Our experience with England is both broad and deep, as our team has completed a number of extended stays in the country. Our interests in England are wide-ranging thanks to the size and importance of the country’s capital markets and the many excellent businesses domiciled and/or operating in the country.
We wanted to highlight one particular trip in May 2012, during which we drove around southeastern England and visited over 100 stores in an effort to better understand the nuances of the retail sector, particularly grocery. The motivation behind our visit was a potential investment in TESCO, in which we subsequently purchased a stake. In addition to speaking with managers from TESCO, we continued our habit of meeting with executives of our target investment’s competitors, a practice that has provided the most valuable insights.
TESCO has several different store concepts that it uses based on addressable demographics of the surrounding area, the density of housing, the traffic pattern of each site, the shopping patterns of nearby residences, etc. As part of of our self-guided tour, we made a point to visit a number of stores in each format to better understand staffing levels, operational excellence, product mix, basket sizes, etc. Understanding each store type would allow us to better understand the attractiveness of TESCO’s growth roadmap from store openings and the impact of proposed store closings. When in stores, we are trying to see it both through the eyes of the company (are things operating well?) and through the consumer (do they have what I need and am I having a pleasant shopping experience?).
We visited a handful of ASDA stores, a British supermarket chain owned by Wal-Mart and the second largest UK chain by market share, after TESCO. While at a store in Canterbury, we were astonished at how full the parking lot was an hour before the store opens. Customers are allowed to start shopping at 9:30 a.m., but they are unable to make any purchases before 10:00 am. The store was extremely nice inside, and all of the displays — especially produce — were impressive. So-called Sunday shopping hours are likely on their way out.
Sainsbury’s and MORRISONS are two additional large supermarkets in the U.K. that have a substantial market share.