Produce Business UK catches up with top convenience retail sector leader Magnus Reitan from Norway to find out what the UK can learn from someone who has had great success by adapting to dramatic shifts in consumer purchasing habits and understanding the role that C-stores and technology play in meeting continuously changing shopper needs
The Reitan Group operates in seven markets worldwide with its successful blend of supermarkets and convenience offer. None of those markets are the UK, but with our own trend towards purchasing little and often and a retail scene that is coming to terms with the rise of the discounters there is perhaps much the UK can learn from this third generation, Norwegian family firm.
The group operates in all the Nordic countries; Norway, Denmark, Sweden and Finland, as well as the three Baltic states of Estonia, Latvia and Lithuania. It has six different brands and operates using a franchise model.
Magnus Reitan, who heads up the convenience operation at the group and was named European Convenience Industry Leader of the Year at the NACS European Insight Summit earlier this month, is quick to point out that a large part of the group’s success in convenience is down to its people.
A valued workforce is key
“Any organisation is no better than the people working for it,” he says. “That is why we try to find people that match our values. When we hire them we talk about our goals and responsibilities and then it is up to that person to make a difference – we are not constantly looking over their shoulder.
“We need to have people that show a passion for their work as it creates energy for the people around them. They have to work independently and create their own results.
“We believe strong values are better guidelines for employees than rules and regulations as they motivate people and empower them to make decisions: we want 36,000 decision-makers in our business, not 36,000 order-takers and meeting participants.”
Here, the franchise model suits the Reitan Group well, which is why all of its stores are operated on a franchise basis. “Another of our values is that we believe in the individual’s desire to succeed and so our most important task is to give them the best possible tools to do that,” says Reitan.
On-going innovation is a must
Reitan believes that another of the group’s key tasks is to innovate – constantly. “Our customers are demanding healthier options and this is something we take very seriously. It is not that they are just saying they want healthier options; they are choosing them too.
“We have come a long way and done a lot of work in establishing healthier lines and our protein salads are a good example.”
The group’s supply chain and relationships with fresh produce partners are clearly a very important element in meeting this demand. “As well as the protein salads, we have acknowledged the trend for smoothie bars and juices, so we’ve come up with our own versions of those concepts for our customer base. We recognise the need to adapt to these sorts of changes in the marketplace and to take advantage of our locations.”
And location is clearly primordial in importance to the convenience sector. Particularly as the group is the market leader in Sweden and in Norway, this can often mean that one of its stores is located opposite another in the group that’s branded under a different fascia, for example a 7-Eleven and a Narvesen. “We need to be where most people are, so we are shutting and opening new stores all the time,” says Reitan.
“I have never had a stronger belief in [the] convenience [sector],” he continues. “The working population is growing and there are more people on the move going to and from school and work and so on. All the major cities are finding they need to expand their public transport networks. These are golden opportunities for us; our most profitable stores are near major transport hubs and stations.”
Impulse buying options are critical
The Reitan Group’s convenience concept is to specialise in impulse purchasing. “I believe that in the battle of the convenience channel versus the supermarket channel, the convenience channel will grow the most as long as we constantly innovate and come up with impulse products that are not necessarily what can be ordered on the internet and provided we continue to have the best locations.
“A lot of companies are afraid that online shopping and the Internet will threaten their business, but that is why we specialise in impulse; you cannot order a hotdog over the internet.”
Far from feeling threatened, the Reitan Group has also been quick to embrace the opportunities the online shopping boom offers, such as offering parcel pick-up services from its outlets.
Of course, the convenience business within Reitan’s operation is in a strong position in this regard because it has access to all the data pertaining to its supermarket business. “We learn from each other and we need to compete with each other as well,” says Reitan, whose elder brother Ole Robert heads up the supermarket business at the group.
For now, the younger of the two brothers acknowledges that there are some very large players in the supermarket sector in Europe, but he views the convenience sector as being different.
“We believe in international expansion…there are more opportunities for us to be in more countries…but we need the time to consolidate our acquisitions,” he says.
The group has grown organically and steadily over the decades but also through shrewd mergers, acquisitions and partnerships, for example with fuel giant Shell to bring its brand onto forecourts and into service stations as well.
No surprise then that Magnus Reitan concludes: “The future of convenience retailing is bright and we will do everything in our power to take our fair share of that growing market”.
