Innovation Strategies and Performance Analysis: Greggs Plc Report

This report offers a comprehensive analysis of Greggs Plc's innovation strategies, focusing on its transformation into a leading food-on-the-go brand within the UK bakery market. The report begins with an overview of Greggs' history, highlighting its acquisition strategy and commitment to fresh products. A PESTLE analysis identifies the macro-environmental factors driving innovation, including political, economic, social, technological, legal, and environmental influences. The report then examines Greggs' existing innovation performance and capabilities, supported by a SWOT analysis that assesses its strengths and weaknesses. The company's ability to adapt to changing consumer preferences, such as introducing health-conscious food options, is emphasized. Finally, the report provides an overview of the retail and bakery industry landscape, including the competitive environment and future opportunities for innovation, highlighting Greggs' implementation of SAP software to improve operational efficiency and performance. The report concludes by emphasizing the need for the company to continuously innovate to maintain a competitive edge.

Managing Innovation
In Business

Executive Summary
This report explores the concept of innovation and illustrates its significance within an
organisation to enhance its business growth and profitability. It is based upon Greggs Plc which
is a bakery encouraging introduction of rapid innovations at regular intervals. The major
objective of this enterprise is to gain strategic edge over rivals by bringing innovations in
products and processes. The first part of report illustrates the overview of Greggs and its
innovation history. PESTLE analysis is conducted to determine the macro environmental factors
that act as drivers for innovation within the enterprise. It is assessed that political, legal,
environmental, economical, social and technological factors encouraged the organisation in past
to bring up innovations. Second part of report talks about the existing performance of company
along with the internal capabilities that encourage entity to invest in innovation. SWOT analysis
has been conducted for this purpose to ascertain the probable strengths and shortcomings of the
organisation. It has been evaluated that company is capable of bringing innovations such as
introducing health conscious food in order to tap advantage of a large section of audience within
UK that are very particular about their calorie intake. Lastly, the overall scenario of retail,
(specifically bakery) industry has been highlighted to gain knowledge of present condition of this
sector as well as the future scope for companies to come up with innovation. In this regard, it is
assessed that there is high threat of new entrants and rivalry which need to be considered by
company in order to ensure its sustainability. It has been analysed that company is implementing
SAP software so as to improve the existing processes and enhance overall organisational
performance.

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................1
The Organisation & its innovation History............................................................................1
The Organisations existing Innovation Performance and Capabilities..................................3
The Industry............................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Innovation refers to the process where something new is created or value addition is done
to existing products or processes so as to suit the needs and demands of consumers and market. It
is essential for every enterprise to come up with innovative products and processes at regular
intervals to sustain in market for a long time. This report is based upon Greggs Plc. which is the
largest bakery chain of UK. This entity specialises in savoury products like sausage rolls, bakes,
sandwich and sweet products such as vanilla slices and doughnuts. This report gains an insight
into the overview of organisational innovation history. Also, this report explores the existing
performance of company in relation to engaging innovative practices in daily operations. Along
with this, the capabilities of company to bring about innovative products by engaging in
practices that foster the growth of innovation in company are ascertained.
The Organisation & its innovation History
Greggs is a well renowned and established brand within UK with a very strong bakery
heritage. This organisation was opened in 1951. Over years, the major belief of company has
been to take advantage of their experience in relation to fresh bakery. This assists organisation in
operating feasibly in the food-on-the-go market while taking into consideration the competitors
within the industry. Growing rapidly within North East base, Greggs started acquiring other
regional bakery chains spread across the nation from 1970s only. This was done with the aim to
tap the advantage of loyal customer base of these entities. Over next 2 decades, Greggs became
the largest bakery chain of UK owing to the acquisition of its biggest rival firm, Bakers Oven in
the year 1994 (May). With inflexion of time, the biggest strategy of Greggs has been that it
prepares all the food, beverages and bakery products freshly within their shops. This is done to
comply with the “Always Fresh. Always Tasty” tag-line of company. This strives to assist the
entity in ensuring that a high quality experience is provided for customers to retain them for a
long duration of time. This company opened around 145 new shops in the year 2016 and refitted
around 208 stores by the end of the same year.
Greggs has been running successfully in the highly innovative and competitive food-on-
the-go market (Greggs marketing boss on transforming to a leading 'food-on-the-go' brand,
2019). With time, this company is holding a strong name and position in marketplace due to its
great tasting food and beverages, excellent shopping experience and simple as well as efficient
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operations (Food on the go: Greggs bakes in digital transformation, 2017). By 2017, this bakery
chain possessed over 1,762 outlets from which 143 were franchised outlets. This entity is ranked
at first position breakfast segment and savoury as well as sweet snacks. Greggs has been
continuously coming up with innovations and technological advancements due to which it is at
second position in marketplace for sandwiches. This bakery appeals to a large audience with
their improved services and products so as to maintain customer loyalty and retain them for a
long time. 2019 started off very well for Greggs as this bakery generated a sales of over £1billion
by the end of 2018 (On a roll: Greggs sales top £1bn for first time, 2019). So, this organisation is
presently at momentum and strive to increase the name and stake of company within bakery
market of UK.
PESTLE Analysis
There are a number of factors present within the business environment of Greggs that act
as drivers for innovation. These are discussed in detail below:
Political: The Research & Development department of Greggs is located within UK.
With passage of time, the UK government has realised the importance of encouraging those
companies which bring up regular innovations in terms of products and services. Thus,
government of UK support innovation in companies like Greggs by way of schemes such as
Patent Box and R&D Tax Credit (Acharya, Schaefer and Zhang, 2015). This fostered Greggs to
overhaul as well as relaunch their range of sandwiches by way of introducing better recipes and
improved packaging patterns.
Economic: With increasing and rapid growth of developing markets for Greggs, this
organisation has a chance to tap the market opportunities by ascertaining the gap and taking steps
to fill the same. Also, the economy of UK is developed and support the growth of companies
such as Greggs which have developed a whole new concept of food-on-the-go and transformed
the bakery experience in an innovative manner (Greggs marketing boss on transforming to a
leading 'food-on-the-go' brand, 2019).
Social: Across the globe, every person possess a certain liking towards sweets and
beverages which creates opportunities for Greggs to gain a high stake in UK market by way of
introducing innovations in products and processes. Thus, looking upon the increasing health
consciousness among people in the country, entity a new and unique sub-brand of ‘Balanced
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Choice’ goods which offer healthy products with lesser than 400 calories to customers (El-
Refaie, 2013).
Technological: With rapid and increasing advancements in technology, the retail sector
is evolving at a fast pace. Looking upon this, Greggs transformed its operations and functioning
to convert the entity from bakery to a food-on-the-go brand which can successfully cater to the
breakfast, lunch and snacking needs of consumers (Greggs marketing boss on transforming to a
leading 'food-on-the-go' brand, 2019).
Legal: With time, laws and government have become stringent towards the operations of
entities within retail sector. In this regard, Greggs consider a number of laws and regulations
while entering a new market. These are Anti-trust law prevailing in Retail industry, employment
law, copyright, consumer protection, health and safety, e-commerce etc. Compliance with such
laws and regulations foster enterprise to bring innovations while avoiding any kind of
interference from government.
Environmental: It is often noticed that companies which indulge in sustainable practices
as well as recycling of waste often get support and recognition from UK government and retail
industry. This tends to create opportunities for Greggs to make use of innovative processes and
practices to sustain in market for a longer duration. Thus, analysing this, Greggs keep a positive
attitude towards preservation of renewable sources of energy and does the baking of products in
solar power (Greggs bakes in solar power, 2019).
The Organisations existing Innovation Performance and Capabilities
Greggs Plc is one of the top companies within retail sector. With the passage of time, this
company has been continuously working upon evolving the retail industry within UK so as to
give a boost to the economy. This organisation is listed at London Stock Exchange (LSE) and
carry a market cap of approx. $1435.4 million (USD).
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(Source: Business Model of Greggs Plc, 2019)
Existing innovation performance
Over years, Greggs Plc has significantly transformed the manner of conducting business
in marketplace. Company's business model has been their vertically-integrated operations. They
possess a vertically-integrated supply chain throughout all the processes from production to
distribution to point-of-sale. With the use of this business model, they make food of great taste,
provide bakery items of high quality at high prices and offer an excellent value to consumers.
They have been targetting food-on-the-go market by transforming the experience of bakery into
a whole new genre. Another target segment of this enterprise is the consumers of UK belonging
to all the demographics. The market location decided upon by this entity is shopping, leisure,
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Illustration 1: Business Model of Greggs Plc

travel and work as bakery and food is a product segment which attracts the attention of people in
a significant manner. Owing to this, Greggs deliver high quality food and drinks of great value at
convenient shops with excellent customer service so as to ensure their happiness and increased
satisfaction. In last some years, this entity brought variations in their existing coffee blend so as
to suit the needs of customers. Also, company refitted 13 shops to meet the needs of customers in
terms of seating. Also, organisations has opened up new outlets across various places out of
which 85% shops are away from high street (Greggs Growth Strategy - The Key Ingredients,
2018). Also, the availability of products have been enhanced by company by opening up of a
large number of shops across UK. This bakery has constantly been winning awards like
“'Turnaround of the Year”, “The Grocer Gold Award” for Food to Go Retailer of the Year,
“Business of the Year” at Third Sector's Business Charity Awards (Greggs Win 'Turnaround of
the Year' at the 2015 PLC Awards, 2019).
Capabilities
Greggs Plc has continued to be the largest bakery within UK due to its new and
innovative concept of transforming the experience of bakery into food-on-the-go. This
organisation is capable of enhancing the customer experience by bringing continuous
improvements in their shop offerings, tastes, outlet environment, locations and re-establishing
the business by reaching new and convenient catchment areas. This enterprise is making use of
its franchise business to reach a wide range of audience and possess the capability to further
enter new markets in near future (Jurkovic and et. al., 2015). Also, there is a large scope that
enterprise can bring further product developments and upgrades so as to tap the opportunities
present in market and enhance their stake and position within food-on-the-go market.
SWOT Analysis
It is a tool which assists company in gaining knowledge about internal environment of
business so as to determine probable negatives and positives in relation to organisation.
Strengths:
Greggs has been feasibly entering into new markets by making use of franchising and
vertically-integrated operations. This has been possible more because of the constant innovations
that organisation keeps on bringing within marketplace such as bringing variations in coffee and
introducing range of products for health conscious people. This fosters company to bring about
innovation in products and processes that can render a strategic edge to enterprise over rivals.
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Greggs uses SAP as their core ERP software supplier and is continuously making plans to
implement such modules which can enhance the existing processes and improve the overall
performance. Company is capable of utilising more such innovative processes or software to
improve the existing outcomes so as to fulfil the demand of consumers in an effective manner.
Weakness:
Greggs Plc lack proper and adequate investment in new and advanced technologies. It is
largely seen that company is planning to enter into new geographical locations and the scale of
operations will be increased as a result of it. For this, it is required that organisation puts more
funds in technology so as to formulate integration of processes. In present scenario, the
investment of entity in Research and Development is far below the average investment by key
players within this sector. Company is capable of investing more money in R&D so as to come
up with rapid innovations.
Opportunities:
Company can decrease its transportation cost owing to the low shipping prices, this will
bring down the overall cost of products of Greggs. Also, it will provide an opportunity to the
enterprise to invest funds in formulating innovation across organisational premises. This strives
to provide an edge to enterprise while entering new markets and gaining loyalty of customers to
retain them for a long duration of time.
By analysing the new trends prevailing within retail industry and determining the needs
and demands of consumers, Greggs Plc can tap the advantage of introducing such bakery
products that can provide high satisfaction to people. This will open opportunities for company
to gain a high stake in market and ensure its sustainability. By effectively utilising the strengths
of company, Greggs is capable of implementing such modules within SAP which can enhance
the existing procedures as well as activities within the organisation and improve the overall
organisational performance.
Threats:
Greggs can face massive threat from competitors who come up with new technologies
and processes to shift the loyalty of customers towards substitute brands. Thus, inadequate
investment in technologies is a threat for enterprise for bringing up innovative products and
processes. Company is capable of bringing such innovations which are aligned with the
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demographic as well as economic needs of consumers as has been done by organisation while
introducing food products with lower than 400 calories.
The Industry
The retail industry is rapidly transforming with passage of time. Particularly in the bakery
industry, introduction of gluten free products, innovative frying technology to reduce acrylamide,
photo cakes and designer cakes have gained increasing attention from people. Also, the new face
of this industry is going to be customisation within bakery products so as to provide products and
services which strive to fulfil the needs and demands of consumers (Customisation essential to
innovation in bakery, 2019). Thus, the manager of Greggs has to constantly evaluate the industry
so as to gain an insight into the strategies adopted by customers and the probable threats and
opportunities available within this sector. In this regard, the major competitors of this bakery are
Pret A Manger, Food Genius, Grupo Bimbo etc. Greggs is mainly famous for its Caramel Latte,
Dripping Cake, Empire Biscuits and Milky Coffee Delight which are found to be the major
attractions of this enterprise. Thus, this company conducts Porter Five Force analysis to further
gain knowledge of this sector and to ascertain the opportunities with the help of which this
bakery can continue to remain at the top position within UK.
Porters Five Force Model
Threat of new entrants: The level of threat of new entrants within this industry is quite
high. This is because new brands can easily enter the retail (particularly bakery) sector because
of the relatively lesser investment needed as capital to enter in this sector. Economies of scale are
beneficial for entrants. Also, organisations can easily acquire a high stake within this market by
analysing the needs and demands of consumers and acquiring adequate distribution channels so
as to deal with high operational cost.
Bargaining power of suppliers: Suppliers enjoy low bargaining power due to the already
established products of companies within this sector. Although, bakeries get influenced by price
fluctuations of raw materials, yet the negotiation power of suppliers is relatively lesser (Helper
and Henderson, 2014). This will foster the enterprise in procurement of materials from suppliers
at a price that they consider appropriate
Bargaining power of buyers: Customers like grocery stores, hotels, supermarkets,
convenience stores etc. enjoy high bargaining power within this industry. Buyers, here, are able
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to demand low prices from companies along with volume discounts. Only, large organisations
such as Kraft, Kellogg, Greggs possess the power to influence customers according to them.
Customers prefer those brands which come up with rapid innovations.
Threat of substitutes: There are a number of alternative products available which can be
used by customers, however, none of them provides the taste and delight provided by bakery
products. Such substitutes can be alternate brands such as Food Genius, Grupo Bimbo whose
products can be in-taken by customers.
Competitive rivalry among existing players: There is high rivalry within this sector.
However, companies such as Food Genius, Pret A Manger, Grupo Bimbo which act as strong
rivals for companies operating within this industry.
CONCLUSION
From the above mentioned report, it has been concluded that innovation is the best tool
through which an organisation can gain a strategic edge in marketplace. Also, it has been
analysed that it is essential for every organisation to continuously bring improvements in
products as well as processes to sustain in marketplace for a long duration of time. Besides this,
PESTLE analysis has been conducted by enterprise to gain knowledge of macro-environmental
factors that act as drivers of innovation. SWOT analysis is carried out to get an overview of
existing innovation performance and capabilities of company in relation to innovation.
Furthermore, the overview of industry has been given with the help of Porters Five Force Model
to ascertain the scope for companies to bring in innovation.
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REFERENCES
Books and Journals
Helper, S. and Henderson, R., 2014. Management practices, relational contracts, and the decline
of General Motors. Journal of Economic Perspectives. 28(1). pp.49-72.
Jurkovic, S. and et. al., 2015. Induction machine design and analysis for general motors e-assist
electrification technology. IEEE Transactions on Industry Applications. 51(1). pp.631-
639.
El-Refaie, A. M., 2013. Motors/generators for traction/propulsion applications: A review. IEEE
Vehicular Technology Magazine. 8(1). pp.90-99.
Acharya, V. V., Schaefer, S. and Zhang, Y., 2015. Liquidity risk and correlation risk: A clinical
study of the General Motors and Ford Downgrade of May 2005. The Quarterly Journal
of Finance. 5(02). p.1550006.
Online
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boss-transforming-leading-food-go-brand>.
Greggs Growth Strategy - The Key Ingredients. 2018. [Online}. Available
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ingredients>.
Food on the go: Greggs bakes in digital transformation. 2017. [Online]. Available
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ingredients>.
Customisation essential to innovation in bakery. 2019. [Online]. Available
Through:<https://www.bakeryandsnacks.com/Article/2015/10/26/Customization-
essential-to-innovation-in-bakery>.
Greggs bakes in solar power. 2019. [Online]. Available
Through:<https://www.bakeryandsnacks.com/Article/2015/10/26/Customization-
essential-to-innovation-in-bakery>.
On a roll: Greggs sales top £1bn for first time. 2019. [Online]. Available Through:
<https://www.ft.com/content/e0776c30-40a8-11e9-9bee-efab61506f44>.
Greggs Win 'Turnaround of the Year' at the 2015 PLC Awards. 2019. [Online]. Available
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year-at-the-2015-plc-awards>.
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