UK roundup: Asda trials wholesale, AI and leadership drive change

Asda trials franchise/wholesale package for small retailers

Asda appears to be following the example set by Morrisons by launching a wholesale supply service to third party retailers, backed with a franchise/fascia package for small stores. Three stores from the Glasgow-based One O One convenience chain have been rebadged as Asda Convenience as part of a trial supply relationship with a view to a wider roll-out going forward. Aiming the package initially at small ‘group’ retailers with 20 or more stores, Asda hopes to have wholesale links to at least three such retailers within the next 18-months. The package is described as 'between a franchise and symbol agreement' suggesting something closer to the Morrisons Daily package, rather than the stricter One Stop contract offered by the Tesco-owned subsidiary. 

Insight Partner, Patrick Mitchell-Fox’s view:

As Morrisons has proved, recruiting existing retailers to a wholesale/franchise relationship is a much quicker way to access growth in the convenience sector than by opening company-owned and operated sites. Developing company-run stores has significant costs and risks with few guarantees of success. With many retailers all looking to access a finite number of the best performing locations for their convenience formats, wholesaling to partner retailers, where store performance is a lesser concern, enables a business like Asda to tap into convenience sales in locations they would never consider running directly. From One O One’s perspective access to the range capabilities of Asda, especially in chilled and fresh, is a significant step towards a fuller, modern convenience offer and Asda’s value heritage will also be a benefit in many of its catchments. To date the One O One chain has primarily been supplied by the Scottish delivered wholesale business JW Filshill a member of the Unitas buying group.

SPAR appoints new MD

It has been announced that Michael Fletcher is to step down from the day-to-day running of SPAR (UK) Central Office at the end of August and is to be replaced as managing director by Jerome Saint-Marc who will join the business on 17 August.  Jerome Saint-Marc’s most recent permanent position was with Co-op where latterly he was Managing Director for Growth, a remit that included oversight of the Co-op Wholesale division (formerly Nisa).

Insight Partner, Patrick Mitchell-Fox’s view:

Michael Fletcher joined SPAR in later 2024, the first permanent managing director after a year-long interregnum following the departure of Louise Hoste in September 2023. This latest change comes at a challenging time for convenience retailing in the UK with several years of weak sales across the sector due to high levels of attrition affecting the key tobacco category in particular. This declining performance has been driving consolidation amongst regional operators, including within the SPAR network where the decision of the parent of Appleby Westward to exit the market set the stage for its purchase by AF Blakemore earlier this year. This acquisition of the SPAR distributor for South-West England has reduced the number of SPAR distributors in the market to four, confirming Blakemore as substantially the largest component of the SPAR network covering 44% of all SPAR stores in the UK. 

Tesco trials Finest coffee machines as part of meal deal offer  

Tesco has begun a trial of Finest coffee machines in two convenience stores located in Brixton and Moorgate. The machines will serve shoppers coffee made with Tesco Finest coffee beans, with the drinks included in the retailer’s meal deal offer. Tesco provides shoppers with hot coffee in more than 2,800 locations through a partnership with Costa Coffee.

Senior Insight Analyst, Alex Rowberry’s view:

The launch of Finest-branded coffee machines could be an attempt by Tesco to differentiate its food-to-go offer from rivals while also creating a new consumption occasion and growth opportunity for the £3bn Finest brand. The limited nature of the current trial suggests Tesco is taking a test-and-learn approach, but if shopper engagement is strong, the concept could position Tesco as a more significant player in the vended coffee market and increase competitive pressure on established operators. 

Gordon Brothers considering Poundland sale

The US investment firm is looking to auction off the struggling variety discounter just over a year after it bought it for £1 from previous owner Pepco. After a restructuring process that saw it close over 150 stores, it appears operations are still struggling to pick up; results for the latest financial year are currently delayed.   

Senior insight Analyst, Michela Pearson’s view:

It is unlikely that the entire Poundland estate would be acquired by a single competing retailer, as the 600-store strong network would be challenging to take on and convert. The high-street locations are also often too small for the likes of discounters Aldi and Lidl, although both are looking to increase their presence in high-footfall locations. The most likely scenario would be a division of locations among several retailers across both grocery and non-grocery, or vacant units as the UK high street continues to struggle.

Iceland Foods sees success from AI powered theft prevention platform  

Iceland Foods partnered with SAI to launch a theft prevention platform across its estate. The platform uses both the existing CCTV infrastructure of Iceland stores as well as AI to identify suspicious activity and potential theft, notifying colleagues in real time. The platform uses computer vision and generative AI to analyse live feeds across checkouts, aisles, and store entrances, with the software being able to pick up on missed scans, concealment, walkouts, in-store consumption, and shelf-sweeping. The retailer claims the technology has succeeded citing an 80% decrease in losses since rolling it out, with the number of false alerts also having dropped by nearly 50%.

Analyst, Seth Russell‘s view:

This technology seems to be able to be scaled, with the retailer citing that false alerts have dropped by nearly 50% meaning it is learning the specifics of what to look out for when it comes to theft. Using AI in this way enhances the functionality of already-installed CCTV networks within stores, but means there is not requirement to employ a person to be checking through the cameras consistently and also means colleagues won’t waste their time checking through footage of regular store activity.