It’s been a little more than a decade since the first Convenience Shop opened its doors in Zebbug and, in that time, the company’s growth has been nothing short of stratospheric. Today, the group comprises 83 stores in 48 localities – and according to CEO Martin Agius, it’s nowhere near done yet.
Delving into the major milestones in The Convenience Group’s relatively short life and tracing its impressive growth, CEO Martin Agius begins by highlighting an important decision taken by the company’s directors in 2014 – a decision that paved the way for the successes to come.
“In 2014, the directors had the foresight to launch the franchise concept,” he says. “They understood that shoppers needed shops nearby, and began to evolve the company accordingly.” From there, the group’s expansion rapidly increased in 2016, before things changed completely in 2018, as the group was restructured.
“From a fragmented system that comprised lots of companies with minority shareholding, the restructuring of the group resulted in having four shareholders as from 2018. This led to a bond issue of €5 million on the Prospects MTF in 2019, along with the employment of an experienced management team that continues to drive the project forward, which Martin himself joined at the end of 2018.
Explaining the group’s management structure, which reports to the board of directors and which Martin describes as “the brain of the company”, the CEO highlights the crucial roles of the team that drives it, including key people like the Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer, Chief Technical Officer and Chief People Officer, as well as an audit committee and internal auditor.
The fact that the company is headed by an independent CEO, he says, ensures that the management team can drive the business forward within the vision of the company, while also ensuring good governance, transparency and the appropriate controls. “Human resources are also an integral part of the company,” he affirms, noting that, “as a franchise, we employ more than 750 people.”
It was thanks to this strong managerial backbone that the company continued to thrive when the pandemic hit, in 2020. “We didn’t stay idle. That year we launched our online business and, then, in 2021, we created a fruitful relationship with Wolt, which today sees 20 of our stores included on their platform,” Martin smiles, before proceeding to outline the group’s most recent milestones.
“In 2022, we completed an agreement with COOP Italian Food S.P.A, making us their exclusive distributors in Malta and Libya, as well as a distribution agreement with Wolt Market, a dark store business that sells to the public and the retail sector alike.”
Delving further into the group’s operations, which are split into own store operations and franchised store operations, Martin explains that 40 outlets are the company’s own operated stores, which are run directly by the group within leased premises, while 43 are franchise outlets. The head office, he says, supports both by providing finance, marketing, human resources, category management and IT services.
“One of the company’s competencies is that all management, right up to director level, work towards KPIs, to create accountability and ownership, and to ensure that we drive the bottom line and performance of the group,” he maintains, describing the importance of guiding the people involved on the quality and performance of each and every shop. “One of my challenges at the outset,” he says, by way of example, “was to ensure that we have rigorous control on our stock. So, today we have an independent stocktake team led by a cost controller who, on a daily basis, visits shops to constantly take stock.”
Franchise development is another integral part of managing a rapidly growing group like TCS, the CEO says, and he is adamant that the expansion is not happening haphazardly. “Every shop is measured and studied in detail, demographically and socio-economically. For every franchisee, we do the necessary due diligence, projections and financing, a five-year profit and loss, and eventually get involved in everything from product selection to floor planning,” he affirms.
“I call it the catalyst of growth, and it makes all the difference,” he continues, going on to reveal signed agreements for 11 new Convenience Shop outlets which are set to open their doors in 2023. Affirming that the group’s approach remains cautious despite its outwardly rapid growth, Martin says, “each decision we take, we take scientifically.”
Illustrating this, the CEO references a recent study on shopper dynamics the company carried out with Procter & Gamble. The research revealed, he says, that shoppers, against the backdrop of the instability brought about following COVID and the onset of the war in Ukraine, as well as inflationary pressures and a rising cost of living, will be seeking smaller typology and discount stores. “What this means for us as a company,” he says, “is that we need to ensure that we review our assortment priorities in the proximity stores and exploit customer loyalty schemes.”
It is this emphasis on shopper needs that leads to the CEO’s belief that the group will grow even further in the coming years. “In 2023, we will have 91 outlets in 51 localities. To achieve this, we need to keep focusing on the core brand, making sure that we optimise proximity and align with the needs and expectations of our shoppers.”
Highlighting several growth opportunities moving forward, Martin continues, “small, independent grocery stores face an increasingly challenging competitive landscape ahead, presenting an acquisition or franchising opportunity for us.” Going further to highlight the decision to align with COOP Italia as one that’s been a long time in the works, and correlates with the way in which the retail segment in Malta is changing, he adds, “by featuring a wider, affordable product offering, consumers will be able to top up on a broader range of products, thus increasing the average chit size per visit.”
Delving into the challenges the business is set to face in the coming years, the CEO is adamant that the group’s brand recognition and the store network’s proximity to shoppers places TCS in a position to mitigate the effect of current and upcoming hurdles. “Our key challenges are inflationary pressures (for which our partnership with COOP Italian Food S.P.A ensures that we will continue to provide a quality, affordable product option); and tight labour market conditions coupled with our high dependency on human resources, for which we are focusing on internal and external talent attraction, and increased training and employee retention,” he states, asserting, “we are not a reactive company – we are always ahead of the curve.”
So much so that his strategy moving forward is aligned with The Convenience Shop’s vision to be the retailer of choice in the local convenience sector by ensuring that a modern, reliable and customer centric experience is always provided.
“We’re going to be very selective when it comes to acquisitions, and will also focus strongly on improving our customer experience through better category management, as well as expanding our product offering to new categories,” he maintains, revealing that more fresh produce and an expanded bakery and pastry section are on the cards. Along with these, the CEO reiterates that maintaining product quality and affordability through the group’s collaboration with local suppliers also features highly on the agenda, as well as continuing to open new stores in key growth locations lacking a Convenience Shop presence, while expanding its franchised store network. “We’re definitely looking at some very exciting years ahead,” he smiles.
This article is part of the serialisation of 50 interviews featured in MaltaCEOs 2023 – the sister brand to MaltaCEOs.mt and an annual high-end publication bringing together some of the country’s most influential business leaders
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