Countrywide: creating a modern proposition for rural retail

While Britain’s high streets and big urban centres are the scene of constant retail change and innovation, rural store groups have typically proceeded at the slower pace of the countryside.

But a new breed of rustic retailer is emerging that has as much in common with Asda as Ambridge, and is as equally adept at serving the green welly brigade as its traditional Farmer Giles customer base.

At the forefront of the change is Countrywide, the 47-store group that has been transformed in recent years from an agricultural co-operative into a modern retail outfit. It is a blend illustrated by the fact that Countrywide is chaired by former Arcadia finance director Nigel Hall, while ex-president of the National Farmers Union Ben Gill is a non-executive director.

Buying the farm

Countrywide’s retail division has been ramped up over the past six years by chief executive John Hardman, who recognised the increasing importance of the stores arm to the group and the need to bring it up to date.

The business, originally formed through farmers’ co-operatives, has been refocused. Countrywide has exited activities such as manufacturing and concentrated on three core areas - agricultural supplies, energy and retail.

And it is retail where Hardman spotted some of the most exiting opportunities. He saw the potential of the Countrywide brand, its distinctness from other retailers and the chance to appeal to more customers as the rural population changed.

He says: “We’ve repositioned it without abandoning its roots. We set out a clear vision and strategy and we’ve seen profits grow.” Last year Countrywide’s retail arm posted a 16% rise in operating profits before corporate costs to £3m, with sales up 8% to £70m.

The improvements have been led by retail director Garry Wharmby, who had worked at retailers ranging from Sears to B&Q, before joining Countrywide just under three years ago.

He was drawn by the potential of the business, which he believes can exert a unique appeal to rural shoppers and, along with Hardman he has driven the professionalisation of Countrywide.

“We’re the strongest brand in this marketplace,” says Wharmby. “What the company needed was improvements in retailing.” He drafted in staff from retailers such as Tesco and B&Q to bolster the existing team and modernise operations.

The retailer calculates that its target market is worth £20bn overall and has prioritised better customer segmentation in order to tailor its offer and service.

Alongside the original professional farming shoppers, “lifestyle” customers have become increasingly important. The latter includes groups such as hobbyist smallholders and market town residents, and both main groups share interests such as horse riding, keeping pets and country pursuits.

That gives Countrywide the opportunity to become a one-stop destination store for all things pastoral. As well as the everyday essentials such as utilitarian workwear, customers can buy clothing brands such as Joules - the retailer’s best-selling women’s range - and Barbour. And a “good, better best” price architecture can be applied to such unusual products as wellington boots - Countrywide sells 100,000 pairs a year including Hunter at £137 a pair.

Categories such as equestrian and pets are key for Countrywide because of the associated consumer spend, but also necessitate high service standards.

So the retailer has developed an Equine World in-store area, now in two shops, designed like a stable to distinguish and add authority to the offer. There are more than 7 million horse owners in the UK and more than 50% of Countrywide’s customers have some sort of horsey connection.

And it is a category that is frequently not catered for in its totality, providing an opportunity for Countryside. “There are plenty of feed merchants or tack shops, but very few one-stop-shops for equestrianism,” Wharmby maintains.

A horse can cost up to £10,000 and maintenance costs can run to up to £4,000 a year. Wharmby says: “What’s really important here is looking after the relationships. The time a horse owner puts in is amazing so it’s important we get things right - expertise is crucial.”

Horse-related merchandise accounts for about 20% of the retailer’s sales, as does the pets category. In the latter case, Countrywide’s point of difference is its bulk offers - it sells 10kg bags of pet food for instance - but the service aspect is also offered through dispensaries.

Wharmby says: “Over the past few years we’ve done a lot on customer service.” Stores now achieve an average 87% to 88% mystery shopping score.

The retailer has also been overhauling its stores and extending its reach. A total of 12 shops have been revamped last year to the standard seen, for instance, at Honiton, Devon (pictured), and the refurbishments have gone down well with consumers. In 2008 Countrywide began adding garden centres - there are now 17 - and in 15 stores local produce, such as hams, cheeses and drinks, is sold.

A loyalty scheme has been introduced, helping push average transaction values from cardholders up compared with regular cash customers. The retailer has also developed own-brands, such as the Kadence and Woodbury equestrian clothing lines, which are sourced directly from China.

Countrywide has changed its business structure too. Since 2006 its shares have been traded on Sharemark, an exchange for small companies. The bulk of owners are 11,000 farmers and an employee save-as-you-earn scheme was launched last year. The share listing was an expedient way of addressing the needs of such an unusual group of owners, rather than an indication that Countrywide was setting itself up as a rival to conventionally listed firms. “There’s very little share trading - for instance it might be a farmer who’s retiring,” says Hardman.

But the sleepy share structure of Countrywide does not mean any shortage of ambition. Growth is very much on the retailer’s agenda. Most of its shops are in the Midlands and west of England and Hardman wants to branch out.

He says: “Countrywide is both a great brand name and an aspiration.” He says there is “easily” potential for 200 stores. However, the fragmented nature of the market makes building scale through deals difficult.

Hardman says: “There are probably 200 to 300 country stores, mainly owned by individuals. You can’t buy another competitor like, for instance, Pets at Home did, so growth takes more time.”

He adds: “We’re bigger than a regional player but not much bigger. We’ve got the appetite, the backing, the skills and the brand to take off.”

Rural competitors

Along with Countrywide, other retailers specialise in catering for the rural market.

AIM-listed Wynnstay Group, for instance, runs 43 shops. Most are eponymous stores but the retailer also runs the 14-strong Just for Pets chain. The majority of Wynnstay stores are in Wales and the Marches and in the year to October 31 2009 the group - which also has manufacture and supply divisions - turned over £215m and made an operating profit of £5.5m.

Like-for-likes rose 7% at Wynnstay stores and pro forma revenues at the Just for Pets chain climbed 16%.

In the southwest, co-operative Mole Valley Farmers has nine shops - again, pet supplies is an important part of the business mix alongside farm products but the retailer is also developing food lines. It said last week that sales of the Taste of the West range from local suppliers rose 150% year on year in the final quarter of 2009.

Mole Valley head of retail marketing Alun Johnson said: “Supporting the local community is at the heart of what Mole Valley is about.”

Another group, Scats Country Stores, has 19 shops in the southern counties and pitches itself as catering for shoppers whether they have “acres of land or a window box, a herd of cattle or a single dog”.