“One of the UK’s leading value brands has more to offer than sausage rolls and stottie cakes.”
At one time you could stand on any street corner in central Newcastle and see five Greggs shops just by turning your head. This Newcastle-based company is the largest specialist retail bakery chain in the UK with 1571 shops in all. It was founded by John Gregg in 1939 on Tyneside and since 1964 has expanded steadily. In the year to the end of December total revenues rose 5.8 per cent to £701 million, despite like-for-like sales falling in established stores, something that has continued into the first quarter of 2012. Pre-tax profits rose by 15.2 per cent to £60.5m.
Although in 2003 it opened 10 stores in Belgium “to test the foreign market” they are now all closed and the company is firmly focused on the UK, with 10 regional bakeries. It has prospered by clearly focusing on a value proposition: it is particularly well known for its budget breakfasts and low-cost pastries. In 1995, it rebranded the 165 Baker’s Oven stores it had bought from Allied Bakeries to Greggs to better leverage its national brand advertising.
Only 120 or so of its stores have any seating. So last year Greggs decided to take on the Starbucks of this world with its first Greggs Moments coffee shop in Newcastle. It plans to open more along with more motorway service station outlets. With its roots in the north east, there is an understandable regional bias – regional foods are sold locally – and there are plans to invest in promotions targeted in Scotland, the Midlands and the North East.
Greggs is now a national brand but one which retains a regional flavour and makes an implied price promise of being cheaper than the competition. In its first Greggs Moments, sandwiches were at least £1 cheaper than the numerous international chains that surrounded it.
The tough economic times are not just playing to its price positioning but are also freeing-up city centre shop spaces for incomers as trade continues to move away from our high streets. Soon we’ll be spoilt for breakfast choice on the high street. We can choose between Greggs, Wetherspoons or MacDonalds, before we do our shopping in the nearby pound shop. All seem to be benefiting from the current high street restructuring as traditional retailers leave.
Greggs is expanding and broadening its retail base by leveraging a very clearly positioned brand at just the right moment. Its focus and timing are to be commended.