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Why "Local" is a Business Model, Not a Marketing Slogan | BM · The Retail Podcast

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Hello and welcome back to the Retail Podcast live from a
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beautiful part of Spain, specifically on the outskirts of
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Madrid in a residential area called Potfuelo.
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I am so fortunate to be joined by Jose.
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Jose, for those who don't know you, and there's lots of people
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in the region that do know you, could you tell us a little bit
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about where we are and who you are?
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Alex, welcome to La Finca. It's it's great to have you here
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with us today. This is a very special location.
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We are inside one of the most exclusive residential areas of
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Porcello, Baracon and Madrid in general and the store sits
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within a very distinctive food focused commercial centre.
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You'll see it afterwards. But what you'll see inside is,
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is our BM standard really around 1000 square metres of sales
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floor, a deep assortment, an exceptional fresh offering and
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obviously a store that is where the experience is designed
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entirely around customer well-being.
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I don't know how much you know about us, how much your public
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knows about us, but this important also to speak about
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maybe about, about this history, about some, some some quick
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things about, about BM. For those who don't know us and
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our base outside of Spain, we are a family owned company with
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more than 30 years of history that was acquired by a private
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equity firm. Long story short, in just seven
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years, we've we've grown in Madrid from from zero to 86
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stores and more than 2000 colleagues.
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But throughout this journey, we have been clear.
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But one thing we we refuse, and I said it before recording, we
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refuse to become a commodity retailer.
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You know, in this sense, our differentiation comes from 4
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pillars. Yeah, mainly fresh leadership,
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assortment, breath, service, quality and customer experience.
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We'll see it after. But everything you'll see the,
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the, I mean the lightning, the self high, the visual clarity
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has been studied to ensure that the customer leaves the the
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store happier than when they entered.
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Let's walk through if you want. And I try to show you how this
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philosophy comes to life. Perfect, let's do it.
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Jose, you've obviously managed lots of different store formats
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and and from discount value retailers to now working at BM.
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What specific lessons from working in those different
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environments are you bringing to this store specifically?
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Yeah, as you know, I've been working at Little Spain and
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Little International nearly 10 years and you know, every, every
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stage of our career influences 1.
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You know, a hard discount taught me the more the operational
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discipline, you know, simplicity, clarity and pricing
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efficient flows and PM as as a value driven company teaches me
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everyday really the importance of assortment dev service and
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obviously emotional connection. I, I try to bring those, those
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learnings together through BM's identity.
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We, we want to be different, never a commodity.
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And as you see, you see that in several ways, but a very broad
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assortment for our proximity store, we work around in the
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store around 10,000 SKUs. And this breath is obviously
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intentional. You know, it allows customers to
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to complete their entire shopping mission in, in, in one
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visit. They don't need to go elsewhere.
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You know, BM resolves the full basket with their variety choice
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and obviously a, a balanced proposition, a balanced value
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proposition, about 85% of the manufacturer brands and 50%
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private label it. It's a model mainly built on,
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on, on freedom, not on restriction with our own brand,
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customers can save when they choose to and when the and, and
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with the manufacturer brand, if they, if it matters for trust,
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for taste or whatever, they, they also have it.
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So that's something that is very, very relevant for us.
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Obviously we a fresh concept that that blends in some way
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tradition, technology and and new processes.
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This will be also the future. But fresh represents here almost
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50% of our BM cells. We are modernising it without
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losing its soul, you know, combining expert service, strict
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quality standards, innovation, preparation and new forms of
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presenting the product, which is also very relevant and maybe to
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finish also to expertise. We have real experts in, in, in
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our store. And this is very, this is very
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important for us in fish, for example, there's, there's a huge
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difference between wild caught or farm raised.
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You know, while traditional markets in, in, in, in Spain are
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closing, we offer this mix that the city is missing.
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You know, the, the, the craft, the closeness of a traditional
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market combined with the most advanced approach to to
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freshness, you know, service technology.
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On the other hand, as we spoke before having the coffee other
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hard discount retailers or or models rely almost on entirely
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on, on, on deflation. Yeah.
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A raise in, in, in which price is the only level.
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We we believe at least this is our our thought that this is a
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fragile path. Yeah.
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When, when, when the only difference is is the price.
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Everything else becomes a compromise.
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And what I really want people in Madrid to feel is that BM is
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instantly recognisable here. You don't have to choose or give
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anything up at BM. You can find everything and the
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good thing is that you can find it in a single visit.
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Perfect. OK.
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So there's a big focus on fresh. Why don't we go and have a look
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at the fresh area then? Fantastic.
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So in your beautiful store, I can see that fresh produce is a
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a big bet for for you in terms of focusing on local produce.
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You have a slogan kilometre thero, but how do you go beyond
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slogans and marketing? And then what's the impact that
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you're having on local farmers and producers?
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Could you? I mean, what would be wonderful
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is if like you can take us through how you measure it and
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then and then how you strengthen the proposition well.
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That's a good point. But you know, local is not
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marketing for us. It's part of our business model
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in Madrid. We, we work closely with
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different producers. We can take a look afterwards
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at, at some of them, but the impact we aim for is, is very
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concrete, you know, providing stable and predictable demands,
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not, not sporadic purchasing for us does something that is very
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poor. Helping producers scale
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responsibility by integrating them into our logistic.
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But maybe the, the, the biggest point in here is giving them the
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visibility of a premium, premium context, you know where they
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story and, and, and the quality can shine.
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And we measured this seriously. I mean share of local products
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in sales, supply growth, customer penetration, repetition
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and obviously the contribution to cross margin.
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And at the end of the day, when, when, when those KP is move in
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the right direction, we know we are strengthening the region's
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food ecosystem. And this is also something that
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makes us different. OK.
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You manage more than 85 stores and over 2000 people just in the
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Madrid region, both organic growth and acquisitions.
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With the acquisition of Heber Group, I'm really curious how
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this store fits in your regional strategy.
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And then how does that sort of create a template on how you
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plan to scale across the city? Well, you're right, IBM growth
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is core to to our DNA both organic and inorganic.
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And you know over the years we we have consistently
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demonstrated our ability to expand our network through
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discipline, store openings and successful integration of
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acquired businesses such as Ebert in this case in Madrid
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with with really no big disruption in operation or
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customer experience. Growth in in in all forms has
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has never been a challenge. It's really part of our culture.
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And in this sense, working hand in hand, you know, with with
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stakeholder like by partners in this case has for the
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accelerated this, this, this journey, their strategic
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support, the operational focus has helped us scale and turn
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local into scalable and with the driven value creation.
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But coming to La Finca, where we are right now, La Finca plays
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really 33 roles at once. First, it is a flagship, it is a
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flagship. It showcases the highest
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standard of what BM can can deliver assortment service,
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fresh leadership and store atmosphere.
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As you see. Secondly, it is a laboratory.
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That's the that's the truth here.
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We, we test innovations, we we plan to scale across the
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network, extend really ready to eat solutions.
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As you as we saw before, new fresh merchandising automatic
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loft dispenser we tried last year, the first pineapple
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cutting machine we we we had in Madrid was here and and 3rd, it
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is a template. What works here becomes really
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the blueprint for refurbishments and new openings across Madrid.
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So although we are in a luxury area, the principles, quality,
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fresh digital, convenience, assortment depth are fully
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scalable. So you mentioned premium in
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terms of we're in a premium zone, but yet you're still
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delivering everyday value if you like.
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But we have to acknowledge that we're in a in a very beautiful
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area and the store is beautifully stocked, which is
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amazing. The shelves of, you know,
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merchandising is phenomenal. When you look at sort of
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demanding customers in your 1000 square metre footprint, which is
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your ideal footprint. We have behind us.
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We've got the fish market, we've got poultry and we've got the
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deli counter behind us and we're going to take a look at those in
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a minute. Yeah.
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What problem for the neighbourhood do you think
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you're solving with this type of store?
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Well, in Madrid, customers want something very specific and this
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is very, very clear for us the the quality of a traditional
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market, the convenience of a supermarket and the speed of
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digital retail and and all in the same place.
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That's a difficult thing and that's a problem we solve better
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than anyone. I think the question is how can
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I shop quickly, eat exceptionally well and enjoy the
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experience and everything is calibrated so that the client
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leaves the store happier than when they come in.
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As I said before that that is really our true competitive
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advantage. If we take a look at our fish
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low temperature ready meals beyond the fresh counter, we've
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we've incorporated I mean a special refrigerated unit with
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ready made dishes cooked at low temperature and and this high
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quality gastronomic solutions ready to eat, ready to heat and
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enjoy at home are perfect for this neighbourhood and and for
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for Madrid in general. If we take a look at the
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butchery hot roasts, we combine here again, traditional service
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and convenience. We have our classic cuts and our
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premium pieces, but also a hot corner with daily roasts.
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You know, whole chicken, ribs, beef preparation, it gives
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customers restaurant quality meals without preparation time.
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And that's also something, something relevant.
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We have also our ham cuts to to order, of course, in an area
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like like Madrid that is essential for our store for a
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store like this and our dedicated ham cutting station
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with with trained specialist slicing by hand is is really
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relevant. This service is highly valued in
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in Pothuelo and in Madrid because it's typical Spain and
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reflects our premium, our premium service stand.
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Our bakery. Our bakery is a perfect example
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really of how we combine tradition and innovation.
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If you take a look, you have traditional bread furniture and
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an open bread display where customers see all the varieties,
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select with gloves and weight their bread as in their fruit
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section and a manual bread slicer with three thickness
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levels much more customer centric than the single standard
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slicers you see in in most retailers.
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And we have also our refrigerated pastry cabinet
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supplied in this case by Vienna Caballanes, a brand synonymous
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with, you know, craftsmanship in, in in Madrid.
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And to finish, we, we we also have digital experience
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referring the the the virtual wine recommender.
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And here's a great example of digital convenience enhancing
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the, the the shopping journey. Our virtual wine recommender,
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you know customers can select wines with by grape variety,
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denomination of origin or pairing.
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Once they choose on the screen, a light signal activates on the
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self guiding them straight to the correct bottle.
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And this is also something different that we only have in
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this case in La Finca and that we are testing in order to
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expand it to the next to the other stores.
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Finally, I would say all this is wrapped in in a store design for
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for well-being. As I said at the beginning, you
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know, the lightning, the music, the circulation, the self
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heights, everything, everything is calibrated so that the client
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leaves happy the store. We think that this is one of our
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biggest advantages, Alex, you can't leave the store without
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testing our hand. So really.
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Yeah, yeah. You have heard.
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It's world famous. Yeah, yeah, yeah.
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You have to taste it, Roberto. McGrath Yes, thank you.
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Thank you, Roberto. We have also for the team.
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No, I'll eat it all. Fantastic.
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Ricissimo Gracias, when you look to three to five years into the
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future, what do you see what, what changes most in BM and, and
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in terms of operations, digital services, assortment, even
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talent, what do you see that you can turn around and say, we've
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truly delivered a new standard of proximity in Madrid if you
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like? For us to say we've delivered a
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new standard of proximity retail in, in Madrid or in general in
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in in Spain, several fundamental transformations must take place
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in the next years. A modernised concept of
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freshness could be maybe the the first point will we?
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We will have to redefine what fresh means for BM.
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You know, blending tradition with technology and new
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processes is is relevant. That means evolving how we work
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with products, service counters, preparation techniques and
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quality control so that freshness becomes both our
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heritage, but at the same time our innovation driver.
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Digital growth is also something is a big point.
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We we must not only maintain but expand our e-commerce and quick
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commerce network. The goal is seamless really
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interaction between online and in store and ensuring that
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digital convenience truly amplifies the value of of
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proximity in retail. Then our assortment will be a
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key element in the future. We will need to continue
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choosing carefully how our assortment grows and how it is
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organised in store creative categories, clear navigation and
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and an offer that reflects Madrid evolving needs.
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You know from premium to everyday.
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This is going to be also essential and, and speaking
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about our talent, our talent first internal growth supported
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by our specialist, our internal talent is one of our biggest
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strengths. You know, we must keep
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investing. It's not easy fishmongers,
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butchers, bakers. This is something that is
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difficult and we we have to combine it with better tools
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that training. But for sure our talent will,
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will define the the BM experience in the future.
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And finally, we were speaking about before connecting health,
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nutrition and technology. This is something that consumers
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increasingly expect, expect this guidance, this transparency and
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the relevance, you know, we will need to connect health,
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nutrition and technology across the whole journey from
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assortment decisions to digital advice and insto communication.
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I think that if we if we get this, this five areas, which is
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also is it's something it's is a lot we will, we will be relevant
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for sure in the Spanish market. That's brilliant.
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It's been an absolute blast. Thank you so much for taking the
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time and taking me through your beautiful store.
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You're always welcome to Spain, so see you next time, see you
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next time, see you next time.