Greggs sharpens digital focus as it refreshes five-year strategy

After recording its first-ever loss during Covid-19, Greggs has reported a strong first half recovery as it adopts a “two-pronged focus” on digital innovations and product development.

greggsDelivery, customer rewards and product development have all been highlighted as key priorities in Greggs’ “refreshed” five-year strategy, as the bakery chain bounces back from the impact of Covid-19.

After recording its first-ever loss during the Covid-19 pandemic, Greggs has reported a strong first half recovery following the reopening of non-essential retail in April. The second quarter of 2021 “exceeded expectations” by delivering like-for-like sales growth compared to the same period in 2019.

Walk-in customer transactions still remained below the level seen in the second quarter of 2019, but were compensated for by higher average transaction values and increases in delivery sales. Greggs’ delivery partnership with Just Eat is now available in 837 of its 2,115 shops, representing 8.5% of shop sales over the first six months of the year.

As it continues to invest in its digital capabilities, Greggs says it will be relocating existing shops and redesigning them so they can better support collection of digital orders.

The chain opened 48 new shops over the first half of the year, 70% of which were in car-accessed locations such as roadsides, petrol stations, retail parks and supermarkets. A further 52 shops are expected to open this year to bring the 2021 total to 100.

Greggs signals faith in marketing despite financial hit from Covid

According to Greggs, pre-ordering or ‘click-and-collect’ presents the retailer with an opportunity to improve availability of its standard menu, as well as offering personalised choices where customers can, for example, adapt the ingredients in their sandwich.

“Pre-ordering is a market trend that we believe will support, in particular, our ambition to grow sales in the evening daypart, a segment of the market where we are currently underrepresented,” says CEO Roger Whiteside.

“Delivery will also have a role to play here, giving customers convenient access to Greggs’ products wherever they are throughout the day.”

Rewarding customers

Greggs has also pointed towards its new rewards app as being a key driver of its renewed sales growth, with plans to further invest in customer loyalty moving forward.

Over the half year period, the bakery chain launched a new Greggs Rewards app and revamped customer websites, designed to make the customer journey “as convenient as possible”. The app is integrated with the retailer’s click-and-collect service, and features an upgraded shop finder and access to nutritional information.

The brand also restarted its product development pipeline after a temporary suspension in 2020, with new launches in its vegan range. Greggs will continue developing its menu, with particular focus on offering greater choice in “growth categories” such as coffee and hot food.

However, despite recording growth in the second quarter of the year, like-for-like sales for the entire first half were down by 9.2% on a two-year basis, as shops remained shuttered during the first quarter due to Covid restrictions.

Nevertheless, with its second quarter boost, total sales for the first six months of the year reached £546m, driving an underlying pre-tax profit of £55.5m. Greggs says it now expects full-year profit to be “slightly” ahead of previous expectations.

How Greggs got customers to see it with new eyes

The food-to-go retailer had been hit hard by the Covid-19 pandemic, recording its first-ever loss as lockdown restrictions kept shops closed and consumers at home. The bakery chain posted a pre-tax loss of £13.7m for 2020 as a whole, significantly down from the £108.3m profit it made in 2019. In the first half alone, Greggs posted a loss of £64.5m.

According to the Chartered Institute of Marketing’s CEO Chris Daly, Greggs’ half year results are a result of its “hard work” adapting its services and operations to keep up with changing consumer habits over the last 18 months.

“Innovations like offering a click-and-collect service, and a partnership with Just Eat, have made it easier for consumers to continue buying Greggs’ products even throughout lockdown. Last week’s announcement of the new vegan sausage, bean and cheese melt also created a stir of excitement, which will no doubt entice customers to re-enter stores when it hits the shelves,” Daly says.

“Greggs’ two-pronged focus on digital innovations, coupled with releasing in-demand products, has allowed it to keep high street and online shoppers at its fingertips and bounce back following a difficult year.”

Greggs was named the Marketing Week Masters Brand of the Year in 2019 for its success in growing brand awareness and addressing challenges around brand consideration.

The turnaround saw the brand’s pre-tax profits rise 15% to £82.6m in its 2018 financial year, making sales of just over £1bn for the first time.