit Greggs”.
Breakfast on-the-go has become an increasingly important category, with Greggs bringing in a £2 meal deal to tap into the growing trend of people eating breakfast outside of their own homes at a price point that beats the majority of its rivals.
“Retailers outside the food space haven’t been afraid to broaden their horizons either, without forgetting their core roots”
And it has launched the ‘Balanced Choice’ range – a selection of wraps, sandwiches, salads, soups, porridge, fruit, yoghurt and drinks under 400 calories each – which raked in more than £100m in sales last year.
In the grocery sector, Iceland has launched the Food Warehouse fascia to offer more upmarket products such as ostrich and kangaroo steaks and the big four are rapidly expanding their vegan and ‘free from’ propositions to cater for specific dietary needs.
Retailers outside the food space haven’t been afraid to broaden their horizons either, without forgetting their core roots.
Fashion specialists Next, H&M and Zara now have well-established homewares categories, while Hotel Chocolat is dipping its toe into the beauty arena with a range of skincare items.
Drive shopper loyalty
Achieving genuine customer loyalty in challenging economic and political times has arguably never been so difficult, but Greggs is managing to do exactly that.
Central to its efforts to keep shoppers coming back for more is its “rapidly” growing Greggs Rewards smartphone app.
Users simply scan their phone every time they make a purchase to get their hands on numerous rewards, including a free coffee after you buy seven, a free treat on your birthday and entry into a monthly draw to win £50.
“Loyalty initiatives, when executed well, can still be relevant to the modern consumer”
Shoppers can also use the Greggs Rewards app to pay, either via PayPal, Apple Pay or by pre-loading money onto their account using cash or a debit card.
Greggs also receives “satisfaction ratings” through the app, which it says “is helping to inform decision-making throughout the business”.
Tesco’s Clubcard, Sainsbury’s Nectar scheme, My John Lewis and the Boots Advantage Card have all demonstrated that loyalty initiatives, when executed well, can still be relevant to the modern consumer.
But plenty of other retailers could take a leaf out of Greggs’ book.
Read more: Is your loyalty scheme still relevant?
Harness the hype of the ‘PR product’
Over the past few years, Greggs has emerged as one of the kings of the PR stunt.
Last Christmas, it launched a limited edition £24 advent calendar, bearing the greeting “Merry Greggsmas” and an image of its festive bake wrapped in a red Santa bag.
The fact it produced just 500 of them created a spike in demand and drove footfall to the 16 stores that stocked the product.
“In the social media age, the power of product PR cannot be underestimated”
Its infamous Christmas advertising this year, which replaced the baby Jesus with a sausage roll, created a social media storm and, although Greggs was forced to apologise for any offence caused, the publicity it received was priceless.
And last month the baker teamed up with restaurant booking service OpenTable to serve romantic four-course dinners on Valentine’s Day for just £15 a head.
In the social media age, the power of product PR cannot be underestimated – and retailers are increasingly waking up to that fact.
Over the past year, Morrisons has led the way on that front – stocking the ‘Daddy of all Burgers’ for Father’s Day, the Yorkshire pudding pizza for Yorkshire Pudding Day and a volcanic vindaloo in honour of National Curry Week – while Poundland’s range of £1 sex toys also grabbed the nation’s attention.
Give back to local communities
As consumers become ever-more aware of provenance, ethics and responsible retailing, being seen to contribute positively to society can encourage more people to shop with you more often.
Greggs has carved out a reputation as a business that shares its success with local communities, largely through the Greggs Foundation – a charitable trust that celebrated its 30th birthday in 2017.
Last year, the foundation dished out £3.1m to charitable causes, including the Greggs Breakfast Club – an initiative that provides six million free breakfasts to children in almost 500 primary schools across the UK.
“Retailers could perhaps shout about their community work more as a way of attracting new customers”
As part of Greggs’ long-term goal to “have a positive impact on people’s lives”, the business also increased the amount of end-of-day food it donates to charity by 45% in 2017, providing free meals to thousands of people in need up and down the country.
In retail, the Co-op has a similar objective to give back to the communities it serves.
Since September 2016, it has raised more than £20m for local causes through its membership scheme – 1% of all cash spent by members on own-brand products and services is distributed to charity through the Co-op’s local community fund.
Other retailers do plenty for charity too, but could perhaps shout about their community work more as a way of attracting new customers.
Innovate within your store estate
Plenty of bricks and mortar-based businesses may be looking to scale back their high street presence, but Greggs is “accelerating” growth in store numbers – despite already boasting more than 1,850 branches.
Part of that drive is based on convenience – Greggs wants to be “within easy reach of customers” and opened 131 new stores last year alone – but it is also innovating within its property portfolio.
It has ploughed cash into transforming its old bakeries into its more modern “food-on-the-go formats”, is leveraging the franchise model to boost its nationwide coverage and has developed a new drive-thru format to allow it to “compete effectively” in a different type of location.
“Innovating within your property portfolio could be key for many retailers in the coming years”
Greggs launched its first drive-thru store at Irlam Gateway service station in Salford last summer and, following its success, is now on the hunt for more sites to roll out the format.
Boss Roger Whiteside told the Newcastle Chronicle last August: “We are very excited by it – it’s got off to a flying start.
“Customers are very taken by the idea of not having to leave their cars… it’s been very positive – I don’t understand why we haven’t done this years ago.”
Similarly, supermarket chains have dabbled with drive-thru click-and-collect points in their car parks, while Zara has opened a temporary click-and-collect store in Westfield London.
But thinking carefully about how to breathe new life into stores and genuinely innovating within your property portfolio could be key for many retailers in the coming years.