Greggs’ recession busting recipe
Greggs* is one of the few brands to keep growing during the the doom and gloom on the high street. Total sales rose 5.4 percent in the third quarter to Sep, according to Reuters. This is a good performance indeed, given that Tesco just posted one of its biggest-ever quarterly falls in underlying sales and other retailers like Mothercare are doing even worse.
Here's some of the things they've been doing well to keep growing.
1. Focus on value
An obvious factor in Greggs favour during hard times is affordability. The average transaction value is relatively low at £2.25. And the company has maintained a good level of promotions to appeal to cash-strapped consumers.
2. Impactful identity
OK, Greggs isn't going to win a brand beauty contest. However, the simple blue, white and yellow frontage stands out well on the high street. I actually like the fact the company has stuck to this simple look, and not been tempted to spend time and money on a new, fancier brand identity.
3. Boosting physical availability
As with last week's post on Dominos, Greggs has grown by driving new store openings, with a record 80 net new openings planned this year. And with 1,540 stores Greggs now has more outlets than McDonald's.
4. Product truth – freshly baked
OK, so it might not be gourmet fare. But, to give Greggs some credit, they do bake their food fresh each morning and send it to their stores. Which is a nice product story.
5. Product news
Greggs have also done a good job of using product news to keep the brand top-of-mind and drive store traffic: building "mental availability". The latest bit of news has been "Superstar Doughnuts", with 1.4 million sold in the five weeks since launch.
There is one thing I find surprising and a bit disappointing coming from this down-to-earth business. Greggs' CEO, Ken McMeikan, is pushing the story that social media played a key role in the doughnut success story. He told reporters: "Through social media marketing we gave each of the doughnuts their own voice where they were talking about themselves and interacting with Facebook fans."
Ken, Ken, Ken. Come on. This makes a good media story. But looking at the Twitter page of the said doughnuts, they have between 500 and 1000 followers. Now, even if every one of these followers bought loads of doughnuts, it has NOTHING to do with the 1.4million sold.
Even the facebook page is not the key thing working here. It has a relatively large 284,000 likers. But as covered last week on the blog, interaction levels on Facebook are relatively low and unlikely to play a key role in sales. Typical wall posts get c.100-200 comments/likes: an interaction level of 0.05%.
In conclusion, Greggs is a good example of how to survive and thrive in tough economic times. Stick to a simple, clearly communicated proposition with a relevant product story (freshly baked) and drive both mental and physical availability.
