Keep it fresh. Keep it local. That’s chief executive Nick Read’s recipe for success at Nisa. He spoke to Deputy Business Editor Greg Wright.
NICK Read is a man on a mission. It’s a straightforward mission, but one that can take the unprepared along a path strewn with snares.
When he became chief executive at Scunthorpe-based Nisa in February last year, his prime task was to return the business to profit, after a period of change and financial under-performance.
Over the past few years Nisa has been forced to fend off takeover approaches from York-based Costcutter and Bibby Line.
So his other significant task was to re-assert Nisa’s innate strength as an independent brand, at a time when more consumers are looking favourably on the convenience sector.
Mr Read clearly relishes the challenge, and after a bullish Christmas trading update, and a very healthy increase in membership numbers, there’s hard data to support his claim that Nisa is on the right track. In the longer term, he believes we will see more alliances and joint buying groups in the fiercely competitive convenience sector.
He took over as CEO from Neil Turton, who left to join a retail insight firm after a 23-year career at Nisa. Nisa was formed in 1977 to protect the interests of independent retailers. It was set up to negotiate the best deals on products to allow its members to compete with the big players.
Mr Read is a man who loves to place himself in the customers’ shoes. He joined Nisa from Thomas Cook, where he was group customer service director.
He’s also been commercial operations director at Vodafone UK. His CV includes stints as customer experience director at Lloyds Banking Group, and customer service director at Tesco.
He started his retail career with Aldi, where he rose to become purchasing director. So he’s got a clear vision about how small independents can set themselves apart from the retail giants. He believes the focus should not be solely on price. You must show that your heart is in the community you serve.
“I came in to Nisa to stabilise the business and return it to profit,’’ Mr Read told me. “The next challenge is – how do we build a sustainable business model for the group?”
“It’s an amazingly competitive market and if we focus entirely on price it would be the wrong thing to do. Clearly prices are a major component, but there are a number of other ingredients.”
Mr Read believes fresh “product”, which includes deli, bakery, fish, meat and fruit and veg and newspapers, all help to create a perception of quality. He believes they inspire customers to feel confident about their local shop.
He added: “Other ingredients include; being local and convenient, the speed of the shop – that’s getting in, getting what you want and getting out quickly, and the quality of the service; it must be personalised and relevant…as well as the notion of being part of the community.”
There’s mounting evidence that this approach is working. Nisa boosted its membership numbers by 374 stores over the last nine months of last year, as Mr Read’s turnaround plan gathered pace. Mr Reed’s strategy has also improved Nisa’s distribution and service offering.
Nisa Retail swung into profit over Christmas, reversing the large losses it suffered over the previous year’s festive season. Over the 10-week period to January 3 2016, Nisa recorded a profit of £520,000, compared with a loss of £2.4m in 2014.
Mr Read believes that Nisa’s ability to serve and develop a wide range of business types, including start-ups that need intensive support, sets it apart from its competitors. And in keeping with its mutual business model, Nisa should be for the benefit of the many and not the few, according to Mr Read.
Today, Nisa supports more than 1,300 member retailers, operating 3,000 retail sites throughout the UK. Some of these retailers operate under the Nisa brand. Nisa supplies the stock and retail support that enables them to grow their businesses.
In November last year, Nisa Retail secured a refinancing deal with Barclays. The business has also secured a number of high-value contract wins in recent months, including a £1bn five-year contract with My Local.
My Local, the group that bought Morrisons’ M Local convenience store estate, opened its doors in late 2015 with the promise that each store will stock more local produce.
Mr Read believes local independents must find “a point of differentiation” to show they are in touch with the community. Supporting community projects is one element of this approach, along with a commitment to locally sourced produce.
He added: “Consumer beha-viour is changing and people will spend time, and money, in people they feel are investing in their community. We have experienced a dramatic pick up in people joining us – we expect to see that continuing.”
The convenience sector has enjoyed rapid growth in recent years, but analysts believe that there will inevitably be some casualties and mergers.
“I think there will be consolidation in the convenience sector – there are 49,000 operators in this space and invariably something will give,’’ Mr Read said.
However, he doesn’t think consolidation will necessarily mean acquisitions in the sector. It could lead to the emergence of joint buying groups and alliances, for example.
Mr Read is also acutely aware of Nisa’s role as a major employer in Scunthorpe. He hopes that the staff who have stayed loyal during the downturn will benefit from Nisa’s revival.
He said: “There are around 1,000 people employed at the Scunthorpe site – that is where our heritage is, and we would hope the operation could grow there.”