SPAR Scotland wholesaler and retailer CJ Lang & Son is on track to hit £200 million in turnover for 2020/21 – up from £194 million in 2019/20.
Speaking at the company’s virtual tradeshow today (23 September) CEO Colin McLean said that, in addition to the rise in turnover, CJ Lang has increased profits.
“For far too long we were shifting an awful lot of low-margin products. This business only made just under half a million pounds in profit in 2017/18. We doubled that to just over a million pounds in 2018/19 and then grew it to just over £1.5 million in 2019/20. Although our results aren’t published yet, we have continued to grow our bottom line,” he reported.
“We have to be more focused on how we can build profits. Profits protect jobs,” he added.
A key contributor to CJ Lang’s profitable growth is its food-to-go programme – there are now CJ’s counters in more than 80 of the 107 company-owned stores and the roll-out will be completed by the end of the year. “We are well on our way to delivering a very profitable food-to-go business,” said McLean. “We will sell over £2 million of Costa coffee this year – that drives footfall into our stores – and we are selling hundreds of thousands of morning rolls every year. Our higher margin food-to-go offer typically replaces a loss-making Subway or post office counter.”
On the back of its investment in food-to-go and a new transport fleet, CJ Lang is now about to make its largest ever investment in its company-owned estate – stores will be modernised and the ageing refrigeration equipment will be replaced. “Spending money on new refrigeration is a must as we want a far better chilled and produce offer for all our customers,” he explained. “By investing in our refrigeration we will also take a giant step forward in our energy conservation.”
The company is also planning around 30 store refits, including its top 10 branches and summer seasonal stores. SPAR Crosshouse in Kilmarnock will be renovated in the early part of 2022, with other stores including Kilwinning and Erskine to follow shortly afterwards.
In the meantime, CJ Lang is focusing on removing manual tasks from its company stores. Initiatives include trials of electronic shelf-edge labels and digital media screens. In addition, automatic store based ordering, already in place for cigarettes and spirits, is being rolled out across all ambient and chilled categories over the next 12 months. “This is about moving towards a much more simple, higher margin convenience store offer,” said McLean.
CJ Lang is also supporting and investing in the 220+ independent SPAR stores in Scotland. A new website for its independent customers will go fully live by the end of October, and this will enable easier ordering of regular stock, promotions and seasonal stock, McLean promised. A one-stop help desk will also be introduced.
McLean also revealed that, having spent the summer months working with a team of consultants from KPMG to review its end-to-end supply chain and business IT systems, the CJ Lang board is now considering the recommendations with a view to enhancements in these areas.
Meanwhile, the company’s management and 1,700-strong workforce are striving to address the challenges currently affecting the business. McLean commented: “We are nearly five months into our latest trading year, but the past three months have been particularly tough and stressful. It has been described as a perfect storm: a combination of the pingdemic, in-bound supply chain shortages, raw material issues, Brexit, lorry driver issues, and in some areas a struggle to recruit experienced staff.
“We continue to do a terrific job overall at managing a very tricky situation. In some instances we are having to send our own trucks to collect beers, wines & spirits from our suppliers south of the border, just to protect customer availability. We have managed to protect the depot and our delivery operation from falling over – just – but we have provided a lot of additional support centrally just to keep it moving.
“The next few months as we move towards Christmas are likely to remain very challenging with the ongoing supply chain issues, and we are having to carefully protect today’s business whilst also building our future direction.”
He added: “Many other retailers want a slice of the growing convenience market and we will still need to keep pressing ahead – and quickly. Only recently Asda announced that over 200 petrol stations would convert to convenience stores. That’s a lot of new competition coming into our sector.
“Our business today is in a much stronger financial position than it has been for many years and we can look to build on this. SPAR Scotland has a long way to go as we unleash the full potential of this business.”
CJ Lang’s trading director Richard Collins highlighted some of the opportunities for boosting sales: “Shoppers in Scotland top the league when buying on impulse [but] the shopper in Scotland is one of the lowest users of convenience stores and of shopping online. 14% of shoppers in Scotland have not used a convenience store in the last month and only 43% have shopped for groceries online (IGD). This means they are our opportunity.”
Looking at the performance (wholesale sales) of specific product categories versus two years ago, Collins reported that all categories except fruit & veg were ahead. “The impulse categories of crisps, snacks and soft drinks are strong, although confectionery definitely has work to do. To the suppliers in this category I would urge you to do something a little bit different. Licensed is doing exceptionally well, as is tobacco, and it is also pleasing to see the growth of frozen and bread & cakes. Food to go leads the way in terms of percentage growth.”
Collins added that, at retail level, all categories are doing well with the exception of grocery, confectionery and fruit & veg, and he urged suppliers to use CJ Lang’s SalesTrack service in conjunction with TWC to drill down into how they are performing and inform their future activities.
Collins also spoke about forthcoming initiatives, including a £26,000 giveaway to green projects in local communities (nominations from 1 November) and TV advertising of in-store promotions in November and February. For Christmas, CJ Lang is securing and investing in stock now and also introducing allocations for key lines, “to take the spikes out of the supply chain”.
On top of the usual seasonal occasions, 2022 will have two extra events that offer potential for incremental sales and profits, Collins pointed out. These events are the Queen’s Platinum Jubilee with two extra bank holidays (2 and 3 June) and the FIFA World Cup in Qatar (21 November to 18 December). Collins invited suppliers to work with CJ Lang to maximise the opportunities: “If you have plans, share them with us, so that we can execute them in all our stores and also give you some ideas on how we can best exploit them together.”
• The SPAR Scotland Conference will be held on 22 September 2022 at Macdonald Aviemore Resort.
Tel: CJ Lang (01382) 512100
Published Date: September 23, 2021