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The Sunday Times has names Terry Leahy, the outgoing Tesco boss, as business person of the year. This will not be the last honour Sir Terry will pick up. In its interview it highlights: He understands why his company is successful. When it stopped trying to overtake Sainsbury and focused on the shopper, it then overtook Sainsbury to become the UK's number one retailer. He grew up loving shopping: "I went shopping with my mother a lot as a child. She had four boys and I was the most amenable to shopping. I enjoyed it." He understood the opportunity. "There were no supermarkets. These post-war council estates were surrounded by a few local shops. They were convenient but they were very expensive. A lot of our disposable income went on food and it was a constant worry." He also talks about how he used the views of City analysts to create an us against them mentality within Tesco that helped drive its performance. He lists its successes and points out how Tes...

The chief executive of McDonald's, Jim Skinner, clearly knows why his customers love his company's restaurants and last week attacked US regulators keen to ban children's meals as undermining parents. This follows a decision in San Francisco to ban the sale of toys with food that did not meet limits on calories, sugar and fat. He told the FT: "We'll continue to sell Happy Meals. We've seen many years of someone trying to dictate behaviour through legislation. Our Happy Meals have been supported by parents since the 1970s. The nutrition of Happy Meals meets FDA guidelines." For UK local retailers, and their suppliers, this is significant in that most traders fear that the willingness of politicians to legislate to improve the health of the population is out of proportion with the success of many measures. MPs that I have spoken to clearly disagree. They say that the smoking ban is a fantastic success. While they are nervous at the impact on local shops ...

At the weekend, the Brent Cross shopping centre in north London, hard by the M1 and the north circular road, closed due to snow, losing half a day's trading. Anecdotal reports say it bounced back the next day, with so many people shopping that the centre manager thought it was the first day of the sales. Over the previous week a number of deals were done in larger retail properties and the FT took the opportunity to point out the leading retailers were in the market for new space, showing their confidence in the size of the UK shoppers' purse moving forward. The newspaper quoted DTZ, a property agency, that said only 100 of the 840 shopping centres in the UK would be regarded as prime. Big anchor tenants such as John Lewis are not interested in older, poorer-quality centres or in secondary towns. Obviously, regional shopping centres aim to attract customers from a wide area, perhaps an hour's drive or more from the centre. For a shopper to make the trip, the centre need...

It is a snatched photograph so you may not be able to make out the woman in the dark hooded jacket counting out the money from her purse as she holds on to her baby's pushchair. The man behind just darted past to enter the shop. You may not be able to make out the step that made it difficult for the woman to enter the shop to buy a copy of the Guardian. The child behind was also darting into the shop. It is minus 2 degrees, which is cold for London. Does the shopkeeper even know that he is going to gain a sale? How many barriers are there for this woman to contend with to buy her paper? Is she likely to make an impulse purchase as well? Should the retailer care? Yes. Firstly, because he is less than a two minute walk from a new Tesco Express. He needs to fight for every sales he can get. Secondly, because he needs to understand his shop from the shoppers point of view. Does all this clutter outside work? He may get the newspaper sale, but he has shoppers who never visit ...

In Time magazine's review of the first decade of the current century it followed up on the software pirates who threatened to undermine the publishing industry by creating file sharing software. One bullet point was particularly interesting - the way to compete with free on the internet was to make something easy. This is partly why the pirates did not win. Free is not enough. Today, Google has launched its book store on line. On the front page is a great list of benefits of its web reader: Unlimited storage of ebooks 2-page reading mode Search within book Adjust text size, typeface, line space, justification Free samples of books Information about book Worry-free archive The last bullet is particularly compelling as so many people worry about shopping on the internet or storing stuff on the internet. In his book Linchpin, Seth Godin writes about Marissa Mayer, who works for Google. Her job is to make interfaces work. She makes sure that the start page has the smallest...

I was talking to one retailer last month who said he had managed to raise bank finance for a second shop by remortgaging a residential property that he owned. While this is good news for him, it underlines how difficult it is to persuade banks to lend against good business plans. Daniel Thomas, writing in the FT, explains that one reason for this is that at present there is about £5billion available for real estate lending in the UK in a market that needs to fund around £25billion of activity each year. "It means banks are increasingly picking over clients, " he writes. However, in his definition of clients, local shopkeepers do not even figure. Broadly speaking, there is almost no money available from banks for ordinary property deals. This is an issue that retailers should take up with their MPs as the lack of finance for independents means that the supermarkets can continue their expansion plans into the convenience sector almost without constraint.

I follow Todd Sattersten's blog as he wrestles with the arrival of e-books and how big they are going to be because he is watching the world for ideas and is sceptical of overheated claims. For local shopkeepers who sell newspapers, magazines and books, it is a useful source of intelligence. It is worth checking out his recent blog http://toddsattersten.com/2010/11/three-strange-perspectives-on-publishing.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ToddSattersten+%28Todd+Sattersten+%7C+Business.+Books.%29  in which he observes three things. First, that old media keeps on imaging how its business model will be successful on an e-platform, which involves lashings of wishful thinking. Second, how pundits keep on applying what has happened to the music industry to the book industry, which Mr Sattersten challenges as books are different to music. Third, and this one is a gem, is how do you lend an e-book. One of the great things about print on paper ...

Last weekend I spent some time discussing business with 10 local retailers from all parts of the UK. Their message was that sales are tough.  Probing further, they were saying that they were trading 10 per cent down year-on-year, on average. What were they doing about this? They were out in the market looking for new ideas, things that would work for their shops. However, many accept that progress will take some time. One shopkeeper told me how she could see her customers counting out how much money they had to spend before coming into her shop. While this was depressing, she is looking for ways to get them spending more. Yesterday, talking to wholesalers I heard them saying that sales were flat. While everyone in public wants to talk up how well they are going, they admit that many of their customers, the retailers are struggling. At the same time, across London, Tesco's new UK head was busy talking up how his company is performing. Christmas sales will be the best ever, he ...

Planning for his speech at the Independent Achievers Academy last week, Theo Paphitis asked an assistant to buy a basket of six essentials from a Tesco, a Londis (independent operator in a symbol group) and a One Stop (Tesco's CTN/convenience chain). Tesco was cheapest by a big margin. Second came Londis. The most expensive was One Stop. Mr Paphitis understands the power of the supermarkets and he says the way to counter them is to focus on how to make the experience of shopping with you more relevant to shoppers or more enjoyable for them. John Heynan, sales director of Molson Coors, told Retail Newsagent at about the same time that occasional beer buyers will pay 13 per cent more for their beer in an independent convenience store, provided the retailer targets them appropriately. Tesco has carved itself out this 13 per cent head start. Looking at pricing, if Tesco is 100, then Tesco Express is 108, One Stop is 112, a good symbol group is 115 and non-affiliated independents ...

Shoppers with an iPhone or iPad could soon be using their Apples to scan in groceries as they walk the aisles of Tesco supermarkets, Tesco.com head of digital Nick Lansley told Computing this week. His team has already developed home shopping apps, a Tesco store finder app and a Clubcard app. But the mission now is to consolidate to three: transactional apps, banking apps and an app for information on Tesco. What else is he working on? A mobile device for his in-store stockpickers that tells them where products are in the shops as they pick orders for Tesco.com. The current devices are on the carts that the stockpickers push around. The weakness of this approach is that the carts are bulky and its pickers would prefer to be able to walk nimbly around and bring products back to the carts when the shops are busy. Mobile devices fit the bill. And if you can make that device an iPhone? Of equal interest is the company's attitude to development. Instead of using outside compa...

Pejorative is an adjective that is used to indicate a word with a disparaging connotation. When I say that shelfstaker is a pejorative word, I am not saying that people should not stack shelves or keep stock keeping units free from dust. What I am saying is that no true retailer should ever wish to employ shelfstackers. At the Independent Achievers Awards last night, Theo Paphitis, retailer and entrepreneur, asked the audience of local shopkeepers and trade suppliers who the most important person in his Ryman business was? The customer, said many. My staff, said Theo. Retail is fantastic, he said. As a youth, Theo learned about life and about business by running his school tuck shop. When the teachers complained to him about crisp wrappers littering the playground, he paid youngsters in crisps for every 25 packets they picked up. Where did he get the crisps from? From his supplier, who provided free stock once it understood his purpose. Retail is about working with your suppliers...

As commodity prices rise, so manufacturers seek to cut back on the raw materials that they use... The November 15 issue of Fortune illustrates this well with an analysis of Scott 1000 toilet paper. In 1995, a single sheet measured 4.5 by 4.5 inches. Four years later the sheet was cut to 4.5 by 4.1 inches while its maker, Kimberly-Clark made "softness enhancements". Seven years later, more "softness enhancements" plus a pattern added and the sheet is 4.5 by 3.7 inches. This August, a "10 per cent strength product enhancement" and, you guessed it, the sheet is 4.1 by 3.7 inches. The Cottonelle double roll reduced from 308 sheets to 260 in February. The Angel Soft Double Roll went from 352 sheets to 300 and reduced from 4.17 inches wide to 4.0 in April. Charmin Ultra Soft Big Roll dropped from 200 sheets to 176 in July. Quilted Northern Soft and Strong Double Roll went from 286 to 242 sheets in September. A year ago it went from 4.5 inches wide to 4.0. ...

Look at the ceiling and top wall of this McDonalds restaurant. There is a picture of two good looking healthy people having fun and some bright primary colours. Ask yourself what is the purpose of this picture? In the latest issue of Retail Newsagent in a feature on merchandising, Andrew Knight of RI tells its independent readers that they need to think about using sharp pictures of non-packaged products linked to people consuming goods. Perhaps this has been taken to the next level by the fast food chain - that is selling the feeling of being happy and healthy rather than the products. A second, related tip from the same feature is made by most contributors - it is vital to keep windows clean and clear of clutter. "I believe that less is more," says Roli Ranger, a retailer from Ascot, Berkshire. He has posters for promotions in between the windows that are regularly updated and discreet signs in the windows. Third, a highly visible well-stocked promotion at the entranc...

Writing in the FT this week, John Kay tackles the claims made by the health lobby for the impact of the ban on smoking in public places and the potential benefit of reducing the limit on blood alcohol for drivers. In both cases, he shows that the statistics quoted by proponents are tortured "to reveal conclusions that do not obviously follow from them". "It is time to reassert the principle that research must pursue the truth wherever it leads," he writes. While the objectives being pursued may be worthwhile, this principle should not be sacrificed. The problem that local retailers face in resisting the display ban is that the stories are already out there and mostly unchallenged. So many MPs believe that the smoking ban is a good thing and a popular piece of legislation that they are open minded about adding further legislation on top. While Mr Kay's comments are useful, local retailers can not turn the clock backwards. However, they do need to challeng...

Retail analyst Dave McCarthy says that the big four UK grocers are planning to add 5 million square feet of extra selling space each year in the next four, increasing total floor space by more than 20 per cent by the end of 2014. Are shoppers going to be spending 20 per cent more? Not likely. So what will the impact be? "It is inevitable that the big four will be going head to head more than at any time in history, with consequences for sales, profits and returns," says Mr McCarthy. At first look, independent retailers may think this is terrible news. But that assumes that the 75 per cent market share of the big four can grow. The other side of the coin is that the big four have already reached the maximum share that they can reach and each new square foot of selling space will impact on their own profitability. Two stories from local retailers this week bear consideration. Navin Bupthani assured me that a large Tesco Express near his shop was missing its numbers and fe...

At some time in the 1990s retail marketing decided that the experience shoppers had in-store helped determine how satisfied they were with the goods that they bought. Put simply, this means that they distiniguish between the bottle of Coke they buy in Asda and the bottle of Coke they buy from you. While the product is identical, it is likely shoppers will value one more. The response to this was to invest in in-store theatre, where the products could be included in a sympathetic environment. Quite quickly shoppers reacted to this and negatively. The reason that shoppers no longer rationally evaluated value was because there were simply too many products to compare. Adding theatre made the shopping experience even more difficult. However, you have to know which market you are in. Here are policy statements from two stores at the polar opposites of the in-store theatre debate. Target: "We design our stores to be easy and intuitive to shop, with related departments placed next ...

Adrian Smith, the former WHSmith News executive who has chaired the Press Distribution Forum in the UK, is a passionate promoter of the strengths of the newspaper and magazine supply chain in the UK. In his introduction to last week's launch of the Press Distribution Charter, Mr Smith says the intention is to "help retailers to serve their customers". The charter has 80 clauses and a complaints mechanism, which builds on the previous ISSA regime. However, while well intentioned the charter is always likely to fall short as far as retailers are concerned. The reasons for this are set out in an unrelated column by FT writer John Kay, who chose this week to discuss the weaknesses of regulation. In 1887 the US decided to regulate its railroads at the request of farmers and merchants. However, Mr Kay quotes the president of the Union Pacific Railroad who supported regulation as saying: "What is desired is something having a good sound, but quite harmless, which will...

While the local pub has been faring worse than the local shop, there are signs that operators are starting to think more creatively about how to use their franchise. In particular, pubs are opening at 9am and offering breakfast. This week the 217 outlet Barracuda pub chain announced it will open at 9am and offer Costa coffee to attract breakfast business. "Young people value brands and we respond to that. By putting Costa in, we're perceived as taking coffee very seriously," a Barracuda executive told the FT. "If pubs just remain retailers of alcohol, then that is a diminishing market." While many local retailers fear that unsuccessful pubs might be reopened as Tesco c-stores, they may also find some enterprising publicans see their shoppers as a target. The trick though is in the execution. While pubs may have more comfortable seating areas, will their staff be as welcoming as yours and will the service be outstanding? How will they do this? Pretty mu...

This week's launch of i in the UK has received a broadly favourable welcome from the experts - buyers of advertising space and media planners - and a cautious welcome from news retailers. Taking a leaf from the Bauer book of launching to a mass market, the paper has offered retailers double margin for the first week and flooded the market with more than 100,000 free copies for the first two weeks - distributed in the evening. This tactic still seems to have wrong-footed some local retailers, who have withheld support from the newspaper because they simply do not trust publishers to treat them straight. However, it is probably a better rule of thumb for retailers to be positive about all launches because the ones that interest shoppers are ones that they should want to take part in. As it is half term, I was on holiday on Tuesday and it was interesting that a number of people mentioned the launch to me, suggesting that the Independent's marketing had worked in terms of...

Local retailers will be thinking hard about the impact of the government spending review announced last week. The first thing to note is that the government is not cutting spending at all. In fact, as economist Roger Martin-Fagg points out, spending will continue to increase by 5 per cent over the next four years. What may happen, if the economy grows, is that the proportion of the economy that is accounted for by government spending will contract from 47 per cent today to a level of 40 per cent at the same time. For the purpose of comparison, spending was at 37 per cent in 1997 when Labour came to power. According to Mr Martin-Fagg, the current plans will cut spending in around 6 million houses with mortgages by £500 a year over the next four years. On the other hand, if the government did not constrain spending, interest rates would need to rise by 1.5 per cent and that would cost the same householders £900 a year – nearly twice as much. On this simple measure, the spending...

At my company the team on Retail Newsagent, led by editor Lindsay Sharman, unveiled a new look for the weekly magazine last week after eight months of planning, including interviews with hundreds of retailers and advertisers. We realised that what we were doing was similar to what we are telling independent retailers to do - invest in your business. At present, we believe that printed media is still the favourite tool for independent retailers seeking information and trade news. However, we also believe it has to be done well. We have invested in a better paper stock, which makes the magazine easier to read, and the editorial team has worked with the designers to ensure the package is accessable and attractive. The feedback from retailers and suppliers has been fantastic. We held a small launch party for retailers and our trade partners and they applauded Lindsay after her short speech introducing the refresh. "Retail Newsagent has always had fantastic conte...

As industry data appears to show that local shops in the UK are resisting the expansion of the multiple grocers, a possible reason for their success may be contained in an analysis of the problems big banks face written by FT writer Tony Jackson. "Most economic activities work best if people on the ground are free to make decisions," he says. In the world of banks, decision making has been centralised, he argues. As training local people is expensive, the banks prefer to build mathematical models of the world that they can control from the centre. This is why they prefer to invest in mortgages, which can be commoditised, rather than in small businesses, where local knowledge is needed. When the world fails to meet the model, problems arise. This is why banks in the US often do not have proper records of the loans they have made. This is why they cannot tell the difference between someone in a secure job and someone who is just about to be made redundant. "Proper...

Tesco's results today include a figure that shows like-for-like sales in the UK were up 1.2 per cent in the six months to the end of August this year, compared to the same period last year. However, of more interest to local retailers in the conveninence channel is its increased emphasis on opening local shops, which now account for 10 per cent of its selling space. The grocer increased its number of Express c-stores by 53 in the first half and this will increase by 103 in the next six months, with the stores having an average floor space of 2,281 square feet, which equates to more than £57,000 sales a week. At the same time, it is planning 22 more One Stop shops in the second half, with an average floor space of 1,181 square feet, which equates to sales of £14,750 a week. What is the secret? Availability, service and quality, Tesco tells investors. Shopper satisfaction with its availability is the highest ever, it says. 10 million shoppers a week are using self-service check...

John Speakman produced some research in 2008 that showed that people in the UK are exercising as much today as they did 25 years ago and suggesting the only way to fight obesity is to eat less. After a couple of lectures this year, the Aberdeen University professor's work has been back in the news. He found that in the UK the average calorie content of food we buy had increased by 12 per cent over the same period. In the US the rise was 25 per cent. "People would have to exercise for four to five hours a day," he says in order to lose the weight that these extra calories cause. What the food companies put in, they can also take out. Expect major manufacturers to innovate their way back to the calorie content of foods 25 years ago.

"We're blessed with a wonderful business where we sell moments of pleasure at cents a time...billions of times every day," Muhtar Kent, who heads Coca-Cola, tells the Financial Times. I have cut the quote in half because the first half is what lots of local retailers are in the business of providing in the CTN market. CTN, which stands for confectionery tobacco newsagent, is a specific term that covers a loose style of retailing where people make frequent out-of-pocket purchases. In the modern convenience store, CTN is a major category alongside top-up shopping, food to go and a food for later offering (fresh and chilled). Mr Kent is clear that selling moments of pleasure for cents at a time is a recession proof business - provided you have enough scale. Most local shop owners recognise that they are in the pennies business, needing to build sales volumes. A second theme is his commitment to investment in the future of the business. It is why Coke has supported the ...

In its second feature on Tesco this week, the Financial Times discusses Terry Leahy's vision for 10,000 small convenience stores "on every junction of every major city in the US". His working name for the chain was Fresh & Easy. Interviewing the executive who Sir Terry picked to develop Fresh & Easy, Colin Smith, the newspaper finds that after 18 months of research his team came up with a vision very close to that of Sir Terry. The gap was for neighbourhood stores selling fresh, cheap food and that was easy to shop in terms of range and location. The target sales density was between $14-$20 a square foot, above the US average of $10 a square foot. But most US stores are much bigger than the Fresh & Easy model. In contrast, the UK Tesco Express stores achieve £20-£30 a square foot ($31-$46). The speculation is that Tesco may give up on F&E because it can make more money in Asia, where its incoming chief executive Philip Clarke has made his name. Howev...

In an article for Retail Express last week assessing Morrisons plans to open three convenience stores next year, I recounted a short walk that I took up Clapham High Street earlier this month, passing by a Sainsbury's Local, then a Tesco Express, then a Sainsbury supermarket. It is clear that these stores must put pressure on local shops. But also on each other. This week, the Financial Times is running a series of features to celebrate Terry Leahy's achievements at Tesco. The first feature includes the following observation from City analyst Dave McCarthy who says he cannot see how Tesco can continue to open 2 million square feet of new selling space a year without "significant cannibalisation" of its own sales. At the same time, Mr McCarthy says there is no "soft underbelly" to competitors to help feed Tesco's opening programme. Local shops, as the Kantar Worldpanel figures show, are holding their own. At least those that are investing in their...

Asda has permanently lowered its price for four pints of milk from £1.53 to £1.25. Tesco says it will respond. Robert Wiseman Dairies, which supplies almost a third of the UK's fresh milk has had to issue a profits warning. This year its profits will be cut from £43m to £36m. Next year from £44m to less than £20m. A third of its revenues come from convenience stores and two thirds from supermarkets. Interestingly, after years of consolidation was assumed to have led to a stable supply chain for milk, Clive Black of Shore Capital told the Financial Times that in liquid milk "competition now seems to border on the irrational." The strategic importance of convenience stores to suppliers can only increase. Local shopkeepers will hope that suppliers like Robert Wiseman will continue to have the wherewithall to invest in their business too!

Interim results from Waitrose this week confirm the industry figures that show the upmarket supermarkets and convenience stores are leading the market (albeit from a 4.2% share according to Kantar Worldpanel). Charlie Mayfield, the chairman, highlights many reasons for its success and here are five that local retailers should consider. Marketing works. Waitrose claims that more than 370,000 extra customer transactions resulted from its spring tie-up with Delia Smith and Heston Blumenthal in the first eight weeks. This autumn, it launches a cookery school. Engaged shoppers are more profitable shoppers! You need a value offering. 17 per cent of Waitrose sales are from its value range, called essentials. Momentum works. Its strategy is to bring Waitrose to more people in more places. It invested in 75,000 square feet of extra selling space in the first half of this year, including three convenience stores. In the second half of the year, it is adding eight convenience stores. Str...

Talking to a retailer in Ireland last week about how to spot a good investment opportunity, he suggested that there are three things to look for: elderly existing owners poor organisation of the shop tired-looking and dirty. The list is useful as it also serves as a warning to shop operators that the basic disciplines of a good shop need to be maintained: clean floors good lighting. Local shops are good at adapting to new opportunities but are they as good at letting go of the opportunities that have passed. Do brands that no longer sell stay on your shelves? Do you tell yourself that you are keeping this as a service to your shoppers? When you have to dust a stock keeping unit, that tells you something about its profit potential (expensive jewellery excepted!).

Visiting this central Dublin convenience store last week, I was struck by the investment in space. Across the road from a Spar offering pretty much the same mix of top up shopping, food to go, and eat in, the shops are massively different in terms of feel. I hope that this video helps you to see the attractiveness of the Centra/Dame cafe solution. In tone, it feels like a Waitrose.

This week's Scottish government proposal for a minimum price for alcohol of 45p a unit is likely to unleash a new wave of legislation as politicians around the world vie for credit in saving lives. The impact of regulatory interference will change the dynamics of local shops. If the proposal goes ahead, the Scottish government expects that retailers will gain an extra £90 million plus a year in revenues. What it does not know is whether this will stick with the retailer or by grabbed by the manufacturer. Its assumptions also assume that people will continue to buy alcohol in the usual places. However, from the world of tobacco, retailers can see several issues that the Scottish government ignores. Firstly, by creating an articificial price for a product, legislators create a business opportunity for people who work outside the law. The bigger the differential, the bigger the opportunity. At 45p, the politicians think they might reduce consumption by 4.7 per cent. However, the...

The Sun devoted 34 words on its business page to talk up the latest quarterly results for "independent" symbol group Spar. Its 2583 outlets achieved a 3.1 per cent rise in sales in the quarter to the end of July compared to last year - "in contrast to a fall at the rival Co-op chain", added The Sun. Industry data shows that around 30 per cent of the Spar universe are multiple outlets but as it markets itself as Britain's biggest group of independent neighbourhood stores there are clearly lessons for other local shops. The Co-op has spent billions in its aim to dominate the local shops market but clearly is being outperformed. Spar gives four reasons for its success: a substantial increase in the numbers of promotions, up 28.8 per cent year on year building its own label range, up 4.4 per cent improving its fresh food offering, up 3.9 per cent redeveloping its wine portfolio, up 3.5 per cent. The first two of these trends are evident in most local shops,...

Most local shopkeepers are uncertain if they are making enough profit from their sales. Benchmarks are hard to come by. In the news, all we hear about are the companies that make vast fortunes - or lose them. Money buys you a little happiness, Nick Powdthavee writes in the latest issue of FT Weekend Magazine. "According to economist Richard Easterlin, part of the reason for this is that we care a great deal more about what other people earn than we do ourselves," he explains. "For those whose most basic needs are already met, money buys additional happiness only if it can lead to higher status in society, which is hard when everyone else is getting richer over time." Bob Phibbs , whose blog on the worst case of local marketing is fascinating reading, has worked out that the average American business makes about three cents on the dollar in profit. "Yes, that is a really good business in average times," he says. It would be useful to hear from UK co...

Fears about the digital future sweeping over the local shop may be overdone, based on three reports I read this week. One from a newspaper and two from blogs. Firstly, in an article about on line shopping, the FT pointed out that the mechanisms of the internet are very like the mechanisms of the real world, with web sites using vouchers and one day specials to generate sales. The FT concludes that it is better to be a data aggregator, like Facebook, than a retailer trying to sell stuff on the back of the data. At almost the same time, one major bank was writing down the value of Ocado, the on-line retailer, saying that it needed to achieve orders of more than £100 a time to make a profit. That is a big average basket size. Other banks did not share this view but it still puts a question mark over where shopping is headed. Meanwhile, Seth Godin was busy writing about his frustration with Apple's i-pad store, where the shelves have more than 24,000 apps to buy yet the "fro...

Even if your prices are low, shoppers will assume that they can get the same things cheaper in the supermarkets. While some local shops market hard that they are cheaper than Tesco, for most this is probably a waste of effort. Shoppers simply are not visiting you for low prices. The basic logic is that the best discounts go to the biggest stores because they have the market power to extract the lowest prices. However, this logic ignores the fact that small, local suppliers can often undercut the prices of big national suppliers. The big stores will probably not use the local suppliers because they want a consistent offer in all their stores; and this creates an opportunity for local shops to sell local products, which can be marketed as cheaper than what is available in Tesco, if you like. Another thing to consider is that shoppers generally do not understand every day low pricing (EDLP) as pioneered by Wal-Mart and its UK operation, Asda. EDLP is copied from manufacturing busi...

There's an unlimited supply and there is no reason why, the Sex Pistols used to sing of the 1970s music industry. What drove sales was fashion and people's need to be first to have the new song and the new hair style. For local shops that want to sell magazines, however, the lyrics could be changed to there's a limited supply. The maths behind this are simply explained in a recent Neville Rhodes's column in Retail Newsagent. There are only 42 magazines in the UK that average a sale of more than three copies per outlet - out of a universe of 3,500 magazines available. As 52 per cent of the sales are achieved in 15 per cent of the outlets (mainly supermarkets and WH Smith) and independents with 60 per cent of the outlets achieve 27 per cent of the sales, this shows that most magazines are more likely not to be sold in most outlets. The short shelf life of most magazine titles - either weekly or monthly - and the promiscuity of magazine shoppers who will buy their favo...

Visualising what success looks like is a key way to keep yourself focussed on what you want to achieve. It is the first point that Richard Hammond makes in his book Smart Retail and for the owner manager it is a vital one. Mr Hammond writes about Bob Caton, who taught him the techniques of visioning. Mr Caton told him about the house he built for himself in Thailand. "He bought the patch of land as soon as he could afford to and then every night, at home in England, imagined himself sitting on the vehranda at a house that didn't exist. He would describe to himself how it would feel, the taste of the cold beer in his mouth, the warmth of the breeze on his arms... "The next morning, he would repeat the process and no matter what lay in the day ahead he would get two things achieved - he would feel better about things that he was not all that keen on having to do and he got his house built." The success of your business depends on your ability to motivate your tea...

Retailers need to introduce new products to provide their shoppers with "good news" and to generate interest. But for each new product that you introduce you need to consider delisting an existing line. Easy, you might think. I will just print out the list of products in the category and take off the one with the lowest sales. However, if you do this research from the US suggest you might be wrong. What you need to consider is what sort of demand you have for each product, a white paper by Demand Tec, a US specialist software provider shows. It says that there are two kinds of sales: incremental sales, when products add to the total shopper spend and are not readily substituted by another item transferable sales, where shoppers find an alternative easily when it is not available. Using its software, it shows a category with 50 products from top seller to bottom seller. At the same time it also measures the incremental sales each product provides. The number 50 in ove...

While local shops should market themselves as being good for their local communities, they also need to think about how to make a profit. Consider the following two propositions. Where is the real money made in supermarkets? In the middle of the store, where processed foods and well-known brands reign supreme, says Fortune magazine in its profile of US firm JM Smucker. "Our strategy is to own and market No. 1 brands, sold in the centre of the store, in North America," says co-chief executive Richard Smucker. Where do you go to buy real food? The peripheries says Michael Pollan in his Food Rules - and "stay out of the middle." "Processed foods dominate the centre aisles of the store, while the cases of mostly fresh food line the walls," he writes. If we assume that supermarkets are designed to generate profits from all parts of the store, how do these rules translate into how you have organised your shop? If your layout is designed so that people ...

The supermarkets are so big that everyone has a view on whether they are a good thing or a bad thing and shoppers' tend to make judgements through the prism of the world that the big shops have shaped. Tyrrells crisps founder William Chase has a vodka brand to sell and is on a media charm offensive, which may explain his talking up Tesco to Business XL magazine. Supermarkets did a lot for the food industry in the 1980s by cleaning up hygiene standards and offering families food that was consistently safe to eat, he says. "If we didn't have bar-coded, pre-packaged food, shopping as we know it physically wouldn't happen. People will say 'poor farmers' but the most important thing is that they want their food to be on the supermarket shelves and they want to know it's not going to hurt their children," Mr Chase told the business magazine. His view is shared by many shoppers. The supermarkets are very good at promoting healthy eating and providing ...

Period-on-period sales of convenience stores are up 21%, according to Tony Evans, who heads up business agent Christie + Co's retail sales operations. His press release, issued earlier this month, says that buyers were active in the first six months of this year, compared to the last six of 2009. Its team facilitated 2,253 viewings, up 13% on the 1,958 achived in the second half of last year. These figures exclude its disposal of more thna 1,200 former First Quench Retailing stores , which generated 3,000 offers. Values have stabilised, says Mr Evans, which means that buyers with cash are confident that they will not lose capital on buying freeholds. Christie + Co was not prepared to give any more details to qualify its optimistic snapshot. However, its viewpoint tallies with what retailers and suppliers are saying around the country - that well run independent local shops are able to deliver good profits. While the work is hard, the barriers to entry are relatively low. Pr...

Food and drink sales during June were very strong, increasing optimism among retailers. But the longer term picture remains uncertain. On Tuesday this week the CBI said that more than half of retailers taking part in its high street survey said that sales were up during June, providing the most positive figures since June 2007. The CBI's sample includes 20,000 outlets owned by 131 companies and it works by adding up those retailers reporting an increase and taking away those who say sales have fallen.  In June the figure was plus 33 per cent (51 per cent take away 18 per cent), which was much better than the plus 11 per cent figure that retailers had been forecasting. Looking forward, the forecast for August is plus 45 per cent, which if achieved will be the best result since June 2004. "Retailers are optimistic that strong sales growth will continue next month, which is promising," said Lai Wah Co, the CBI's economist. "We still expect the recovery in ...

Don't eat anything your great-grandmother would not recognise as food, says Michael Pollan in his new, cheap book called Food Rules An Eater's Manual. If you sell treats, top-up food items or everything, this book will help you plan your future. "There are now thousands of foodish products in the supermarket that our ancestors simply wouldn't recognise as food. The reasons to avoid eating such complicated food products are many..." he writes in rule two on great-grandmothers. However, in his introduction, Pollan offers his basic philosophy for healthy eating: Eat Food. Not Too Much. Mostly Plants. Rule 64 is break the rules once in a while. Rule 60 is Treat treats as treats. Rule 44 is Pay more, eat less... Rule 36 is Don't eat breakfast cereals that change the color of the milk. What makes this book so enjoyable is it is very short, well written and provides you with plenty of food for thought about what is going on in your shoppers' minds. Perhap...

How do you know what people will want to buy next? Time magazine asked Kraft boss Irene Rosenfeld in the spring but only published the answer this week. "One of the best ways is by studying restaurant menus," she replied. "That's typically a leading indicator of what consumers are eating." As a local shop operator, you need to be aware of two things: what local restaurants are selling and what the next big things will be. This can help guide which parts of your store you promote and which promoted products you select. A second question was waht do you see America eating more of? Her answer split in two. Snacking is where the greatest growth is - both in quick-meal products and confectionery. "I think that is indicative of the fact that people continue to be on the go and are looking for quick treats". But she remains on-message by adding that lower-sugar, lower-fat versions of Kraft's products are "experiencing very attractive growth r...

Further to my post of Paco Underhill's Why We Buy, he makes the point that everybody loves lists. His book is remarkably free of lists but contains two that may inspire some local retailers to read the book. What do shoppers love? Touching things Mirrors Discovering some things all by themselves Talking Being recognised Bargains. What do shoppers hate? Too many mirrors Queues Being asked dumb questions Having to bend over Out of stocks Obscure price tags Intimidating service. The last point explains my lack of Gucci loafers!

I was talking to Steve Denham about a presentation that I made earlier this year and he said that I should read Why We Buy by Paco Underhill, which is about the Science of Shopping. Steve was listening to me talking about how signs worked and how the outside of shops encouraged or discouraged a shopper. Mr Underhill has great credentials and is one of the pioneers of using anthropology to understand how people shop and why. The science was born in the late 1990s and has spread rapidly. While experienced retailers will feel much of what the book tells them is common sense, I agree with Mr Underhill that experienced retailers often miss what is under their nose. However, the following paragraph is a good example of what really works in the book and if you like this then it would be worthwhile to get a copy for yourself. "Here's a good example of the terrible magic that smart merchandising can perform. I once heard a talk given by a vice president of merchandising from a na...

While the Grocer indulged in its usual agenda of knocking CTNs through the medium of Jerry Marwood, boss of Spar, two week's ago, his rather more insightful interview in the same issue provides two thoughts for local retailers. The first is that the "one-trick pony" is dead in the retail water, by which Mr Marwood means that retailers who buy an off-licence or a newsagent cannot expect to make a living on its core product range. This is not news. It was true that until the mid 1990s you could make a very good living on just selling confectionery news tobacco (CTN) or beers wines and spirits (BWS). It is also not news because both shop formats are in decline. Combined they account for fewer than 7.8 per cent of outlets. C-stores account for 44 per cent. It is also not news because the stores that remain are increasingly in locations where the business model makes sense - by travel points for example. However, the CTN owners and off-licence operators of the 1990s...

Demographics suggest that as people get older and as households get smaller, then local convenience stores will prove more attractive for more shoppers. On the surface this is good news for local shops but don’t kid yourself that the multiple grocers have not got designs on this sector. Authoritative figures from the Institute of Grocery Distribution released earlier this month show that the convenience market is growing faster than the grocery market, up 6.3 per cent in the past year to £30.9 billion. Better news, the IGD says it will grow strongly over the next five years to £41.2bn in 2015. A good market to be in. Yes, says Tesco, which is adding 521,000 square feet of selling space in the convenience channel this year in 213 locations and expecting to grab just under £640 million of extra sales. With Waitrose and Sainsbury also active in providing “convenience options”, how much of this £10 billion growth in the next five years will be available to you? That depends on how se...

Higher taxes give tobacco companies the "cover to raise prices" which means the tobacco industry is in rude health, an analysis in the FT's Lex column today shows. For local shops, which depend on tobacco sales to generate footfall, this means that they do not have to rethink their strategy anytime soon. In the US in 2009, a 25 per cent rise in cigarette prices caused consumption to fall by 8 per cent, which was "bang in line" with the impact of the 87 per cent rise in prices since 1969 (adjusted for inflation). Based on this, investment bank UBS argues that tobacco manufacturers can sustain price increases of 4 to 5 per cent a year (8 to 9 per cent for retail prices) for the next 10 years, while absorbing consumption declines of 3 to 4  per cent. What is good news for the tobacco manufacturers may not be good news for tobacco retailers, who might read into these numbers that the former could afford to be more generous with margins. However, they also need t...

At the Newsagents Federation conference in Birmingham this week, Imperial Tobacco, the UK's market leader, suggested to retailers that they should focus less on cigarette margins, at 6.6 per cent, and more on stockturn, at 183 times a year. Using a simple model, general manager Amal Pramanik, showed that the 50 per cent margin offered by toothbrushes which turned over four times a year, offered a cash return of £200 a year for every £100 invested. Cigarettes, in contrast, would earn a retailer £1,200 for every £100 invested. It is a simple illustration and holds true even when retailers add on investment in assets, such as the space occupied by the product. In order to measure how well you are doing, you need to understand what return you get when you multiply your margin by your stockturn. Mr Pramanik's purpose in reminding retailers of this fact is to head off increasing pressure from retailers for a rise in the margin that they get on cigarettes. However, his reminder ...

The article from the front page of the Financial Times is perhaps evidence that newspapers will survive the launch of the iPad. The advertisement on the underground on the day of the iPad's UK launch may also be evidence of the same thing. Fresh from my first play with an iPad, I am sure that it will change a lot of things. I was surprised how small and light it was. Apps from the iPhone do not work on it. Apps written specially for the iPad look fantastic. My friend who is an expert says that the iPad is too middle class to be as successful as the iPhone. But if you have middle class customers, then you should expect it to change something. The newspaper story was about the creation of artificial life. I had seen the story on the internet the previous day and saw it on the television evening news. But putting the story on the front page of a newspaper made it more real for me. While we know that not everything that is printed is 100 per cent accurate, we also pay attention to ...

Tony Wheeler and his wife created a £90 million business, Lonely Planet, by simply doing what they loved - travelling. They recently provided the FT with a list of 10 success tips, three of which make interesting reading for local shopkeepers. One. Keep appealing to young customers. The 18-year-olds could be with you in 50 years' time, the 68-year-olds won't. Good advice but probably advice that you want to flex. Your young customers are probably people in their 40s and 50s and your aim is to have them shop with you from 60 to 85, when they won't need to make a weekly trip to the supermarket. Two. Make work as much fun as possible. I've always been proud that people say we're a company that knows how to party. It pays off, even when the party's over. For local retailers, what opportunities do you have to apply this advice? How do you make more of them? Three. Engage your customers. They come up with great ideas and there's absolutely no better prom...

A US study into why some people get into trouble with their mortgages suggests that a lack of numeracy may be the reason. In the latest issue of the Economist under the witty headline of 'The fear of all sums', Stephan Meier says that the innumerate may be worse at managing their daily finances, leaving them with little room for manouevre when things get difficult. The study shows that the behaviour of the numerate and innumerate mortgage holders were similar. They bought similar financial instruments. They borrowed similar amounts relative to their income. The value of loan to the value of property was similar. Which means that suppliers would find the two groups hard to tell apart. What might this mean for the independent retailer sector? Most suppliers assume that shopkeepers are good at working out the margins on what they sell. However, start talking margins with retailers and you find that most are reluctant to say much. Part of this is a fear that they are not doin...

News this week that the average price of a CD has fallen below £8 for the first time, compared to more than £11 in 2000, tell all retailers that prices do not have to just go up. While the recording industry may blame the internet and supermarkets, which are accused of below cost selling, the business of music may not be suffering in proportion. Radiohead guitarist Ed O'Brien told Time magazine that "the music industry isn't in crisis, the recording industry is; it is an unbelievably good time to be a fan of music and new bands." Whatever, most corner shops are not big into music. However, the implications for book, magazine and newspaper sales is more sobering. The Boston Consulting Group has just studied the attitude of shoppers towards buying digital content in the US, China and Germany. They will pay $100-$150; $70-$120; and $130-$160 respectively for an e-reader. For a book the price ranges are $5-$10; $1-$2; and $7-$12 respectively. For a magazine $2-$4; $1-$2; ...

Clearly the answer is Tesco and Sainsbury, who are leading a big increase in investment in new stores and extensions to existing stores, according to building industry analyst Glenigan. It has tracked £350 million of investment in 60 projects by major supermarket groups in the first quarter, more than double the £150m of contracts awarded in the same quarter in 2009. Almost all of these projects will come into the market over the next 18 months - suggesting the supermarkets are banking on a recovery in shopper sentiment in 2011, suggests Allan Wilen, economic director of Glenigan. What is clear is that they are backing themselves to be successful. The really interesting question is whether they are going to be slugging for share against each other as Nielsen data for 2009 and the first quarter of 2010 shows that convenience stores are out-growing the supermarkets. A good time for optimists armed with a good business strategy.

The owner of this store was surprised when I discussed this sign with him that I would take issue with it...and he may be right. It may be that retailers have to be heavy handed with the public when it comes to people parking all day in spaces that you maintain for shoppers. However, I was suggesting that the type of person who daily abuses your business is unlikely to notice this notice anyway. Instead you should try and send a positive message to your shoppers. How about: Free parking for our customers. You are welcome to park in the slip road outside these shops, which is a private road for the use of shoppers using our precinct. Please do not park here otherwise. Thank you. What is the difference? I think the current sign tells people off. The new wording tells people about the benefit that you provide them with. And it still gives you something to point to if you confront someone who is taking advantage of your parking bays.

The sign says welcome but the door says stay out. In part, this arrangement is forced on the shopkeeper by the architecture of his shop. However, this door is still wrong. I know this because I walk past this shop weekly with my son after he plays football. He is on the lookout for asking his father to buy a salty snack, a soft drink or some football cards but he never suggests we go in here. In contrast, this window, less than a quarter of a mile away does plenty to draw attention to itself. It looks fantastic and simple words tell you exactly what to expect inside. I have bought family gifts here and while I will not go in every time I pass, I know where to go for beautiful gifts and homeware. Having taken the photograph I also know there is a web site. In customer service terms, I know that the people in the convenience store are more welcoming and friendlier. However, the way that they present their shop creates a barrier to shopper visits and what they sell is available everywhere...