Greggs’ “adapt or die” mantra is the blueprint all businesses must follow
Greggs’ decision to reconsider its high-street presence in favour of motorway services, drive-throughs and industrial parks has helped it top £1 billion in sales for the first time. It’s time for every retailer to learn from the company’s success and seriously consider their physical strategy.
It’s not often that you go to a major trade event and walk away with only one particularly overriding thought.
Such was the case after visiting Retail Week Live at London’s InterContinental O2 hotel, where we took in as much as possible from the two-day gathering.
Many of the opinions showcased at RWL were those we fundamentally believed in ourselves. Various talking heads spoke of how the high street wasn’t dead, nor would it be with the correct approach; that local DNA is intrinsic to a physical store’s success; and that people must have convenience, certainty and choice to justify their trip to the shops, however long they’re there for.
However, it was Greggs’ keynote speech, which explained its recent overwhelming success, that stuck firmly in the memory. Not only did the business play on the three factors listed above, but it combined them with a strongly adaptive culture across its physical locations that went much further than simply creating footfall from vegan sausage rolls, even if it was an incredible, money-spinning PR coup.
Greggs has proved to every high-street company, whatever its sector, that the traditional approach to growth – one that saw Greggs itself aggressively expand in the 90s – is no longer fit for purpose. Now, it’s more important than ever to build a store strategy around a customer’s basic needs. For these reasons, Greggs itself is no longer expanding on the high street: it’s actively withdrawing from it, yet profits are greater than ever.
From market saturation to outright stagnation
I grew up in Greggs’ north-east heartland, and saw plenty of smaller bakeries consumed by the Newcastle brand – Bakers Oven in particular, which immediately handed the chain no fewer than three outlets in my local shopping centre during the mid-to-late 90s. At the time, bakeries were still hugely popular, even though smaller outfits could no longer compete in an increasingly competitive fast-food marketplace, supercharged by American imports like McDonald’s and KFC.
While rough around the edges, Greggs continued to thrive well into the new millennium. When I moved here to Leeds in 2008, it was clear the city was built on sausage rolls: there was at least a dozen in the city centre alone. However, they were usually unchanged from when they were first fitted: white, tiled floors reflected the warm, orange glow of the stores’ wood veneer trims, and of course the pastries themselves.
Over time, it seemed to take its toll on both Greggs’ street cred and presence. Its fortunes appeared to change; as Leeds redeveloped, the bakery’s outlets gradually began to close. Those left behind were rebranded and remodelled, albeit subtly.
However, this was all part of Greggs’ strategic roadmap pioneered in 2013: something shared in great detail at Retail Week Live by charismatic Greggs CEO Roger Whiteside, who received his OBE for services to women and equality this year. During his tenure, he’s taken Greggs from 1,671 shops with a regional structure to just short of 2,000 by the end of 2018. This year, they’re taking it over that number.
In short, it’s because of Whiteside’s bottom line: putting change at the heart of matters. For him, it’s adapt or die.
Using data, not instinct
Whiteside, who made a name for himself at both Marks & Spencer and Ocado, was quick off the mark with his core belief for any business. “If you’re not changing, you’re going backwards,” he opened. “I was looking for a reason to change. Initially, I didn’t have one, but by 2013, people were losing faith in the brand.”
This stagnation at Greggs was his main concern, but knowing where to start was the most difficult issue. He did, however, know that he couldn’t rely on people at the top as a first point of contact, adding: “You never find out how a business works from head office – you must go in store.”
From there, he visited various outlets across the UK with his team, knowing that to deliver change properly, his group needed to “row in sync, or you’ll capsize”. He adopted the most open-minded approach, putting his faith entirely in people at all levels. “I told the team they had my full support,” Whiteside explained. “Abandon theories if you need to.”
Instinct was discarded from the start; he needed to see raw data of sales, and that’s what led to the initial strategy – one that’s still in place five years later.
Developing the one-page plan
While Greggs was stagnant, Whiteside’s approach still put an initial emphasis on maintaining the good things that Greggs was still popular for, notably “traditional favourites” (pasties, slices and sandwiches), “great value”, “loyal, hardworking staff” and its position as Britain’s number-four coffee destination and number-two choice for breakfast.
Built onto these foundations were several core tenets developed by Whiteside and co. This included:
- “Food for all” – the ability to cater to all tastes and dietary requirements;
- “On the go” – the opportunity to get something fast and easily;
- “Customer experience” – friendly faces behind the counter, quick service and great communication; and
- “Building ahead” – an eye on the future, building capacity for many more stores than are in operation (Greggs currently has capacity for 2,500 stores, despite having around 2,000).
This looped back to observing and listening to customers in store and through data. Only then could they advance past simply redecorating their stores, or changing menus.
Listening to the customer – but learning when to say no
“Customers don’t change their minds quickly” was one of Whiteside’s more surprising points, but certainly accurate, especially for the FMCGs behind the curved glass windows in Greggs. More shocking than that was his honest admission that “no-one goes out for a Greggs”: something that further underpinned his approach of listening to the customer’s demands, analysing data and underlining his passion for Greggs to remain fast and friendly.
One big change meant departing from Greggs’ initial modus operandi entirely. Bakers, of course, are generally associated with bread. Nowadays, you’d be hard-pressed to find any on sale in Greggs, simply because customers don’t buy it like they used to – data proved that.
“We’re just not that type of business anymore,” he told the audience, without a trace of lament. He also pointed out that large cakes, and cakes in general, are also on the decline; lower sales are tied to a surge in demand for healthier options. This, too, led to the boom in its “balanced choices” range.
“You have you learn when to say no to customers,” he explained, adding that while some complained about the lack of freshly-baked bread, the brand was no longer associated with that with modern, younger consumers, who would simply go to supermarkets or independents instead.
The same can be said for regional specialities, such as stotties, egg custard tarts and Tottenham cake. In each of these cases, Greggs has kowtowed to regional demand until it’s not there anymore. While Newcastle still makes stottie sandwiches, Greggs refused to back down on other complainants, particularly during one particularly fraught moment in 2013 involving Eccles cakes in Eccles on Eccles Cake Week.
But don’t forget those vegan sausage rolls
While Whiteside “never expected Piers Morgan” in the vegan sausage roll debate, he already knew the business was onto a winner with them. Greggs’ textbook cheeky advertising aside, it wasn’t developed with vegans solely in mind – quite the opposite. From data trends, Whiteside and his team had identified a real demand for non-meat options from meat eaters, too.
Combining the quintessential Greggs staple with a wholly new recipe saw people from all walks of life trying it out. While it was never going to be a real sausage roll, it wasn’t trying to be. Just matching demand but maintaining Greggs’ brand values represented a double-whammy combo that proved impossible to resist – and in early May, the company announced that shares had jumped by over 13%, making it the best performer on the FTSE 100.
Locations meet vocations
The biggest change in Greggs’ direction came with the store’s units themselves – not their design so much as their placement. While repointing existing units proved to be a quick success, it didn’t cover the issue of its stores truly meeting customers on their terms.
Since 2013, Whiteside closed 300 of Greggs’ high-street stores. Many, including me, would’ve argued there were too many in the first place – in some instances, you could stand at the doorway of one and see another, like 7-Elevens in Hong Kong – but others would’ve seen this as a sign of failure. Whiteside proved this was not the case.
In their place, Greggs has opened 600 outlets away from the high street. These new locations matched its one-page plan perfectly, delivering fast, friendly service in places where speed, convenience and value were required, and people knew Greggs delivered it. As Whiteside explained, “no-one goes out just for a Greggs” – they’re just there when you really need them.
As such, Whiteside swapped town centres for travel hubs. Units in motorway services and airports in particular were snapped up. Some of these were more expensive to operate, but comparing the slightly raised price of an already-cheap steak bake at a services versus a £7+ meal deal at a Burger King proved immediately impactful.
Areas such as industrial parks close to builders’ merchants also proved incredibly popular. Aside from your classic burger vans, Whiteside found there was rarely any competition outside of a Wickes or Selco, and yet the demand for cheap and easy lunches “on the go” were greater than ever.
Of course, Greggs didn’t abandon the high street altogether; just that Whiteside and his team want to work to his “fewer, better” mantra. “We believe the high street will always be visited by people who want to be entertained away from home,” he said. Why miss out on this captive audience?
It’s no longer about improving – it’s time for real innovation
Those who fear that Greggs’ strategy is null and void because they’re a fast food retailer – and not, say, a fashion brand or a stationer – blind themselves to the incredible possibilities that could be gained from learning from even the smallest elements of its modern strategy.
Greggs isn’t the most glamorous brand in the world, but those who dare to look down their noses at the value-first bakery chain are foolish. Whiteside and his team, from board level to behind the counter, know exactly what they represent as a brand, and they’re proud of it.
And why shouldn’t they be? Greggs has listened to customers and abandoned instinct in favour of hard data, and its reward is a business model that’s effectively future-proofed. Profits are constantly reinvested into growth, branding, communications and new offerings, updating its physical stores – and the experience that comes with it – in the same way developers constantly deploy miniscule changes to a website or app, matching evolving demands and tastes.
George Blankenship, a former executive at bleeding-edge businesses including Tesla Motors and Apple, describes the current conundrum on the high street better than anyone when he says that “[w]e try to rationalise why innovations from other sectors don’t apply to us, rather than focusing on why they do.”
As such, a corporate strategy of just being slightly better than direct competitors – instead of learning from those outside of the sector – means that only one upstart company is needed to provide something so positively disruptive that everyone else is blown out of the water. Isn’t it time every company strived to learn from hard facts and respond, just like Greggs has?