Alldays plc

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Alldays plc

Alldays House
Chestnut Ave
Chandlers Ford
Eastleigh, Hampshire S053 3HJ
United Kingdom
Telephone: (+44) 23-8064-5000
Fax: (+44) 23-8064-5111
Web site: http://www.Alldays.co.uk

Public Company
Incorporated: 1998
Employees: 10,196
Sales: 524.9 million ($839.8 million) (2001)
Stock Exchanges: London
Ticker Symbol: ALD
NAIC: 445120 Convenience Stores

Alldays plc is one of the United Kingdom’s leading operators of convenience stores. The company’s network includes more than 630 stores—at least 600 of which are owned directly by the company. Alldays has positioned itself as a “top-up” marketer, that is, the place for customers to come in order to buy items forgotten during a supermarket shopping trip. As such, the company’s stores feature a relatively wide range of products, but most product categories are limited to a single brand name. The company also features various convenience amenities, such as in-store ATM machines; postal services; bakeries, featuring L’Art du Pain bakeoff facilities; and “Movie Nights” video and DVD rental outlets. Alldays also owns and operates eight gasoline stations. Average store size in the Alldays network is 1,750 square feet. Confectionery, tobacco, and newsstand sales make up the largest percentage of the company’s revenues, at 60 percent. Yet Alldays has begun stepping up its presentation of fresh and chilled foods, both of which deliver higher-margin sales. Alldays stumbled hard after an aggressive expansion drive in the 1990s, which saw the company’s retail network swell to nearly 1,100 stores. A restructuring effort permitted the company to return to operational profits in 2001, yet a heavy debt burden, the result of a store buyback and disposal program begun in the late 1990s, left the company with continued net losses. Alldays aborted a plan to sell off the company at the end of 2001, and instead has focused on renewed growth, including attracting new franchise outlets, as well as a redesigned store format and product offering. Alldays is led by CEO Stuart Lawson and non-executive Chairman Alan Cole. The company is traded on the London stock exchange.

Wholesale to Retail Group in the 1990s

Alldays’ origins lie in the wholesale food trade in Scotland. The company was originally formed as Watson & Philip in the late 1960s and became one of the principal wholesale food suppliers to the VG and Spar supermarket chains, distributing to nearly 200 stores throughout Scotland. The company also developed its own network of wholesale trade cash and carry stores under the Trademarket name. After going public, Watson & Philip branched out into two additional directions, catering services and convenience stores, the latter operated under the VG and Spar banners. By the late 1980s, Watson & Philip had built up its own network of 37 convenience stores. The company’s total sales reached £250 million.

In 1991, Watson & Philip merged with another food wholesaler, Amalgamated Foods. That company had built up a complementary business to Watson & Philip, supplying the VG and Spar supermarket network in England, and specifically in the Midlands, East Anglia, and southeast regions. Amalgamated reached some 900 stores in all, and had also developed its own retail network of about 30 convenience stores, with sales of around £175 million by the beginning of the 1990s. While both merger parties initially kept their own names and management, the deal was in fact a takeover of Amalgamated by Watson & Philip, then led by Chairman Ian Macpherson.

Watson & Philip placed its name across the whole of its operations. The company’s convenience store network, which now neared 70 stores, maintained the Spar and VG banners for the time being. But the acquisition of Amalgamated had also brought the company a new banner, “All-day,” developed by Amalgamated as a sub-brand for its retail store network. Soon after the acquisition Watson & Philip decided to adopt the Alldays banner for all of its stores. The company meanwhile continued to build on its wholesale side, particularly with the opening of a new depot in Aberdeen in 1991 that gave the company frozen and chilled food capacity.

The Amalgamated acquisition signaled the start of a transition away from Watson & Philip’s wholesale operations, hard hit by the long recession in the United Kingdom at the beginning of the 1990s. Instead, the company placed its growth prospects on its retail division, and determined to expand its network of convenience stores. Since the Amalgamated acquistion, Watson & Philip had continued adding to its network, topping 100 stores in 1993. That year, however, saw the company make a big step toward achieving its goal of creating a nationwide chain of convenience stores when it paid £21 million to acquire the U.K. Circle K convenience store chain perations.

Circle K added more than 200 stores to the Watson & Philip network, bringing the company’s total store numbers over 300, some 80 of which were franchised stores. The company maintained the Circle K banner for a time as it tested new store formats for both Alldays and Circle K in an effort to determine which had the greatest appeal for the U.K. consumer public.

Convenient Focus in the 21st Century

The acquisition of Circle K brought Watson & Philip in conflict with the Spar/VG buying network, as Circle K belonged to the rival Nisa Today buying network. Despite the company’s denials that it would leave Spar/VG, the breakup appeared inevitable, and by the end of 1993, the company had severed its ties with Spar/VG, subcontracting its distribution activities to a group of third-party distributors. Soon after, Watson & Philip pulled out of the Nisa Today buying network as well, a move that underlined its determination to redevelop itself as a focused retail store group. After Macpherson became ill, David Bremner took over as company CEO.

By 1994, Watson & Philip had decided to rebrand all of its stores—which included a number of Spar and VG stores—as Alldays. The company not only rolled out the new banner across the networks, it also launched a new store design, placing more of an emphasis on fresh foods. The company’s departure from its former buying groups also enabled it to change its product range—which had been built around Spar and Nisa private labels—to feature more prominently the major brand names.

With nearly 350 Alldays stores by the middle of 1994, Watson & Philip had created the United Kingdom’s first nationally operating convenience store chain. By then, the company had begun to dispose of the remaining parts of its former wholesale business, pulling its Trademarket cash and carry arm out of England (that division was sold to Booker in 1999), focusing that business around six stores in Scotland and a single store in northern England.

The company now turned its major focus on its retailing arm, promising an aggressive growth policy—indeed, by the end of that year the company had added more than 50 new stores, and promised up to 70 new stores per year, with a goal of topping 1,000 stores throughout the United Kingdom. As Bremner told Grocer: “We think there are about 7,000 perfect locations for c-stores. If we get 1,000 over a sensible period of time, that gives us a 15% share of the market.”

In order to fuel this expansion, Watson & Philip developed its own—controversial—franchising concept. Instead of a more standard franchise network, the company created a series of so-called Regional Development Companies (RDC). Each RDC operated as an independent company, capable of borrowing capital to pursue its expansion. Each RDC was initially created around a hub of four to six stores “loaned” by Watson & Philip; an individual RDC was encouraged to grow, however, to a maximum of 40 stores. Bank loans arranged by an RDC were backed by Watson & Philip, while new constructions were carried out as joint ventures with construction companies.

Watson & Philip’s foodservice distribution wing continued to grow through the mid-1990s, and that division became one of the United Kingdom’s main players in the sector. The company also began foodservice distribution onto the European continent, although international operations remained a small part of the division’s business. Instead, Watson & Philip heightened its focus on its convenience store network, which, under the RDC plan, began to grow strongly. By the end of the year, the company had opened more than 100 new stores—of which 77 were franchised stores. During this time, the company closed 22 existing stores as it shuffled its geographic mix, bringing its total at the end of the year to 450 stores. Aiding the growing network was the launch of the British National Lottery. Alldays was quick to place ticket terminals in its stores, boosting revenues with the accompanying license fees, but also increasing traffic into the stores.

The company began 1996 with the announcement of opening an additional 100 stores—a figure reached by the end of the year. Yet in October of that year the company was forced to post a quarterly profit warning—largely due to expansion efforts in its foodservice division. While the company quickly recovered, the profit warning suggested growing trouble for the company. Aggressive growth had begun to drain its resources; meanwhile, despite the aggressive expansion of the convenience store network, like-for-like sales were growing more slowly, by just 1 percent.

Company Perspectives

The Alldays Mission: To be the customer’s first choice for convenience and top-up shopping within each store’s trading area.

New CEO Colin Glass, who took over after Bremner joined supermarket group Sainsburys, managed to revive the company’s like-for-like sales growth, which climbed to a respectable 6 percent by 1997. The company was also boosted by a deal made with Total Oil placing Alldays convenience shops in up to 250 Total gasoline stations across the United Kingdom. Under Glass, the company stepped up its franchise campaign. By the end of 1997, the company’s franchise network featured 31 RDCs, which operated 300 stores, out of a company total of 759 stores. The company itself owned only 252 stores, with the rest operated by non-RDC franchises. Yet by then, stock market analysts were already beginning to raise questions over the plan, which took operational control of a large part of the company’s store network away from Watson & Philip, while burdening the company with a great deal of financial responsibility.

Despite these concerns, Watson & Philip continued its aggressive growth—by the end of 1998, the company had reached 959 stores, nearly half of which were operated by its RDC network. In 1998, Watson & Philip decided to concentrate fully on convenience stores, selling the Watson & Philip foodservice division to catering group Brake Brothers for £38 million. With that sale went the Watson & Philip name as well—and the company now renamed itself Alldays Plc.

By then, Alldays had grown through the acquisition of a rival convenience store chain, Walter Willson’s, based in Gateshead and operating in the English northeast and Scottish border region. That acquisition brought the company 48 new stores, boosting Alldays’ total to some 200 new stores for the year.

Yet Alldays’ expansion proved too rapid. By 1999, the company resembled, as the Daily Telegraph described it, “one of those elaborate pyramids of fruit built by bored grocers.” After a slip in profits in 1998, the company’s pyramid was revealed to be resting on a shaky base. The company faced mounting competition from the United Kingdom’s large supermarket groups, which were turning to small-store formats to counter resistance to further “superstore” openings. At the same time, Alldays had moved beyond its traditional product mix to add items such as books, videos, compact discs, and even home electronics equipment, none of which found a ready market from Alldays’ customers. Attempts to introduce such “Americanisms” as fast-food and being open 24-hours a day were also unsuccessful.

Most importantly, however, all but seven of the company’s 32 RDCs were losing money and becoming an increasing financial burden for Alldays. The poor condition of a number of RDC-owned stores also tarnished the Alldays’ brand itself. Even Alldays’ company-owned stores were posting negative sales growth, as the company’s debts climbed to a crushing £170 million and its operating profits slumped.

By mid-1999, the company had worked out a £200 million financial rescue package, the primary component of which required it to buy out the owners of its RDCs and take back control of its convenience store network. Buybacks began in August 1999, but quickly ran into trouble as the owners of the company’s few profitable RDCs refused to sell their businesses. An agreement was worked out by the end of October—the buybacks proceeded, although without CEO Glass, who tendered his resignation. The company also sold off the last of its Trademarket operation, becoming a pure-play convenience store group.

Glass was replaced by David Chapman, an industry veteran coming from a 25-year career at Sainsburys. Chapman set to work restoring the Alldays concept as well, refitting its stores—and particularly the former RDC-operated stores—with a return to the basic convenience store products that had built the company. Meanwhile, a price-cutting initiative was put in place in order to attract customers back into Alldays stores. The number of these continued to be pared, with the closing of poorly performing locations set up by its more aggressive RDCs and the sales of 32 stores to rival Costcutter. By the end of 2000, Alldays owned more than 675 stores outright; another 70 stores were held under the four remaining, profitable RDCs.

Yet Alldays continued to suffer through 2000, particularly with the end of its agreement with Total, and the resulting loss of some 200 Total-owned stores. The company’s share price collapsed to just a fraction of its former value and by the end of the year Alldays’ acknowledged that it was up for sale. Yet no suitable bidders stepped up, and in 2001, Alldays decided to “trade its way” out of its financial troubles.

Clapham was forced to resign at the beginning of 2001. New CEO Stuart Lawson ended the price-cutting operation—which had not succeeded in returning customers to the stores, while further depressing the company’s operating profits. Instead, Alldays returned to revitalizing the Alldays store concept. The company began working on a new store design, and also began adding new amenities, such as in-store bakeries, video and DVD rentals, and in-store post offices, to attract the motoring public.

Key Dates

1991:: Wholesale foodservices group Watson & Philip merges with another food wholesaler, Amalgamated Foods; all of the company’s stores are placed under the “Alldays” banner.
1993:: Company acquires 200 Circle K stores for £21 million as it begins its transition into a retail convenience store group.
1994:: All of company’s stores are rebranded as Alldays stores; company sells most of its Trademarket wholesale cash-and-carry operations.
1995:: Company begins aggressive expansion through Regional Development Company (RDC) franchise concept, with goal to top 1,000 stores by 2000.
1998:: Company sells off Watson & Philip foodservice division and changes name to Alldays plc; acquires 48-store Walter Wilson chain.
1999:: As operating losses deepen, Alldays announces its intention to buy out its RDCs.
2000:: Alldays announces it is up for sale, but finds no suitable buyer.
2002:: Alldays returns to operating profitability and prepares to launch a new store design.

Alldays returned to operating profitability by the end of 2001—although interest payments on its huge debt continued to depress net profits. By 2002, the company prepared to test its new store design. At the same time, the company hoped to renew expansion of the store network, once again seeking new franchises. This time, however, the company intended to remain in control of the Alldays brand. Despite its difficulties at the turn of the century, Alldays had grown into the United Kingdom’s leading convenience store group with 630 stores flying the Alldays banner.

Principal Subsidiaries

Aire Convenience Stores Limited; Alldays Stores Limited; Al-ldays Franchising Limited 100 licensing; Beds & Bucks Convenience Stores Limited; Central Convenience Stores Limited; Central & Fife Convenience Stores Limited; Cymru Convenience Stores Limited; Hereward Convenience Stores Limited; Home Counties Convenience Stores Limited; Kennet & Avon Convenience Stores Limited; Kent Convenience Stores Limited; Lancashire Convenience Stores Limited; Lothian and Borders Convenience Stores Limited; Merlin Convenience Stores Limited; Norcam Convenience Stores Limited; North Scotland Convenience Stores Limited; North West Convenience Stores Limited; Northumbria Convenience Stores Limited; Perihelion Convenience Stores Limited; Saxon Convenience Stores Limited; South East Convenience Stores Limited; Southern Convenience Stores Limited; Strathtay Retail Limited; Surrey Convenience Stores Limited; Tees and Wear Convenience Stores Limited; Thames Valley Convenience Stores Limited; Trent Convenience Stores Limited; Walter Willson Limited; West Mercia Convenience Stores Limited; West Scotland Convenience Stores Limited.