There’s a good chance the Greggs (LSE: GRG) share price will continue its long-term uptrend for many years.
Over the past couple of decades, the company has evolved its growth strategy and executed it well.
The directors haven’t done everything right. However, they appear to have responded well to feedback from prior outcomes. Now, the Greggs growth juggernaut pushes forward with almost unstoppable momentum.
For example, it’s hard to fault the way the management team built the brand. In one recent visit to Greggs, I was served by a cheerful chap wearing a festive jumper emblazoned with the company logo. However, it wasn’t company issue. He’d bought it himself at Primark!
Who’d have thought a fast-food corporate identity could ever become a popular high street fashion item for teens, twenties and even older fans of the brand? Not me. The situation is a triumph of the firm’s marketing strategy.
Product optimisation
Another example of the company’s effective execution is its focus on optimising the product offering. Years back, the business used to operate different formats for its outlets. So one of the first masterstrokes was to concentrate on just the Greggs brand.
Then the company moved away from being a traditional bakery outlet provider and rebranded as a food-on-the-go business. It stopped selling loaves of bread, for example. Since then, the evolution has continued, such as when the pandemic struck.
Greggs used the Covid outbreak to slim down the range of its products. At the time, such a move made sense because of the difficult operating conditions. However, the range appears to have remained smaller ever since without the change appearing to affect sales.
It looks like Greggs managed to turn the adversity of the pandemic to its advantage by scoring efficiency gains. After all, a narrower focus is almost always a good idea for any business.
When a business clicks with consumers, success can breed further success. Greggs has been doing a good job of finding new routes to market. These days, the chain has expanded well beyond the high street and into digital channels too. It seems like we can find a branch almost anywhere.
An upbeat outlook
The stock was perky on Wednesday (10 January) when the fourth-quarter trading update arrived. Most of the news is good. For example, a net 145 new shops opened in 2023, suggesting expansion is alive on the agenda.
Like-for-like sales rose by almost 14% in the year. Meanwhile, inflationary pressures are easing, the company said. So the operating environment ahead could be smoother.
Chief executive Roisin Currie said the company intends to continue to invest in its shops and supply chain capacity for further growth in 2024. The outlook is upbeat and the business is on a roll, so to speak.
There’s no guarantee of a successful long-term investment for new shareholders. Despite the company’s prior success, the business operates in a competitive sector. It’s also sensitive to general economic conditions.
Nevertheless, I reckon the growth momentum will likely continue for years to come. The stock looks like a stalwart for my watchlist to buy on market dips and down-days for the long term.
