Why small retail sites can be a big challenge

Travel locations and pop-ups are becoming increasingly popular, but these small spaces are not always as easy to run as they might seem.

Bigger isn’t always better. In fact, bakery businesses are increasingly looking at smaller sites from which to peddle their wares – particularly those in travel locations, such as railway stations and airports.

Take Paul UK, for example. The French bakery and patisserie brand has opened two Express sites in the past couple of years, one of which measures just 58 sq ft. Located on Tottenham Court Road, the tiny site focuses on quick service, grab-and-go options with a smaller menu than other Paul stores.

Greggs, too, has opened up sites in a number of train stations in recent years.

But what opportunities and challenges arise from operating in a smaller space than usual? And, how can a brand ensure it stands out in often very busy locations?

Premium specialist Doughnut Time believes small locations are essential to its success. “Pop-ups have been key to us being able to grow so quickly. We haven’t had to put up huge deposits to get a site open, which could be there for six months or a year,” says CEO Thomas Anderson.

“As a start-up, if we had locked ourselves into five leases with five heavy deposits in the beginning, we might not have survived.”

Doughnut Time’s portfolio includes a kiosk in Bicester Village, Oxfordshire; one in Blackfriars North station in London; and Betty, a Renault Estafette van in Westfield Stratford (pictured above).

But, when it comes to shopping centres and train stations, Anderson points to delivery challenges as everything has to go through the retail delivery team.

“Logistically it’s difficult, because there are set times when you can deliver. So if you run out during the day, you can’t get product back in,” he explains, also noting potentially difficult delivery routes via back entrances and corridors, particularly in larger shopping centres and train stations.

“But they’re giving you the customers. Yes, there are a load of rules and red tape and hoops to jump through, but there are millions of shoppers walking past every day.”

The next challenge is converting these passers-by into paying customers. Standing out is key.

Luckily, for kiosks at least, there are four sides to maximise branding rather than a single shopfront.

It is also important to ensure the shelves are well stocked, with effective lighting to highlight products that are relevant to consumers in that area or situation.

“You’ve got to think about the missions people want to be fulfilling,” advises David Martin, joint managing director at brand design agency M Worldwide.

Often, this means editing a product range to ensure shelf space is maximised and customer needs are met. Paul’s Express range, for example, features porridge, croissants, sausage rolls and sandwiches – items that can be eaten on-the-go.

“For smaller sites you have to boil the proposition down to its core essence – from a brand, product and service point of view,” adds Martin.

This ethos has also been embraced by coffee chain Costa, which unveiled a series of commuter-focused mini-sites in London last year – the first of which was in Lewisham station. The layout and ordering system were designed to have customers in and out of the store in a few minutes, so all food and drink is takeaway only, payment can be contactless, and ordering can be self-service.

But customer service shouldn’t be sacrificed for speed – things Pret does really well, according to Martin. “When you go to Pret, priority number one is serving someone quickly and efficiently, so that will be key in this setting. Then there is some friendliness – and that is the icing on top,” he says.

The spaces may be small, but they require big thinking to be a success.

Why is travel such a huge opportunity?

Travel sites, including those in railway stations and airports, are a key focus for a number of bakery businesses as they look to branch away from Britain’s dwindling high streets.
For good reason, too. In the year ending June 2019, Brits splashed an extra £280m on
food and drink at airports, motorway services, train stations and forecourts, according to
The NPD Group.

This takes the value of the travel hub foodservice market from £2.47bn to £2.75bn, an increase of 11% over that period. The number of visits is also up by 7% from
576 million to 619 million.

“A dynamic part of Britain’s £57bn eat-out foodservice market, travel hubs are seeing attractive growth and we predict more success. This is in stark contrast to the British high street, where the performance in terms of visits is flat,” said Guy Fielding, business development director (foodservice) at The NPD Group, when the figures were revealed in August 2019.

Airports were a key driver of growth for the market overall, with foodservice visits up 31% over the past three years, followed by motorway service stations, which were up 16%. This is in stark contrast to the fortunes of foodservice operators on Britain’s high streets and shopping centres, which recorded eight million fewer visits (-0.2%).

The trend has also been reflected in the interest from brands such as Warrens Bakery and Paul UK (see main copy), but also the financial performance of travel-retail players such as SSP.

The company, which operates brands including Starbucks and Upper Crust, posted a 12.1% increase in profit for the year ended 30 September 2019. It also attributed a 1.9% increase in like-for-like sales to growth in air and rail passenger numbers.

One of the other reasons travel sites are doing well, according to Fielding, is that the quality of the food and drinks served has improved, as has the experience offered when shopping there.

“Times have changed,” he added. “Yes, there are still locations and outlets that clearly need to do better, but travelling consumers these days are getting much more than they have ever done before in terms of service, variety and quality.”

The travel hub foodservice market shows no sign of slowing down either. The NPD Group likens it to the explosive growth seen in the delivery channel and predicts that value could increase by as much as 25% by 2020, taking its worth to £3.4bn.

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