Would UGO to Netto-lite?

I had the relative pleasure of attending the press call for the new discounter concept launched by Haldanes yesterday, labelled ‘UGO’ it’s essentially taken the colouring, font and ‘branding’ from Netto and is using it for their own 20 stores purchased from Asda/Netto last week, Netto were taken aback but rather pleased when it was presented to them last week.

Calling it Netto-lite is somewhat harsh as there are several expansive plans to build on Netto’s legacy with 1300 more SKU’s for the ‘full shop experience’ and plans to expand Netto’s woeful H&B category along with home delivery for non food lines, possibility of consumer finance schemes for larger purchases (TV’s – not a £40 food shop) and ATM’s at every store.

Whilst the expansive plans are to take the business forward there is an element of consolidation as there are no plans to move away from Netto’s core spot lines, leaflets, special food lines and good fresh food offer. Also within that is the existing store teams who have impressed the Haldane’s management with their drive and loyalty, it’s great to see that an incoming business are embracing the staff that they are taking on in what is a very uncertain job market.

The stores that become UGO are in rather good condition according to Richard Collins (COO) so nothing will be done other than a rebadging exercise both inside and out which will leave the stores closed for a total of 14 trading hours.

Whilst the colour scheme remains the roughly the same, the new media is far more dominant with the UGO strapline used in various ways ‘mind how UGO’ on the sign indicating a wet floor for example.

The offer is likely to be expanded with concessionary services like bill pay, papers, greetings cards, delivery service and possibly dry cleaners / click + collect introduced to drive footfall, there is no fundamental issue with this but if you look at the hard discounters like Aldi and Lidl who fund their low prices with economies of scale and a low cost base avoiding bill pay, dry cleaners even credit card payments due to cost and efficiency issues then you have to look at how UGO will drive their low prices with just the 20 stores, the Nisa supply agreement and the ‘bells and whistles’ that Aldi / Lidl avoid.

I did pose a question around the ordering system as it’s often a solid way to drive efficiencies, limit stocking problems and also control wastage, Haldane’s have a new IT director starting Monday and they have been offered Netto’s software with the acquisition but they are evaluating their options in terms of IT. They have solid efficiency plans for the replenishment with palletised and composite displays to feature.

It will be interesting to see if UGO / Haldane’s are able to drag the brand up to attract a few more ABC1 shoppers, as recognisable as the logo and colour scheme is, it does come with the downtrodden Netto label so their focus on fresh foods and a sharper in store marketing effort could well see the brand perception rise albeit under a different name.

There are certainly efforts to push the new branding, rugby league advertising has been secured for the upcoming season which is a smart move considering the 20 stores that are being purchased are predominantly on the m62 corridor which is very much rugby league territory. Also Geoff Capes is fronting the advertising campaign highlighting the strength of UGO’s deals.

UGO will be a positive for any community gaining a UGO and losing the Netto but their commitment to low prices is admirable especially when there are efficiencies and a cost base to eliminate, their commitment to local suppliers and the local area is a positive move and will generate nothing but positive PR for the enlarged group.

Plans for the future are bright for Haldane’s – they are nearly at their target of 50 stores with the acquisition of these Netto stores, there is a plan for a fuel forecourt in Scotland and a move to the brand some of their convenience outlets as Haldane’s Express. Further acquisitions haven’t been ruled out and there was talk of a couple of stores in Leeds that were interesting them.

Conversion is due to be finished by the end of April 2011, I’ll be hoping to complete a visit before conversion to the Bradford branch and then another once the conversion is complete.

Within the recession and 2011 forecast to be a tough year, you do have to applaud the Haldane’s team for a bold move and their loyalty and admiration for Netto’s existing store teams.