After c-store chain My Local tumbled into administration, Retail Week looks at what went wrong during its nine-month life on the high street.

Grocery range

Shoppers’ prime reasons for visiting convenience stores are to purchase food for now or food for tonight, but My Local was left trailing in the wake of its rivals across key categories associated with those core missions.

Central to that was a below-average fresh offer in terms of both range and quality.

Although it penned a £1bn supply deal with Nisa, My Local was always going to be chasing the tails of rivals such as Tesco, Sainsbury’s and the Co-op when it came to its fresh credentials – and orders placed with its supplier never reached the anticipated levels because of sales being sluggish.

To make matters worse, that trio of competitors continued to invest heavily in quality and product development, which enabled them pull even further ahead in other categories, including food to go and frozen.

While My Local faced a tough market, sources told Retail Week that it did not help itself by piecing together a “poor” product mix, ordering unusual quantities of ambient goods compared with those being stocked by rivals.

Pricing

Convenience stores are known to charge a premium for products compared with larger supermarkets, but My Local’s pricing was often out of line with both c-store and big-box competitors in a number of areas.

Although beers, wines and spirits were reasonably priced and its meal deal option for lunchtime shoppers launched at a price point comparable to the offers of Sainsbury’s, Tesco and the Co-op, frozen and ambient ranges were often more expensive.

My Local utilised deals and promotions on a regular basis across a number of categories, but they were not enough to convince shoppers to switch from the more established grocery players on a regular basis.

Staff numbers

My Local took on 2,300 workers when it was created through the acquisition of 140 convenience stores from Morrisons in September 2015, but its shopfloor teams soon found themselves stretched.

“The retailer opted not to replace workers when they left the business, to the extent that it now employs 1,658 staff – some 642 fewer employees than it had when it launched nine months ago”

The retailer opted not to replace workers when they left the business, to the extent that it now employs 1,658 staff – some 642 fewer employees than it had when it launched nine months ago.

On average, that equates to each store operating with between four and five fewer staff members than it had become accustomed to.

While such a dent in numbers would have minimal impact on the performance of a larger supermarket, losing five staff members from a c-store team can have much larger ramifications, giving each remaining employee more responsibilities and less time to do the things that catch a shopper’s eye, such as delivering high customer service levels and making sure shelves are replenished.

In one of the most competitive sectors in retail, those are not metrics that My Local could afford to let slip.

Cost pressures

Although My Local removed some of cost from its business by opting not to replace departing staff members, the introduction of the national living wage in April meant that outgoings on shopfloor employees inched back up.

But that was not the only cost pressure My Local confronted during its turbulent nine-month run on the high street.

The chain’s boss Mike Greene pointed to ongoing investment in price in the wider market, which piled further pressure on prices and margins, making it even harder for My Local to compete.

With fears that Brexit will lead to increased sourcing costs for grocery retailers and business rates poised to rise next year, the cost pressures facing My Local looked set to increase even further.

My Local

My Local

My Local has tumbled into administration, putting 1,658 jobs at risk.

Store locations

Questions were raised over the location of My Local’s stores long before Greene and private equity house Greybull purchased and rebranded the estate.

Morrisons was slow to the convenience party and rushed into the sector in 2013 with what numerous analysts have since described as a “scattergun” approach to store acquisition.

“Inconvenient locations were highlighted as one of the main reasons Morrisons could not make its c-store business work – and it’s a hurdle My Local has also been unable to overcome”

The grocer picked up parcels of stores from retailers such as Jessops and Blockbuster after they plunged into administration, as it sought to quickly build a sizeable portfolio and catch up with Tesco and Sainsbury’s.

Morrisons struggled to make a solid return on its investment and boss David Potts decided to sell the business just months after he succeeded Dalton Phillips in March 2015.

Inconvenient locations were highlighted as one of the main reasons Morrisons could not make its c-store business work – and it’s a hurdle My Local has also been unable to overcome.

One property agent told Retail Week last year that a grocery rival of Morrisons had assessed the portfolio when the convenience business was placed up for sale, but the unnamed retailer deemed that “only a handful” of the 140 stores were worth looking at.

That sums up the estate that My Local inherited and the uphill struggle it faced from day one to compete with rivals that could boast shops in prime locations.

Marketing

Despite taking on a sizeable portfolio of stores, My Local did not invest much in marketing to drum up custom.

Its launch was a relatively quiet and unpublicised affair as stores opened in batches over the course of a week rather than as part of a grand opening event.

And as Morrisons heavily invested in Price Crunch, Tesco unveiled its Brand Guarantee initiative and the discounters continued to slash prices, My Local was drowned out by the noise being made by its competitors.

Had the retailer managed to get its name out there early on through newspaper, online and TV advertising, there is a chance it could have received an early sales boost and built the momentum it so desperately needed in a hotly contested sector.

Going it alone

Greene’s entrepreneurism and knowledge of convenience retail cannot be disputed and he clearly felt he had the weaponry in his arsenal that were required to make the business work.

“Perhaps My Local should have been more open to bringing in more expert opinion during its formative months”

He assembled an equally experienced senior team – including former Nisa director Neil Turton, former Asda executive Paul Dennis and ex-Musgrave man Jonathan Rons – to work under him and achieve his vision.

But perhaps they could be accused of underestimating the size of the task at hand.

Sources close to Retail Week revealed that My Local was approached by at least one management consultancy firm keen to work with Greene and his team to steer the business in the right direction, but this was turned down.

While it is too big a jump to say that having such additional help would have transformed the fortunes of the business, perhaps My Local should have been more open to bringing in more expert opinion during its formative months.