Exclusive Interview – ISG

ISG, the construction services specialist, recently broke new ground – quite literally – with its new store development for Tesco at Seaton in Devon, which has proved the contractor’s most challenging scheme to date.  

As reported on the front page of the January Grocery Trader, ISG’s ingenious scheme was built on a site two metres below the flood plain, and required extensive enabling works to raise the ground level to protect any development from the threat of flooding. ISG’s pioneering approach to preparing the space for construction has seen an innovative application of existing technology, resulting in what is believed to be the first inland dredging project completed in the UK.

Besides excelling at new builds, ISG is also a market leader in managing construction works within or adjacent to live trading stores. Their investment in fixturisation and services management, coupled with the skills to minimise disruption to clients and customers, has secured ISG’s position as a principal framework contractor for the UK’s major supermarkets, delivering fit out, construction and a range of specialist services. ISG meets today’s increasing demands for a competitive return on project roll out and investment by utilising framework agreements to achieve better purchasing from material and sub-contract suppliers. The company’s consistent service delivery regardless of geography makes ISG the partner of choice for multi-national and local organisations building, refurbishing or fitting out their spaces.

Andy Taylor, UK Retail Business Development Director at ISG, spoke to The Grocery Trader.

GT – Andy, what does your role as Business Development Director of the Retail business involve from day to day?

My role incorporates the traditional elements of the business development function, so within the grocery retail space we work hard to maintain strong relationships with every major UK supermarket group and engage with new entrants into this market. ISG has longstanding relationships as a framework partner with all the big five supermarkets. In the case of Asda this extends back to 1996, and in 2011 we reached the milestone of completing 400 projects for the retailer. The role of business development director has a much broader remit than in many other sectors, and I have a great deal of involvement in bringing new and innovative ideas and ways of working to our clients. Adding value to our client relationships is extremely important and is a major contributory factor in helping us maintain our position as a preferred contractor and trusted project partner.

GT – How would you sum up ISG and its service offering?

ISG is an international construction services company delivering fit out, construction and a range of specialist services. We currently have 31 office locations worldwide, and this network continues to expand through high profile acquisitions and start-up operations in new countries. We work with owners, developers and occupiers in the public and private sector for an extensive range of industries – though retail is something of a specialism for us. The business was established in 1989 and has been quoted on AIM since 1998, and today the company has a turnover of around £1.2 billion.

GT – How is the Retail Division set up to service the needs of the grocery retailers?

ISG is structured in such a way that each of our supermarket clients has its own professional team that uniquely services its requirements under a key account director. This structure is essential to both protect our clients and to ensure the consistency and quality of project delivery. Our key client teams develop an acute understanding of the unique requirements of each retailer, and this learned knowledge is essential in driving efficiencies and adding value throughout the project process.

GT – In our introduction we’ve referred to the terms fixturisation, framework contractor and services management. What do these mean from your perspective?

They relate to the detailed knowledge and expertise that we possess as a contractor about the market place in general and our client specifically. It’s the value we bring from our ability to deliver not just a shell, but also all the componentry that goes into making a successful trading store.

GT – In your experience what effects have the economic pressures of the last few years had on retailers’ commissioning projects?

A noticeable change over the past three years has been in the procurement route utilised by the major grocery retailers. Over this period, we have witnessed an increase in the use of tendering, whether open market or within existing frameworks, to deliver both new build and refurbishment/extension schemes. Allocated work continues to be a major factor in our future pipeline of opportunities, and importantly we also remain successful at winning tendered schemes. Where the partnering framework really comes into its own is with the highly complex, logistically challenging projects, many of which involve live environment working as stores continue to trade, and this is where the expertise and skill set of sector specialists has the greatest value. A contractor with a proven track record in the successful delivery of these complex projects is a highly valued asset to the client.

The framework is still thriving within the retail sector, and this partnering approach manifestly brings major benefits for clients in terms of learned knowledge that can be applied to schemes. The collective knowledge built up by contractors is an incredibly valuable asset, enabling clients to benefit from efficiencies and innovation that simply does not exist with a strict tendering methodology.

The demand for refurbishment and extension of stores continues to be a strong driver of opportunities. Well-located stores that are overtrading continue to be targeted for extension, and this type of specialised work is where trusted, long-term partners can make a telling contribution. There is a varied response from retailers for the development of new build stores, especially as retailers look to extend their sphere of influence from traditional geographic heartlands and highly attractive development sites become available. All the major supermarkets continue to invest in store building programmes.

Of course, the current economic climate is having an effect on each of the supermarkets’ plans, but fundamentally they all need to have the right store environment to attract customers. So even in tough times, when there may be a slight pause as construction programmes are re-evaluated, the trend is inevitably for a bounce back in activity.

GT – What is the minimum size of retail project that you undertake?

ISG works across the entire spectrum of projects for our major supermarket clients, which can involve minor refurbishment and rebranding works, all the way up to delivering 100,000 sq. ft. new stores and distribution centres. Our ability to act as a one-stop shop for retail clients is one of our greatest assets, with a national capability and consistency of delivery demanded by our clients. A great example of the size and scale of projects we undertake is our recent smaller format or convenience store roll out programme for Asda, with the conversion of half of the Netto stores it recently acquired. Not only does this demonstrate our national capability but also our capacity to manage multiple projects across disparate locations at any one time. We work in partnership with our supermarket clients, and are able to provide solutions to any of their construction requirements.

GT – ISG works across international markets and is further expanding into new geographies. Can you briefly outline the latest developments for the group?

Last year we acquired a design & build capability in China, and organically started up a retail fit out operation in Europe. The acquisition of Alpha International, a retail design and fit out specialist based in Paris, which was completed in October 2011, has enhanced our organic offering. We are also now investing in start-up operations in Qatar and in Johannesburg to service the Southern African region.

Our international expertise positions us well, as most of the supermarket brands are engaging in or considering markets outside the UK. We are working with some of the UK’s major supermarkets with their expansion plans into Continental Europe. In this respect we have a unique international capability, and this really sets us apart from the competition.

GT – Why choose ISG to carry out a supermarket project?

Customer focus and consistency of delivery are central to our retail offering and we invest significant resources in our client relationships to maintain a high level of understanding of their individual operations, needs and requirements. ISG is also constantly innovating and working closely with leading retail specialists to develop and bring leading-edge solutions to our customers. In this way, we are not simply a service provider but a valuable extension of our clients’ business.

Consistent service delivery, regardless of geography, is a fundamental requirement for our clients, and as a business we have to deliver each and every time to the highest possible standards, often within extremely challenging time scales. The ability to consistently deliver is a key reason for ISG’s success in the retail sector, and this links back to our acute understanding of clients’ requirements, allied to a trusted supply chain and the high calibre of our people that ultimately deliver each project.

Driving out waste and making construction solutions leaner and more efficient is also an area in which we invest in to offer the best possible solutions to our clients. This isn’t about value engineering projects, which inevitably leads to the removal of functionality, but identifying and removing inefficiencies from the process. As a trusted partner, our extensive knowledge of building products and materials means that we can advise clients on the most suitable and cost effective solutions for each situation, and this open and honest approach is a key attribute of our overall service offering. We’re involved in the London 2012 Games, and have received great praise for our innovative solution that reduced the cost of steel used in the roof structure on the Velodrome by £1 million. It is exactly this same approach to lean construction solutions and driving out waste that we bring to every project in the grocery retail sector.

GT – Fast-track delivery is now routine in the retail sector. What examples does ISG have of time sensitive store projects?

In 2011, we delivered our largest store for Tesco – a 100,000 sq. ft. new build store in Yate, Bristol that was constructed on stilts, to allow for an under croft car parking area. It was delivered in record time. The project included the provision of off-site, modular accommodation to ensure the continuity of trading at the site.

The recent successful completion of the national rollout programme for Asda, which saw us convert 67 former Netto outlets to new concept Asda Supermarket stores, is also a great example. Each of these stores was converted in just nine days, and we were working on up to eight projects simultaneously across the UK to ensure we delivered in line with our client’s expectations.

GT – Working successfully in live environments is a specialist activity. How do you juggle the demands?

Within the context of live trading sites, minimising disruption for both client and customers is critical – you can’t be invisible, but you can be considerate and appropriate. Over 50 per cent of our turnover can be attributed to live environment working, so understanding how stores operate and developing strong relationships with staff and customers is essential to the successful delivery of projects.

GT – What has been the impact of the dot.com revolution, and what impact does this have on ISG?

The proliferation of consumers using the Internet to shop for all manner of goods has certainly had an impact on the way grocery retailers plan to meet their customers’ needs. From a business perspective, ISG delivered its first dot.com distribution centre for Tesco in Greenford, West London in 2011. This 100,000 sq. ft. centre is an important element of Tesco’s online trading strategy, and this is a growth area of the market.

Another interesting element of increased Internet grocery shopping is the growing emergence of the convenience or small format supermarket stores to service the ‘top up’ market. Asda’s acquisition of Netto highlights the growing importance of this market and this is certainly a highly dynamic area at present, with growth and opportunities for contractors.

GT – Can you explain your strategy on focusing on the communities where you are working?

ISG has a strong commitment to the local communities in which we work, and wherever possible we always look to utilise the skills and expertise of the local supply chain to deliver projects. The local economic multiplier effect of employing a localised supply chain has a major impact on communities, and we work closely with clients to ensure that these communities directly benefit from retail development.

Bringing benefit to local communities is not restricted to providing employment opportunities but also in delivering a lasting legacy, and ISG firmly believes in giving something back during the short time we are at an individual location. Initiatives range from charitable donations, through to the offer of assistance and expertise to local groups and charities. One of our latest initiatives sees us providing funding for local groups and charitable organisations in Croydon, who are being encouraged to come up with a ‘Dragons Den’ style pitch in front of our panel of judges to secure a donation.

GT – How far is it possible to deliver predictable outcomes and deliver projects on time, at quality and on budget?

Working with retailers brings with it a set of challenges that, although not unique within the construction industry, inevitably dictates the methods and processes that contractors must adopt to ensure predictable and consistent project delivery. Margins are always tight but experience and expertise is a major contributing factor to success, the correct delivery team is also critical, as is a trusted supply chain and an understanding of the key drivers of your clients business. Early contractor involvement is essential on highly complex schemes, such as Tesco Seaton, where innovative solutions can be brought to the table at the outset of the development.

GT – Finally, where do you see ISG going from here?

ISG is committed to the retail sector and we will continue to work closely with clients to support and service their requirements as their businesses develop and evolve to meet the needs of constantly changing consumer behaviours. The value we bring to our client relationships is in our consistency of delivery and innovation, and these are key areas that we will focus on now and in the future. The highly dynamic nature of the sector demands that to stay a relevant and meaningful partner you must operate flexibly and innovatively, remaining ahead of the competition and providing added value to your client relationship.

In addition to concentrating on our clients’ immediate requirements we will also be focusing on our clients’ future requirements for the built environment, whether this means new formats and sizes of outlets, receiving houses or state-of-the-art distribution centres. As a business we will continue to work with innovative companies from across the globe that are developing leading-edge solutions that can be applied to our clients.

We are also looking to support our clients’ expansion in the UK and further afield, and our international capability means we are ideally placed to work with the leading grocery retailers that see opportunity and growth in Europe, the Middle East and Asia. We are already working with our retail clients across Europe and this is a trend we expect to continue in the future, where our consistency of delivery, regardless of geography, is a strong and attractive proposition for our customers.

ISG

Tel: 0117 923 6500

Ext 2308

www.isgplc.com