nickshanagher

Make a date with the future in Telford on April 24 and 25

2012-01-26T06:23:00.000Z

The bar at Vanilla is "entirely done in eyeball-searing white". Hidden underneath an anonymous office block, the trendy London meeting place is accessed via entryphone and subterranean staircase, like some illegal drinking den, the reviewer for the Independent newspaper noted.

It was the perfect space for leading wholesaler Palmer & Harvey to launch its 30th Pro-retail exhibition, which takes place on April 24 and 25 this year and will include a dedicated future zone, showcasing upcoming trends for independent retailers.

Seeing Vanilla was part of the attraction of coming to the event for Pindar Cheema, a Coventry retailer, who was wowed by the ideas showcased in an exclusive preview of the future zone. It gets you thinking about what shoppers are looking for, he says.

Martyn Ward, commercial director of Palmer & Harvey, demonstrated how mobile technology might drive sales by inviting leading suppliers and retailers at the launch to take part in a simple text promotion. In a flash, the 100 attendees were typing seven letters into their smart phones.

As well as new ideas, Pro-retail will also offer inspiration, with the government's special retail adviser Mary Portas returning for a second year.

"We're collectively championing the spirit of the independent retailer and the unique role you play in meeting consumer demands," said Mr Ward.

In addition to showcasing the exciting plans for the show, Palmer & Harvey is promoting the fact that all retailers are invited to attend. It is a big investment by the wholesaler and the major suppliers who support it in putting on Pro-Retail, the UK's biggest show for independent retailers and now in its 30th year.

Dean Holborn, a Surrey retailer, was happy to recommend attending Pro-retail to local shopkeepers. He remembers that the first year he went he missed the bus and failed to arrive. In year two he was on the bus and left carrying plenty of free stock. In year three he realised the free stock was not the important thing - the important thing was seeing new products, meeting suppliers, meeting other retailers and learning about what works.

This year it is a key diary event for Mr Holborn. He puts the dates in his diary and makes sure he attends for both days. Pro-retail is an investment in your future and the only way to take advantage is to turn up.

C-store invasion will continue despite Tesco reverse

2012-01-19T11:17:00.000Z

Just three days before Christmas the Times published a spread under the headline: "Domination on the edge of town: crisis aids the march of the supermarkets".
This weekend, the Financial Times said: "End of space race. Tesco change marks turning point for UK food retailing".

The truth will be somewhere between the two stories. In December, experts were telling the Times that the scramble for grocery space would run and run. One reason for this was because local authorities in deprived areas believed the supermarket brands would create jobs (a claim disputed by the Association of Convenience Stores based on its analysis of supermarkets' own figures).

Leading City retail analyst Dave McCarthy warned for most of 2011 that the supermarkets had got their sums wrong. While opening new space made sense for each group separately, the collective volume of space would cut like-for-like sales in both value and volume terms.

Think of it this way. You have a shop with sales of £30,000 a week and operating costs of £25,500. You are making 15 per cent margin. Every time you open a similar shop, your operating costs are the same. But as the market is already saturated, your sales for each shop falls by £1,000 every time you open a new one. After opening five extra shops, you have £150,000 of sales (six by £25,000) but you are making a £300 loss.

This is an oversimplification. The teams running Tesco are among the best retailers on the planet but they have lots of levers to pull and lots of targets to hit. After 20 years, something is going wrong and the management cannot figure out what that is.

To Dave McCarthy, the big issue for Tesco was that all its competitors are much stronger than they used to be. Most retailers are at least as good in terms of presentation, promotion and product assortment. If Tesco slashed prices, its profit margins would be hit hard. However, Mr McCarthy worked out that Tesco could afford this but competitors like Sainsbury could not. Therefore, Sainsbury would have to stop opening new space and Tesco would win.

For local retailers that remans a big threat. The profit warning issued by Tesco may remove one of the barriers to it slashing prices - the fear of doing less well than when Terry Leahy was in charge.

What is clearer after the profit warning is that while the out-of-town model is under threat from the internet, this mainly impacts on non-food sales. The FT identifies three trends:

Shoppers no longer want everything under one roof.
They want to shop locally and take less time about it.
They want to avoid the temptation of buying what they do not need.

This analysis explains why the multiples want to invest in c-stores. In the short term, this investment is likely to help independent shops as they will benefit from the extra local footfall that the supermarket brands are encouraging. But there can be no room for complacency, the multiples have a reputation for excellent execution and they are paying a lot of attention to what local shoppers want.

So don't believe newspaper headlines suggesting that the multiples are out of favour with shoppers. You still need to fight for every shopper, every sale.

3,500 local Facebook pages

2012-01-05T14:40:00.000Z

"How we interact at a local level is really important to us, and that's why we've launched these local Facebook pages," Stephen Quinn, chief marketing officer of Wal-Mart US, tells Fortune magazine.

The full article http://money.cnn.com/2011/12/14/news/companies/walmart_stephen_quinn_leadership.fortune/index.htm is well worth a read. Mr Quinn explains that retailing is fundamentally a local business. His marketing team has to work out how to build local communities around its 3,500 US stores.

For local shopkeepers the challenge is clear. In 2012 you need to think about how you represent your shop on Facebook and similar social media and through the internet. As an exercise, go to Google and enter the word groceries and the name of your town or village. I did it for my village and One Stop came top. I did it for where I work and Sainsbury Local came top.

"Our goal is to integrate into the things that are happening in a local community and to make us better merchants through that," Mr Quinn tells Fortune.

His aim is to erode your advantage as a local retailer. You need to respond by understanding what your shop is about. A second idea that Mr Quinn advances in the interview is that shops need to be defined not by what they sell but by the people who they serve. Many local shopkeepers understand this. I know this because they can explain why some products are great in their shops even though they would never buy them for themselves. However, many retailers are really poor at thinking about who their shoppers are and what they want. Check you have your product and services assortment right.

A former marketer for Pepsico, Mr Quinn is experienced at building brands. For retailers, he says the brand is about how you interact with shoppers every day. This means that you and your team need to understand what you are offering shoppers and to pitch this offer well day in, day out.

The other great thing about retailers is that they are constantly trying new things, he says. What shoppers like, they do more of. What they don't like, they delist. At Wal-Mart this process is delegated to hundreds of buyers but controlled by very strong processes. How does your shop do on this measure? Are you in control of thinking about new ideas?

Five useful fast food secrets

2011-12-30T17:39:00.000Z

Recently there has been a lot of analysis of what makes some casual dining outlets successful while others fail. Convenience store operators - especially those with food-to-go - should pay attention. While these secrets may look simple, operationally simple things often turn out to be difficult to deliver. So don't scoff.

Secret 1: Put plenty of cheese on a takeaway pizza as it retains heat well.

Secret 2: Chinese and Indian meals take time to prepare and are not well designed for takeaway.

Secret 3: Pizzas and burgers have ingredients that can be bulk bought and the average school leaver can be trained to make them.

Secret 4: You need to reinvent the value of meals in the minds of consumers if you want to be successful.

Secret 5: Sometimes you are not in the food business. For example, coffee shops may sell expensive coffee but they rent cheap meeting space.

Get caught for doing something good.

2011-12-22T22:29:00.000Z

A friend who worked for a large UK homewares retailer was saying that the company regularly kept a line of sofas on display priced at £1,000 for two months a year solely so they could sell the sofa at a sale price of £500 for the other 10 months.

The twist to her story was describing what happened when a company-employed mystery shopper came in and enquired about the sofa when it was at the higher price point and was told by a member of staff that if they waited two weeks they may find that it was in the sale.

Afterwards, the company criticised its team at the store for their behaviour, saying they should not have drawn the lower price available two weeks away to the "customer's" attention.

On Tuesday, the banks in England agreed to stop charging holidaymakers who pay for foreign currency with their debit cards a 2.5 per cent fee for essentially using their own cash. Foreign currency providers also agreed to better market "0 per cent" deals that are not free.

This reminded me that I had paid for some currency at an airport in September and used my debit card. Previously I had always taken the cash out a cashpoint and paid that way (possibly because I had read some advice to do it this way) but this time I used a debit card as the cashier told me there would be no charge. He did not advise me that the best thing to do was to use the cashpoint machine right next to his desk.

What connects these two stories is the way that marketing compromises the retailer's relationship with the customer and with their staff. There is nothing wrong with being creative in how you price goods and clever pricing helps many shoppers understand the value they can receive from products and services. But the best retailers always get caught trying to find the best deal for their shoppers.

Start it up - Luke Johnson's bid to energise entrepreneurs

2011-11-16T21:38:00.000Z

"Business is a fantastic technique for someone from a modest background, with minimal education, to improve their life and get ahead, says Luke Johnson in his book Start It Up.

His publishers describe Johnson as “Britain’s busiest tycoon, with a personal fortune estimated at £120 million” and he believes in people with get up and go and that small business owners contribute a great deal to the UK economy.

Start It Up, published by Portfolio Penguin, price £12.99, is aimed at inspiring and guiding budding entrepreneurs. How old are such entrepreneurs? Read the book and you realise Johnson has the 50 plus age group just as much in mind as people in their 20s.

Independent shopkeepers will find this book useful for two reasons. You can compare your strengths and weaknesses with those described by Johnson. And you can learn about the people you do business with, what motivates them and what they may be thinking.

It is organised into seven parts and each part is sub divided into short essays on various themes. For example, on page 138 he explains the “five questions I ask myself before investing.”

They are quite simple questions and they can be used in three ways. Firstly, you can use them to honestly assess your own strengths and weaknesses. Second, you can use them to assess your business and to see it as an outside investor might. Third, you can use them to frame any business plan you put together to justify further capital investment.

Johnson is a man who loves reading. He writes a column in the FT that is occasionally brilliant. He sprinkles his book with great quotes and with his opinion. What the book does not do is provide rigorous evidence for why his opinions matter. If you are not used to reading business books, this is a strength. It makes his ideas more accessible.

In his section on getting funding he promotes angel investors and advises people that a good investor will “bring a multi-layered network of contacts and be able to offer advice on strategy, recruitment and potential customers.”

With his background in the casual dining business, most of Johnson’s business ideas are easily transferable to the convenience sector. He warns that good ideas are soon copied by the market, reducing prices and increasing costs. When he took over Pizza Express, good sites were plentiful, competition was limited and the public was reading to spend on eating out.

In the 1990s “even a relative amateur like me could grow a business enjoying 20 per cent unit margins and cash returns well over 35 per cent”. Today, returns are lower and unlikely to recover.

Johnson is lukewarm on franchises, saying “if you rent someone else’s idea, then you do not control your own destiny” and speaks warmly of independent operators. “I like the individuality of an owner-managed organisation. I want a merchant I patronise to have character, not to be a faceless entity.” But this book does not explore these themes relentlessly.

Instead buy it for his celebration of the get up and go drive of entrepreneurs and his advice on how to network and build partnerships; how to get to know the people who drive your business and why this is in the public good. Enjoy it also as a great source of business quotes. Buy it also to find out about the Money Riverbank. “The Money River really is out there, for those who would only stand in it,” Johnson writes.

Half the products on my shelves are making money...

2011-10-24T15:54:00.001+01:00

There is a scene towards the end of the Hurt Locker where the hero (or antihero) is back home in the US from his job defusing bombs in Iraq and he is standing in a massive supermarket shed dwarfed by thousands of packs of cereal boxes and unable to make up his mind which one he wants to buy. The outcome, he goes back to work in Afghanistan risking his life solving tricky wiring problems.

Perhaps sadly for me, I was more worried about the poor quality of the product display. It was obviously not a real store - there was no attempt at point of sale, no differentiation. Perhaps the hero could have used his decision making skills to inject a bit of order into the cereal display?

However, some manufacturers may be there ahead of him. The FT says Unilever has cuts 40 per cent of its stock keeping units in the UK, armed with the view that 95 per cent of net revenues are generated by 60 per cent of SKUs. This statistical analysis from the Boston Consulting Group appears to be similar to the famous maxim of John Wanamaker that half the money he spent on advertising was wasted but he did not know which half.

But before we can agree to cut SKUs, Bob McDonald of Procter & Gamble is quoted as saying that the shopper who wants just three variants of toothpast might still want 10 different kinds of dog food.

After several thousand words on the subject, I can't work out if cutting SKUs is a good idea or not. The FT summarises this in a bullet point: "Do not rest. Reducing complexity is like painting the Forth rail bridge. It is not a one-off".

The FT in its analysis of big packaged goods companies has a different outlook to the local shop operator. However, the decisions of these packaged goods companies determines what is available for your shelves and your shoppers. There are two simple questions you should ask of every SKU.:

what is it for?
who is going to buy it?

How often you do this should be prioritised by profit analysis. Get your top profit generators correct first.

Bricks and mortar versus the cloud

2011-10-24T14:46:00.000+01:00

The final of three poaches from Vanessa Friedman's FT interview with Mickey Drexler, chief executive of J Crew, is on his views about brand values.

His company is looking for a store in London because a store "really articulates what the brand is. It's an emotional, visual experience in a way a catalogue or website is not."

How good is your store at making an emotional and visual connection with local shoppers? How much better than a web site are you? Remember, if you are selling a commodity, Tesco will win every time. Remember also that good customer service takes in the emotional and visual connection. Check how clean your floor is, how welcoming your door mat.

Two questions for retail success

2011-10-24T14:33:00.001+01:00

Vanessa Friedman of the FT says there were two reasons why Mickey Drexler helped clothes retailer J Crew to sales of $1.7billion in his eight years with the company (previously he took Gap from $400 million to $14 billion in 18 years).

First, he saw the opportunity to raise the style quality and move to where there was a "lot of white space" between very cheap clothes and designer.

Second, he "took a page from Brooks Brothers' book and it was a high margin, high profit page: you don't pay wholesale. Because if you pay wholesale you have two problems: one, discounters - you always have to drop your prices; and two, margin. Say something costs you $50 to make. You mark it up to $150 for wholesale. The retailers mark it up 2.2 or 2.3 times, which is standard. You can't undersell them, so you have to sell your sweater for $350. But if you are the only retailer, you sell it for $150."

Two questions for local retailers:

Where is the white space for you?
What can you source direct from the supplier and control the margin of?

Success secret from J Crew boss Mickey Drexler

2011-10-24T12:06:00.001+01:00

"Wherever I go I always ask what the bestseller is," says Mickey Drexler, chief executive of J Crew, the US preppy clothes company he has headed since 2003.

Meeting Vanessa Friedman, fashion editor of the FT, for lunch, Mr Drexler explains that when he dined at the Wolseley in London he asked and was told 1) wiener schnitzel and 2) cobb salad. He ate the second. For pizza, the answer is always Margherita and this was the case at Pulino's in New York where he dined with Ms Friedman.

In ice cream it is always chocolate and vanilla. In cookies it is chocolate chip and then oatmeal raisin.

"I tell this to my team when we go out together: you need the Margherita! People like consistency. Whether it's a store or a restaurant, they want to come in and see what you are famous for."

J Crew's top sellers are: 1) the Jackie sweater, 2) the Café capri and for men the prewashed shirt.

What is it you are famous for?

Customer service on line

2011-10-21T12:29:00.000+01:00

On-line retailing still requires great customer service, Nick Robertson, chief executive of ASOS, told retail employers at a Skillsmart Retail seminar this week.

Set up before the rise of social media (Facebook and Twitter and YouTube), ASOS has expanded internationally on the back of customer demand. It had no plans to launch in Australia but has huge sales there because social media helped shoppers to find ASOS.

A key measure of customer satisfaction for on-line businesses is to measure the number of shopper contacts to orders. For ASOS this trends between 25 per cent and 30 per cent (which means a shopper asks a question about every fourth sale). Heavy snow in the UK last year caused this to spike over 40 per cent. Distribution problems caused it to spike over 35 per cent.

Customer contact is driven by email. The call centre will only call back if the first two emails fail to solve the problem. Most emails are questions about colours and sizes which are easier to handle by email. If someone phoned you would have to put them on hold while you looked up the answer.

Good customer service is important because social media makes it very easy for shoppers to comment on your brand, says Mr Robertson. Use Google discussions search and find out what people are saying about you.

For example, today someone is asking on the first page: "Is this store trusted? I mean I am not sure they are good or bad when I see their customer cares. A lot of people are complaining at their forum..."

Mr Robertson says some companies get pre-occupied with policing what people say about them on-line. His solution is to provide good customer care. With Facebook conversations, we try to treat customers as friends, he explains.

And then there is You Tube, with 'amateur' beauty gurus like Fleur De Force, who likes to show what she has bought from ASOS for example. More than 81,000 people have watched her talk about her autum/winter fashion haul from ASOS and Mr Robertson shares the start of this upload with the conference where Fleur says she normally sends half the stuff she orders back but her latest haul is so good she is keeping all five!

The main point that Mr Robertson makes is that on-line you cannot control what is said about your shop. His rules for great customer service are:

invest in getting the service right first
communicate in advance if you know you will disappoint a shopper
set up shoppers' expectations and beat them
read emails to the end before you respond and make sure you get it right first time (shoppers can take a long time to get to the point)
template responses are a "no, no" - personalise everything
remember, it's the proposition as well as the service.

At ASOS it is all about the quality of the product. If they don't get that right, there is no where to hide.

How to get new ideas for your business

2011-10-06T16:06:00.000+01:00

Get out and mingle, venture capitalist and FT columnist Luke Johnson advised business people in a column last month. While he targeted his remarks at people sat behind desks, they are equally valid for business leaders who stand behind a counter.

Local retailers need to visit other shops and see what they are doing. In addition, they should attend trade shows and conferences to meet other people and share ideas and know-how.

They should also think about going somewhere new to refresh their minds. With this idea in my head, I toured the Speciality and Fine Food Fair in London’s Olympia last month – now incorporating Chocolatefair. The organisers have already announced that more than 8,300 people visited the show, now in its 12th year, at which more than 550 businesses exhibited.

While the fair is targeted at fine food outlets, there is plenty for local c-store operators to learn and the first thing is about selling. What is great about this show is that most of the stands are run by small companies or by people who are just starting out. The passion for product excellence really makes a difference.

For example, Rob Bookham is promoting his Sussex Charmer cheese, a cross between a traditional farmhouse cheese and a Parmesan. Charmer has won a number of awards and wearing his bowler hat, Rob cheerfully encourages everyone to have a taste.

Taking my business card, his organisation follows up with a letter and price list within days, including a mobile number for Rob and the promise that if I order £65 worth of stock I will get it delivered free the next day. “That’s UK wide,” he assures me when I call up. The show was great, he says, with more than 35 new customers in the pipeline – some wholesale, some retail.

What he also notes about doing the show is that existing customers have got back in touch and reordered. “We’ve got a small business mentality,” Rob cheerily assures me. This feels like a company that it would be good to do business with.

Or, at another level there is Craig Coulton, the founder and MD of Bloom Teas. His stand is small but fantastically presented. He is offering passers-by small shots of cold tea. A former architect, Craig learned about the health properties of tea and he has come up with a daily treatment plan of five teas to help busy and stressed individuals.

These products are at the top end of the market, stocked by Harvey Nichols for example, with 10 tea bags retailing for £3.80. But the packaging is so beautiful and distinctive that it will make an impact on upmarket shoppers.

Also exhibiting were a company selling Palestinian products and a new crisp company from Egypt, artisan bakeries, and some amazing chocolate companies. The catalogue is great and to get one you had to make a donation to a charity to feed the hungry. It is a challenge not to get inspired. It would be a rare retailer who also failed to find at least one great new line to add to their mix.

Wow and wow - a remarkable fruit and vegetable display

2011-09-16T15:17:00.000+01:00

There are two things to learn from this fruit and vegetable display at Paul Cheema's Coventry, UK, local shop.

The first is about benchmarking how shoppers use your store. The fruit and vegetable display is at the back of the shop. It looks fantastic. Every time I have visited it has looked fantastic. Paul says this is because fruit and vegetables were at the core of what his father sold when he originally opened the shop, that his father is good at displaying fresh produce and that he is proud of how good it looks.

So what happens to the shopper who has strolled past the long aisle of fresh meat and dairy and then they come across the fruit and vegetable display and decide to buy? They can because the Cheemas have left them some baskets to use. They happily shop and go to the tillpoints to pay.

However, the trick is that the baskets are unique to this point in the store. They are the only ones of this size. So every week the Cheemas get to work out how many shoppers were tempted to buy more because they saw this fantastic display.

The second thing is about the quality of the display. About the use of great lighting to show off the produce. The Cheemas get the detail in their shop 95 per cent right 95 per cent of the time. (It's never 100 per cent because they are always experimenting and changing the customer experience.) But this display is 100 per cent right, 100 per cent of the time. It communicates authority to shoppers. You feel confident about buying from Paul and his family because their produce looks great. This confidence spreads to other parts of the shop.

Learning from the experiences of others

2011-09-16T14:44:00.000+01:00

Mark Twain once said that "the best kind of experience is other people's". He was right, says Pino Tedesco, a business leader from Australia and one of 60 to contribute to a book just issued in the UK.

One of Mr Tedesco's success secrets is to rent a hero. When times are hard, seek advice and ask yourself what would my hero do? If problems look too difficult to solve, ask yourself what Steve Jobs would do. Or Nelson Mandela.

Another contributor, Jon Clarke, who runs 360 Business Marketing, a UK company, says: "Succeed by being remarkable and ignore the doom merchants". He advises businesses to "go where the customers are: the places where they source products or solutions to problems." Next to this, I scrawled in big letters: HOW?

If you are a local shop, you cannot pick up your shop and move it to where the customers are. But the question is still relevant. If your shoppers are shopping somewhere else, you need to go there and find out what you need to do to win them.

If you do nothing else, says Mr Clarke, after reading his article, buy Purple Cow by Seth Godin, which will tell you how to grow sales by "being remarkable". Which got me to thinking whether I should recommend reading Lessons Learned from the Recession, the first volume from the Business Leaders Book Club, published by Ask the Experts. This book is not remarkable. It has bad typography. Many of the 60 business leaders who offer their thoughts use clichés and their thoughts seem unremarkable at best. Surely, I would do better to recommend Mr Godin's books?

However, I managed to shortlist eight articles that people who run small businesses would find interesting in next to no time. Even the articles I did not like were short and full of first-hand experience. These are people who run small businesses and who are successful. It is about learning from people like us. Business people that we could easily be. As Stephen Covey argues, don't read a business book as a book straight through but use it as a resource. This works for the Book Club offering, edited by Richard Norris and Mark Stephens.

Debra Zimmer writes about "retail knows first" and her experiences of setting up a furniture store in 2005 to complement her successful internet business. Amid lots of helpful advice you can use today, she notes two things:

A leading company in home furnishings, Williams-Sonoma, had a stock price of $40 when she opened her store in August 2005. When she closed it in December 2008, its stock price was $7.85. "Had I thought to track their revenues at the time, I may have shut down sooner," she says.
A venture capitalist friend told her "the number one thing that determines how successful a business will be is the growth of the overall industry". That is why for local retailers it is important to track the success of Booker and what the Institute of Grocery Distribution says about the outlook for the convenience grocery sector.

I enjoyed Andy Goodhay's article on how to achieve more in less time and about self management, which might be worth the £12.99 cover price on its own (it that is what you are looking for).

Jonathan Jay's how to "beat the recession (and your competition) with marketing" is also thought provoking. "I realised that the mistake that other companies in my industry and almost every industry were making: we were talking about ourselves. Every piece of marketing I had done before had really talked aobut how good we were, and how customers or prospects should use our services, but we didn't quantify it. We didn't talk about it from a customer's or prospect's perspective. NABO made me change by approach." (NABO being his current business project.)

For retailers who like to learn by reading, this book may be a useful addition to their library. It is not pretty but it gives you insight into how people who run other businesses think. All business owners need to network with other business owners to build up their banks of good ideas and self-confidence. It is just like Mark Twain says.

The need to pressure the regulators to think outside the box

2011-09-12T17:42:00.000+01:00

The Newsagents Federation is calling for the newspaper and magazine industry to be referred to the Competition Commission and will be heartened by the views expressed by Baroness Kingsmill, a former deputy chair of the Commission, in the latest issue of Management Today.

"All markets require regulation," she writes. "Market forces are red in tooth and claw and, unregulated, will lead to the survival of the fittest monopolist."

Regulators usually restrict their findings to considerations of pure consumer benefits, which are "thought to be synonymous with the public interest". However, Lady Kingsmill argues that there are clear distinctions to the interests of consumers and of citizens. She also says that regulators had fettered themselves. Under the Fair Trading Act 1973 they could have been taking into account criteria such as the distribution of employment and enterprise around the UK - or environmental issues. In more than 20 cases she took part in these considerations were never used and they no longer exist under the Enterprise Act 2002.

How might the issue be judged? Take the media, she says. Consumers might want the latest products and the lowest prices. Citizens might want free speech and privacy. Business interests would be profit and access to the market. Social interests might be around public taste and methods used in news gathering.

The public interest needs to be moved up the regulatory agenda, she argues.

"Is it appropriate to destroy a local economy, losing jobs and specialist skills..." she asks in relation to the Thameslink train contract going to Germany rather than Derby.

At a smaller level, the local independent shopkeeper is asking the same question as the supply chain appears to favour the big supermarket operators. Is it appropriate that a supply chain can destroy my business, he or she may ask.

What is perhaps more helpful about Lady Kingsmill's article is her articulation about the beliefs of the people who sit on the commission. What retailers need to do is to persuade regulators to use their powers across the broad spectrum of society and not just a narrow focus on the "average" consumer.

From river and sea: fish tales to help you think

2011-09-07T14:09:00.000+01:00

Half of all fish caught in the North Sea are thrown back overboard DEAD it says on the front page of celebrity chef’s Hugh Fearnley Whittingstall’s campaign website to change European laws governing this industry. After a visit to one of his restaurants last year when I left my email address I was invited to sign up as a supporter last year. Now more that 755,000 people have.

I did so without having to think hard because I had seen his Chicken Out campaign in 2008 and agreed with its objectives. This campaign has changed the way that people shop, Mr Fearnley Whittingstall claims. I believe he is correct and all c-store operators who stock any chicken – or fish – need to be aware of the provenance of the food they sell.

You may disagree. I have visited some great shops where people aspire only to cheap extruded snacks and cheap beer. But as a c-store retailer you need to understand your market positioning: what your shop stands for and what it does not.

If you agree with this then The Fish on Your Plate, a book by Paul Greenberg just published in paperback by Penguin, will provide you with an entertaining and informative read. There are five things you will observe:

The power of supermarkets
The power of industry lobbies
The problems of labelling
The way consumers think
There are only four types of fish!

Mr Greenberg is a journalist who has fished since childhood. He writes well. His book is divided into four chapters on salmon, sea bass, cod and tuna. Mankind, he asserts, eat four types of meat: beef, pork, lamb and goat and four types of fowl: chicken, turkey, duck and goose. It is the same with fish.

However, fish are wild food and not domesticated. Farming salmon does not make sense. But salmon is too important to be let alone. “Most supermarkets would not even have a seafood section if it was not for salmon,” one salmon farmer told him.

A problem campaigners for fish welfare face is the power of big manufacturers and supermarkets to get what they want. “Never get between a fat hog and a trough,” one friend advises Mr Greenberg. “He’ll run you over every time.”

The book explains how the supermarkets need all year round reliable supplies. The Marine Stewardship Council’s certification process may improve fish welfare but it is full of loopholes.

Consumers think in a binary way. Something is either good or bad. Traffic light systems don’t work. For example, people don’t eat whalemeat as whales are considered wild animals. People do eat bluefin tuna as it is a seafood.

Before reading this book, if you had asked me if John West tinned bluefin tuna, I would have said I don’t know. Today, I know for sure it doesn’t. “We have never been in the bluefin tuna business”, it says on its website.

The book is full of great stories that will help you to think about how your shop works in a range of different industries. You will be able to think about how to better present what you sell. This is also a book that will add energy to your life. It gives more than it takes.

Local shops are eating into the supermarkets' margins

2011-09-05T16:47:00.001+01:00

The City analysts cannot make up their minds as to whether the supermarkets' investment in convenience stores is a good thing or not. The FT in a Monday analysis piece suggests that "Grocers count cost of smaller outlets". It is a clever headline. Obviously they are managing their costs. But also they are measuring the impact on their bottom line.

There are several issues. If you sell 399 chicken dinners and have one left over, the cost model is very different from a shop where you sell nine chicken dinners and have one left over. If your 60,000 square foot hypermarket is sited where land is cheap and rates low, the cost of storing those dinners will be cheaper than in a 3,000 square foot store in a city centre.

How do the grocers try to manage the costs:
1. By clustering c-stores close together so you only need one truck to do deliveries
2. By tailoring what the stores offer to local demand and getting the stock levels correct
3. By trying to persuade shoppers to buy premium products.

"If people are going to come in and buy steak and a bottle of wine, it completely changes the economics," Miles Foster, who is heading Morrisons c-store trial, told the FT. However, it is clear that the supermarkets are struggling with finding a competitive advatage against the wholesaler/cash and carry to symbol group/independent supply chain for local stores.

Independent retailers cannot be complacent but they may be encouraged. The big box approach works for superstores in part because the cost of travelling to the stores is taken by the shopper - both in time and through the cost of fuel. Moving the shop closer to the shopper means the supermarkets are taking over a bigger share of this cost and so far they can't make the sums add up.

Buy Booker, says Evolution; good news for local shops perhaps

2011-09-01T15:02:00.000+01:00

The job of retail analysts is to advise investors on where to place their money and their views underpin much of the media coverage of the retail sector. In the wake of the latest Asda income tracker figures that show disposable incomes falling by 6 per cent in July, Dave McCarthy of Evolution Securities said that a tough era lies ahead for the UK food retailers, "for which the industry is not well prepared".

In the UK, retailers have benefited from like-for-like sales growth which has driven the way that companies have funded their business models. Many stores are taking less cash than a year ago and facing real increases in costs, says Mr McCarthy. The result is a profits squeeze.

The managers of Tesco, Sainsbury, Morrisons and Asda have benefited from two dynamics for a long time. In the past two decades, one has always been underperforming. As they are all doing the same, suppliers will find less need to pay to shift their sales around an "undifferentiated pack".

Secondly, consumers have been trading up for 30 years to products that are more processed and to products sourced from overseas. As disposable incomes have risen, the added-value products have been able to grow. Now the market is facing a reverse dynamic.

Mr McCarthy says the industry is very slow to recognise the problem and investors are not putting pressure on. The winner, he suggests, is Booker, which is not involved in the heavy investment in opening new floor space that the big four grocers are engaged in.

If Booker is going to do well, then the shops it supply need to do well. Mr McCarthy's arguments do not necessarily follow through to being good news for local shops. Imagine that supermarkets are two businesses rolled into one: a wholesale arm and a retail arm. It could be that their wholesale arms will do well while the retail arms are suffering the cost of investment in new floor space.

By extension it could be that independent local shops will bear a degree of pain - investing in better standards and expanding their floor space - that their wholesale suppliers will not feel. Even so, independent retailers need their wholesale suppliers to be healthy and competitive so on balance investor confidence in Booker is a good thing. To use a City metaphor, independent shops are a Hold. Your stretch targets should be low single digit year on year sales growth.

Developing your soft drinks chiller

2011-09-01T14:16:00.000+01:00

This photograph from Malcolms Stores, a Costcutter shop in Tile Hill, Coventry, shows how strong a soft drinks display can be - complete with meal deals covering breakfast and lunch. Enjoy the attention to detail and the adjacencies.

"Oh, having a dinner party, madam?" A reality check for you?

2011-09-01T10:41:00.000+01:00

Originally published in May but given to me in a free taster issue handed out last week, the Economist has formed the view that supermarket-bashing is "elitist and muddle-headed". Its target is the Tesco bashing where the opening of a new outlet coincides with the closure of local shops.

The political response from David Cameron and Ed Miliband was to "bring back the bustle to our high streets" and "people think the character of their local high street is being changed and they have no power against big corporations" respectively.

What will happen? Nothing suggests the Economist, pointing out that the Competition Commission found in 2008 that the grocery market represented a good deal for consumers.

The business magazine goes on to question how new the problem is, pointing to research from Surrey and Exeter universities that shows that as far back as 1939 chain stores and co-ops controlled half the market (up to two thirds today).

And it shows that younger, working class women welcomed supermarkets - a retired secretary interviewed by the researchers recalled asking the butcher for a tiny amount of mince. "Oh having a dinner party, madam?" he sneered. The anonymity of supermarkets can be a benefit.

But the question is one local shopkeepers could ask themselves. How inspiring are they to new shoppers? How good are they at introducing new ideas? How can you match the quality of the big supermarkets?

That last point is key. Local shops have to be better than supermarkets in order to thrive. This means you have to understand what you offer local shoppers and how you do the things you do well better than the supermarkets can. Knowing this you have to drill customer service into your team and yourself. You need to show shoppers in your store that you want to make their lives better.

Fortune provides a Big Mac benchmark

2011-09-01T10:24:00.000+01:00

McDonald's is the best fast food operator in the world, details published in the September 5 issue of Fortune show. As part of a feature on chief executive Jim Skinner, the US business magazine lists the annual sales per store achieved by 10 leading fast food companies.

The list is:
McDonald's       $2.4m
Applebee's        $2.3m
Wendy's            $1.4m
Taco Bell           $1.2m
Burger King      $1.2m
KFC                 $1.1m
Starbucks          $800k
Pizza Hut           $700k
Dunkin' Donuts $600k
Subway             $400k

These figures may not be correct for the UK market. But they give you an idea of the sales that your high street competitors may be achieving and what competition for the best sites may be.

How best to sell magazines: a question the industry has no answer to

2011-08-30T12:59:00.002+01:00

'We don't have it in stock but I can order it for you!' The words that are the death knell for small bookshops, according to Harry Mount, writing in the FT.

He points out that thanks to Amazon he can order it himself and the book will be delivered straight to his door. Mr Mount's article is entitled: Shed no tears for the death of the old bookshop. He is confident that book shops may survive but only if they get the emotional pitch correct. They need to provide a quiet yet communal atmosphere in which shoppers can sift through ideas.

It all sounds a bit fancy but the magazine retailer has something to learn. What Mr Mount describes is the commoditisation of buying books. In my local bookshop, when I ask for a book that they don't have, they suggest that they can order it for me. That means I must remember to come back. It also means if their wholesaler is out-of-stock then there will be more delays. I have never said yes.

But what might make me say yes? This was the question that Mr Mount does not address. I am sure that if the book shop assistant was to tell me that it was an excellent book and they wanted to read it themselves and they would love to order me a copy, then I might say yes. Instead, the look I get suggests why don't I look around and find another book, there are plenty in the shop.

What is the analogy for the magazine market. In an insight article published last year, Marketforce director Christine Lucas said that readers don't really care where they buy their magazines - just as long as they can get hold of them easily and conveniently. Ten years ago, when we organised the World of Magazines, our research showed people did care and a great many would go to WHSmith if they wanted to buy a magazine. What can have changed? The arrival of the supermarket, which is now seen, according to Ms Lucas as the "mainstay of magazine sales".

However, her research of WHSmith shoppers suggest many do still see it as a destination for magazine purchases, with 40 per cent visiting purely to buy a magazine. What would they do if the magazine was not available? A third said they would opt for subscription copies. A quarter said they would go to a local newsagent. But more than one in 10 said they didn't know where they would go.

One problem is that selling magazines has been commoditised. By selling publications on sale or return, publishers control the supply of copy, which gives supermarkets an edge. Local retailers may not like this but think about the situation in these terms. Supermarket A says 10 million people will walk past your magazine on shelf A. Shop B says 1000 people will walk past your magazine on shelf B. Which gets your attention?

Another problem is magazine publishers don't know where to invest. Consider PPA boss Barry McIlheney's remarks as published by Retail Newsagent: "For pretty much the entire industry: headline print figure might be down a bit, website up yet again, big growth in the radio station, massive surge on the Twitter followers, ditto the Facebook page, total brand reach now into the millions."

The lack of focus could become self-fulfilling. Brain Murphy of the NFRN, also talking to Retail Newsagent, said: "The battle for retail space will not become easier because of the lack of titles, new or otherwise. It will become harder as other consumer products seize the opportunity opening before them."

As if to underline that opportunity, Retail Newsagent's slim Best Sellers update on the magazine market was preceeded by an advertisement for Clipstrips, an innovation from Pepsico so that local retailers can get crisps closer to their till points.

How will the industry respond? "The future is to continue the focus on category initiatives and to work hard on category adjacencies, display and range management in store," suggests Paul Keenan of Bauer Media. The problem, Paul, is it doesn't compare with Pepsico's promise: "Site at till points to increase slaes by up to 30 per cent."

Club your food-to-go together

2011-08-26T15:59:00.000+01:00

I was sent this photograph of a display at Caltex, an Australian c-store chain, by him!, the UK shopping insights company. What him! wanted to draw to people's attention was the idea of including a healthier option in food-to-go.

What I think UK retailers will like is the way the meal occasion is presented - grouping products together to meet a shoppers need state. I know many retailers think they have this cracked but once you see it done really well - and many UK shopkeepers are doing it better than as shown here - you realise most people are just playing lip service to the concept.

More importantly, the same applies to presenting food for later - quick meal solutions next to drinks and desserts.

It's High Noon on the High Street

2011-08-26T15:46:00.000+01:00

The Sun's execellent City page, otherwise known as the "page you can trust", unveiled the High Noon headline this week after some stinking results posted by the Co-op. It quoted Peter Marks, its chief executive, as having said that people were cutting back on food for the first time in his working life.

"Co-op profits dive triggers panic," suggested the Sun. But so too did the resignation of Steve Jobs, Heineken's announcement of sales falls in the first half of its current financial year, and any number of other corporate events. In a sense the Co-op's pain should be welcome as it confirms the story that the Kantar Worldpanel sales estimates have been telling us every month - the Co-op is losing market share. Local shopkeepers collectively are doing better than the Co-op, which means its 3.6 per cent like-for-like fall in sales (at a time when grocery inflation is nearly 5 per cent) should be your bottom end benchmark.

Our village is served by a Co-op that was previously a Somerfield. It is a good shop with a decent range of food. It is well presented. Its staff are polite. Up front it has good promotions. Most independent shops would be pleased to match its standards. Which I guess is where the panic may kick in for an independent convenience store owner. Being OK is no longer good enough to ensure that your business will be successful.

The Co-op is not standing still. It talks a good story. Its management claims that after two years when integrating Somerfield was the top priority, it is now able to spend time focussed on new product development. It says the recent relaunch of its Truly Irresistable range has been a big success, with sales up 30 per cent year on year. It aims to follow this by launching Eat-in and Free-from ranges, a new wholefoods range, and to significantly increase the presence in store of “own grown British products”.

“Work is underway to enhance the range, segment the customer offer and overhaul the ways in which products and produce are replenished in-store,” the Co-op says. In its TV advertisements it says that it is good with food, which leads to the question of what it is for.

Ed Garner of Kantar Worldpanel reckons the Co-op strategy is to retain the same number of shoppers but to increase the amount that they spend with them. Unlike Waitrose, which aims to get more shoppers spending the same as its existing customers. Clearly the Waitrose strategy is working and the Co-op's is not.

In much of Mr Garner's analysis, the Co-op appears to be coming third to Waitrose and Sainsbury in terms of the up-market customer offer - high on organic, locally sourced and so on. While there are many independents who aspire to work in this sement of the market, most are slightly less ambitious, relying to a greater extent on alcohol and CTN sales.

Looked at this way, the Co-op's results may suggest that you do not need to panic so much as be careful about positioning your store so it appeals to the same shoppers that Waitrose and Sainsbury, to a lesser extent, already own.

Free wi-fi in store - one to watch

2011-08-24T16:04:00.000+01:00

There is a well known rule of retailing that the longer you get people to spend in your shop the more they will buy. One of the reasons that supermarkets put fruit and vegetables up front is because it slows people down, ensuring that they reach the more profitable central aisles packed with processed foods in a better state of mind to browse and buy more.

Tesco's announcement that it was testing free wi-fi in store was being trumpted by its marketing machine as a way to help shoppers price compare using the phones. However, it might also help fill their shops with students and school children who cannot afford to surf the internet on their pay-as-you-go mobile phones.

As many local retailers know, there is a fine line to keeping shoppers in store longer so that they spend more and in having people killing time blocking your floor space. Magazine browsers in particular get a bad press.
However, it is still an area to watch. If it works, you may have to respond in kind.

Fresh and Easy - the marketing lesson

2011-08-24T15:58:00.000+01:00

Analysis of Fresh and Easy - Tesco's loss making foray into the US grocery market - is a great place for local shopkeepers to go in terms of understanding what Tesco believes makes local shops tick.

Interviewed this summer, Tim Mason, chief executive of Fresh and Easy, told the FT that shoppers were telling him that you're certainly easy but you don't seem to be that fresh.

His response is to rejig how the stock is displayed. Flowers are moving to the entrance. The freed space will be filled with in-store bakery products. Fresh coffee to take away will be added. In areas of strength, such as fruit and vegetables, more needs to be made of the products in store. Health and beauty will get less space and own-label food more.

What to learn? First, that despite all its know-how and the research it put into the launch of Fresh & Easy, Tesco made lots of mistakes. In an attempt to keep costs down, it failed to sell its Fresh message. As many independent retailers know, getting fresh correct is vital to success as a convenience retailer. But getting fresh correct is also hard work. You have to experiment.

More importantly, I think the Fresh and Easy story underlines how important it is to get your brand correct in the mind of shoppers. When you visit other independent local shops, would you buy your evening meal from them? If you had guests coming who you wanted to impress, would you buy your evening meal from them?

Once you have established the trust in the mind of shoppers, then your brand has the potential for momentum.

But remember that fresh and easy may not be the correct brand message for your shoppers. You may be serving a population that puts more emphasis on cheap than on fresh. Or a population that puts more emphasis on fast than on easy.

Finally, what is striking about the product groups that Tesco is struggling with in America is that none of them are new to the UK convenience channel. What may be key to your success is in getting the adjacencies correct - presenting products in a way that encourages shoppers to spend more because as they buy a four-pack of beer they see the snacks and remember that they like a snack with a drink!

Business lessons from Moni Varma

2011-08-24T15:29:00.000+01:00

Earlier this month, the FT profiled Moni Varma, founder of Veetee Rice, for its entrepreneur column. As an immigrant from Malawi, Mr Varma's journey to success in the UK will have obvious resonance for many south Asian shop owners.

Mr Varma has built a public profile on the back of a successful track record as a supplier to the multiple supermarkets and more recently through developing his own brand Dine In range. Late last year he joined the chairman of Asda in signing a letter to the Daily Telegraph supporting the government's "cuts" to public spending ("cuts" is in inverted commas because total spending is still going up, just more slowly than previously planned).

Interviewed by Jon Snow of Channel Four, he said his optimism in creating new jobs and investing in the Dine In range was fuelled by the downturn because people were going to be eating in more frequently.

Mr Snow challenged Mr Varma's view that the private sector could kick start the economy, saying that most small businesses could not get the loans from banks. Mr Varma's answer was that he ran a small business (£80 million turnover BUT competing with Mars) and he achieved the loans.

How to get loans? You have to tell the story right and you have to get the results right, he says. There are difficulties but they are not insurmoutable.

What Mr Varma is good at is the hard work of spotting an opportunity. He built his business on a simple fact. He saw that import duties for milled rice into Europe were £400 a tonne and for unmilled rice they were £200 a tonne. He knew nothing about rice but knew this was a good margin. He worked out that he could borrow the money to build a factory in the UK and the business would pay if he could sell 1,100 tonnes a year. His challenge was to get the volume of sales. The answer was own label for Marks and Spencer initially and then the supermarkets.

A second business lesson from the FT article is when to say no. Technology developments in Japan meant you could put great rice in a pouch and sell it to UK consumers who could not master the art of cooking rice. Uncle Ben's was the first mover in the UK and supermarkets asked Veetee to do own-label pouches. Mr Varma refused: "The brand leader and first-mover advantage was taken by Uncle Ben's so anybody else would only struggle along behind...And I was so used to being mucked about by private-label, where margins went wafer-thin at times, that I was not prepared to go into another product just chasing someone else."

Instead, he went to Japan to see what he could develop and the result is the Dine In range, targeted at the convenience market in the UK.

A final lesson. "What motivates pople like me is that there is a problem that you want to solve," Mr Varma told the FT. Pick the correct problems to solve and your business is likely to be successful.

Two business truths from a niche retailer

2011-08-23T09:30:00.000+01:00

In a business diary column in the FT, Laura Tenison, head of the 40 outlet strong JoJo Mamn Bébé children's and maternity clothing company, offers two thoughts that will be resonant for local store owners.

First, on the subject of competing with the supermarkets (niche businesses have to, too!). "Sometimes I get emails asking why we don't put Disney characters on our sleepsuits. Yes, they might sell. But what would be the difference between us and the supermarket? If you are a niche business...you have to think long term."

Second, on the subject of bank finance. "In July 2008, the world changed. We had planned to open eight stores that year, but managed only two because the banks refused to extend our working capital facility, even though our gearing was extremely low for a growing retailer."

A great many company owners understand this second point. Banks are only really happy to lend you money when you don't need to borrow. The moment you need to borrow, your creditworthiness evaporates. Never take the availability of capital from a bank for granted.

Market data shows you need to ask for the extra sale!

2011-08-17T11:19:00.000+01:00

While there is lots of turmoil in the grocery market, local shopkeepers can be optimistic that the billions spent by the big four on new shops is not taking sales from them. On the other hand, trading remains tough and will continue so for some time.

Data collected by industry observers like Kantar Worldpanel and AC Nielsen is released monthly and provides a useful benchmark for local store owners. But you have to keep watching the numbers as they are not as dramatic as you may think.

The big message from the Kantar team is that grocery inflation is running at 5.2 per cent but sales are only up by 3.8 per cent. While the big winners in its August analysis are the discounters - Aldi and Lidl - it estimates the sales rise at symbols and independents is 13.4 per cent across the 12 weeks to 7 August.

However, if you average the market share positions for 13 Kantar reports to smooth out seasonal fluctuations, you find that Asda has lost 0.3 per cent market share and Sainsbury has picked up 0.2 per cent, leaving the big four flat. The Co-op has lost 0.6 per cent, while Waitrose and Iceland have picked up 0.1 per cent and Aldi and Lidl 0.2 per cent each. Independents and symbol retailers share is flat, which may be good news as over two, three or four years the sector has lost market share.

What does this mean for your shop? Compare your numbers for the past month with the same period last year. If your sales are up by more than 5.2 per cent then you are growing sales. But be careful. Your assortment of products may include some where costs are rising ahead of the grocery inflation figure. Confectionery, soft drinks and snacks are areas where manufacturers have pushed through bigger price rises, for example.

It also means that you are doing OK if you are retaining shoppers. However, that is no reason for complacency. Think about what the supermarkets are doing to attract shoppers. Cutting the price of fuel. Price matching on key brands. What value deals are you offering shoppers? And how commited are you to keep the deals long term?

Over the past year, according to Asda, the multiples have grown volume sales by 0.3 per cent. On the back of all their investment, that shows how tough the market is. How can you respond? Think about how good you are at sales disciplines? How well do you communicate promotions to shoppers? Do you ask whether shoppers would like to buy anything else while they are in your store? It may be hard work but it is essential.

Being positive

2011-08-15T17:58:00.000+01:00

On a visit to the Midlands and mid Wales last week I stopped in on a number of local shops ranging from the very good to the OK. What was interesting was to contrast the expectations that are created by a good high street location. In both towns in Wales the architecture of the shops to the streets was great. The windows of some were great. But the investment stopped at the front door.

In one shop, a newsagent, they had a fantastic display at eye level when you walked in and on it was displayed some magazines that I cannot recall. The shop had a really interesting layout that created a lot of shelf space and three aisles at an angle in around 500 square feet of floor space. But there was no spark.
The Spar shop around the corner was OK. An alternative shop selling healthy foods looked interesting but very dark.

The same three shops also appeared in another town, with similar results. Except in this case, the Spar, run by Tates, had very high spec lighting on its vegetables and good tile flooring. But it also had a needlessly long queue caused, the lad behind the till assured me, by being short of staff.

The final shop was an award winner on a suburban shopping estate. If you passed by you might never go into the centre but it was a good shop, full of interesting promotions and a wide range of products.

At around the same time, Jonathan Guthrie, writing in the FT on the subject of Tesco appealing against its £10 million fine for price fixing, said that you "may not admire the corner shop-squashing behemoth".

Maybe it does squash corner shops. But many shopkeepers need to get outside their shops and look at how poor a job they are doing. I can hear my friend Glyn telling me that I don't realise how hard business is for some shopkeepers but I do not understand how you can afford to stay in business if you are not prepared to invest and to back yourself big time.

Think of Tesco as the bar on the high jump that you need to clear to stay in the competition. You can keep ahead if you have a positive attitude. Back your shop to be successful.

Riots spread a shameful message

2011-08-09T11:36:00.000+01:00

It is shocking to see pictures of retailers being attacked and their staff being barricaded into their shops for their own safety. The only comment I can make is one of sympathy with those who find themselves in the path of these yobs.

Rav Garcha tweeted the following comment very late last night; "Please all if u have a business stay away do not get involved. We were hit 4 times while we were in repairing damage."

There is not much I can add to that comment at this time. Keep safe. This insane behaviour must end soon.

Listening to Procter & Gamble

2011-08-08T18:43:00.001+01:00

Like arch-rival Unilever the previous week, Procter & Gamble told investors that consumers had accepted the range of price increases that it had introduced because of the rising costs of raw materials. In summary, its results for the fourth quarter included 8 per cent sales growth of which 3 per cent was from price rises.

In a conference call to chief executive Bob McDonald, one analyst asked about how the company might respond to a low single digit growth environment in developed countries [like the UK]. He said they had two strategies. One was to keep on investing in research and development and to develop new categories. The other, if no growth was possible, was to keep its costs under control so that it hit its profit targets.

What is clear is only two areas are not under threat of spending cuts - research and development, and advertising.

One of Mr McDonald's concerns is if competitors do not raise prices. They were watching markets closely to see if they had to respond. In razors and blades, for example, competitors were spending more than ever on price promotions and discounts.

Memorably, he said: "We believe innovation wins decades and promotions affect quarters."

For local shops there is plenty to think about in what Procter & Gamble is saying, which can be summed up as stick to your strengths and plan long term. Mr McDonald believes totally in the P&G vision of helping consumers have better lives. If you believe the same about what you are doing for local shoppers and make sure all your activity links to this, then you will be in a good long term position.

Also of interest, even if something of an aside, is his assertion that P&G's sponsorship of the Olympics was expected to deliver the highest rate of return of any marketing activity ever. How this is measured I do not know but as they are thanking mums in all the countries in the world for nuturing the talent taking part, I guess it helps P&G spread into new markets.

News Corp may hold a mirror to newsagents

2011-08-08T15:57:00.000+01:00

While hacking may have put Rupert Murdoch into an unpleasant spotlight last month, the analysis of the direction of his business empire offers some uncomfortable truths for independent retailers who sell newspapers - which is most local shop owners in the grocery market.

Mr Murdoch has been very successful and retailers need to acknowledge that over the past 40 years he has made them a lot of money, particularly in the UK, through his investment in and vision for national newspapers. A chart in the FT provided an interesting commentary on the development of Mr Murdoch's company. In 1980, newspapers and magazines accounted for 90 per cent of his revenues. In 1990, they accounted for 71 per cent. In 2000, they accounted for 45 per cent. In 2010, 11 per cent.

In part, the decline is explained by the expansion of his companies into broadcast TV, cable networks and films. In 1990 they were worth 1 per cent, 0 per cent and 8 per cent of his business respectively. In 2000, they were worth 39 per cent, 4 per cent and 7 per cent. In 2010 they were worth 5 per cent, 48 per cent and 29 per cent.

Print is the bedrock upon which the business was developed but the skills he learned in publishing newspapers were applied to audience development on TV and movie screens around the world. The newspapers funded the growth of the business and are still contributing to the group, even if the outlook is less rosy.

The news-based local shop has been the most successful across the same period of time. In the 1980s, just selling newspapers and magazines was the bedrock of a successful retail operation. In the 1990s, snacks and soft drinks and alcohol needed to be added. By the 2000s, if was full scale conveninence.

Unlike News Corporation, most local shops are not scalable businesses. However, collectively independent retailers have had to change their mix to attract the audience of local shoppers. But this does not mean that you need to throw away the business model you started with.

I visited one shop in the Midlands recently and observed the fantastic fruit and vegetable display at the back. This looks fantastic, I said. Yes, said the owner, it is where my dad started out and he loves making it look good. It still contributes to the bottom line too!

It is easy to get carried away with fashion statements. Sometimes you need to ditch yesterday's lines. Sometimes you need to retain them - as long as there is sufficient shopper demand. To use the language of the City, newspapers are still a hold.

Competing for the shopper who is looking for value

2011-08-04T17:59:00.000+01:00

In February this year two UBS economists argued that food might become a political issue in the first world as commodity prices put pressure on household budgets and the UK at that time seemed to them to be the country most at risk.

Shoppers, they argued, based their understanding of inflation on the increases in high frequency purchases and their model suggested that prices of processed foods in the UK were rising 2.5% higher than they should be compared to the US, France and Germany. This might focus the attention of politicians.

Six months later, the food industry seems to have been let off by the energy industry - with rises in petrol, gas and electricity prices making the headlines. However, the impact of the squeeze on consumer purchasing power is still being watched carefully.

In comments to the FT this summer, Paul Polman, chief executive of Unilever, said his company needed to be very close to the consumer and needed to offer them more choice at different price points "if they desire to switch".

"What we see in the UK here, where Persil is the best detergent, which you might [previously] have used for all your laundry, now occasionally you use Surf, which is the best price/value equation that is in the market," he told the newspaper.

"So we see that switching where we have portfolios, where we innovate well, we have a higher chance of keeping the consumer with us."

Unlike the economists, Mr Polman is aware of the need to produce stuff that consumers might trade down to. His strategic sense appears sound. However, I am not convinced that in the real world shoppers will buy both Persil and Surf and decide on a load by load basis which one to stick in their washing machines.

As the UBS economists noted, there is no such thing as an average economy. Similarly there is no such thing as an average shopper. For local shopkeepers you may serve a community which is suffering even greater falls in average weekly spending power than the average. Like Mr Polman you need to flex your range so that you are offering something for them to switch to.

Your ideas of what value products to offer and those of a market leading packaged goods company may not be the same. Remember that local suppliers may be able to provide high quality products that offer good margins - especially as they have to pay less for distribution and don't invest in national advertising spend. Remember that your wholesalers may offer good products too.

Notice also the trend in advertising by the multiples. Today, many executions link discounts in return for spending a certain sum, say £40. The battle is on convince shoppers that supermarkets are their value champions. If your strategy is to keep the price of milk and bread low, are you doing enough to remind shoppers that you are fighting to keep prices down for them too?

The cost of food is likely to be an issue for some time. Be careful to position your shop as one that is generous to local people, helping them through the hard times.

Visit the discounters to assess what the competition really is

2011-08-02T14:57:00.000+01:00

Last Friday I visited my local Aldi for the first time and it was a dispiriting experience. Wide aisles, half empty shelves, a scattering of customers, few staff, and bizarre space planning. This is not the future of retailing. Most of the shoppers there were seeking to buy as much protein as possible for the smallest possible price.

Earlier, I had visited BUYology, which occupied a former DIY shed near the centre of Reading. There were plenty of bargains, including multipacks of Walkers crisps for 35p - all marked OOD or out of date. "Zoom in on microscopic prices," it says.

In the City pages of the FT there is much admiration for Poundland, which with 347 UK stores, almost one for every day of the year, is now planning to open six Dealz shops in Ireland - avoiding the Euroland name that the FT had taken a shine to!

"But," it warns " the company is also losing its fixed price promise, and with that goes some of the simplicity that helps to bring the punters in."

It adds: "The 'don't ask the price, it's a penny' promise of Marks and Spencer's penny bazaar is still fondly remembered in the UK". Is it still fondly remembered? I don't think so, but you may disagree.

There are two things that local shopkeepers should think about. Firstly, the grass often looks greener on the far off hill. The world of discounters looks good if you are not shopping there. The second is that lots of shoppers do like a bargain. Local retailers need to be careful with their price proposition. While shoppers may accept that you are more expensive, you also need to convince them that you are doing everything possible to keep prices down. This is why you need a 99p or Poundzone offering no matter what sort of business you think you are in.

Challenge yourself to visit your local discounters and look at who is shopping there, what they are spending and what deals you think you should match. It should give you ideas and encouragement.

What the Eurozone crisis means for local shops

2011-07-27T06:01:00.000+01:00

When disruption to the newspaper market caused by the closure of the News of the World was making headlines last week, a few managing directors were saying to me that we should all be worrying about the financial crisis gripping the Eurozone. They may have a point but they are wrong if they think that the closure of the NotW is not an important moment for local shops.

Newspapers are a major footfall driver for independent shops. Whether it is customers that you deliver to or ones who come to your shop, you need to hold on to them.

It is obvious why retaining customers is so important. But shopkeepers also need to note that most are likely to have less money to spend that they did a year ago. The Asda income tracker shows the average family has £9 a week less money to spend than it did a year ago. What is causing this? Higher taxes and higher energy prices. How long will disposable incomes fall? For at least another year, most analysts say.

"The outlook for the UK remains poor to very poor," economist Roger Martin-Fagg writes for Vistage, the chief executives organisation. "It will take more time than forecasters expect for our economy to adjust."

Mr Martin-Fagg observes that between 2000 and 2007 retail sales rose by 33 per cent but real disposable income by only 15 per cent. Where did this money come from, he asks. People were happy to borrow money as house prices kept on rising. We were living beyond our means.

What is going on in the Eurozone? The idea was that countries with lower productivity like Greece would experience falling wages and prices and attract inward investment that over time would result in higher productivity, wages and prices. What happened was that the countries played catch up with the Germans, increasing their wages and prices so that they could buy more stuff. This was funded by banks lending them money on the basis that all Euro debt was the same. Once the banks realised that all Euro debt was not the same, they stopped lending to these countries.

Instead of letting these countries go bust, European central banks started to lend the money. In essence, the German taxpayer is bailing out the Greeks and is now saying enough is enough. No-one really knows what will happen. Someone is going to lose money and everyone is trying to make sure it is not them.

For local shops, the bigger influence is the unwinding of the UK equivalent to the Euro, which was high levels of public spending. The country has to find new ways of generating money. No-one really knows what will happen.

Dave McCarthy, the retail analyst for Evolution, argues that the retailing rules that have prevailed since 1990 need to be rewritten. After 20 years when shoppers have traded up to ever more added-value products and services, shoppers are now trading down. As the market shares of the major companies stabilise, suppliers will not want to pay for shifting their sales around from store to store. Volume sales in food stores have fallen in 11 out of the past 12 months.

Interestingly, Mr McCarthy tells investors to sell Tesco, reduce their exposure to Sainsbury and to buy Booker. While he is a fan of Booker's management rather than the independent retail franchise it sits upon, that management's confidence in the future of local shops is significant.

Ask yourself what Booker recommends that you do to retain customers and grow sales and profits. Yes, we may all be dragged back into the dark ages by the Euro crisis. Yes, we may all feel gloomy about the prospects for the UK economy. But retailers have to be positive. Work hard at keeping your shoppers and at selling to them the products that make you the most profit. And remember to challenge any managing directors that you bump into to take their minds off the Euro and on to how to help you make more money from your shared customers.

Grocery sales sluggish; local shop outlook uncertain

2011-07-27T05:18:00.000+01:00

There are many sources of grocery market data compiled in different ways. Kantar Worldpanel uses till roll receipts from 25,000 households, chosen to reflect the demographic make up of the UK. It also measures the prices of 75,000 products to form a view of grocery inflation.

It publishes numbers every month and the latest figures for the 12 week to 10 July show that the market is picking up - which contrasts with many market views. However, it also says that grocery inflation has risen, from 4.6 per cent to 4.8 per cent. It now says it is likely this will reach 5 per cent this year. A month ago, it was not of this opinion.

The reason for this change of view is that a small number of categories are seeing very high price rises. "This is putting extra pressure on shoppers' budgets," it says. "We expect the market to slow in the coming months."

Kantar Worldpanel points out that Aldi and Lidl are growing and Waitrose is growing. The growth, it says, is coming at the bottom and the top of the market. Its figures for independent retailers tend to underplay real sales from local shops as so many do not hand out receipts with purchases so these are not counted. However, they currently show a rise of 9.7 per cent for the past 12 weeks, which beats both the inflation measure and the grocery market sectors growth of 4.6 per cent.

It may sound encouraging but long term KW figures show that independent shops are flat-lining in the low 2.3 per cent market share. There is not much change in the big four's market shares either.

A second view comes from Nielsen market share data for the eight weeks to July 9. Evolution Securities analyst Dave McCarthy uses this to say that the grocery market is in its worst position in more than 30 years. Falling levels of disposable income allied to increasing levels of investment in new shops mean that trading for the major supermarkets is likely to get tricky, he argues.

In the past, they have always had one weak market participant to pick off. Today, all four major companies are very competitive. Something will have to give, concludes Mr McCarthy, as he advises investors to be cautious.

The outlook for local shops is not necessarily the same. If shoppers are looking to avoid trips to the supermarkets, local shops stand to pick up top up sales. But the outlook will influence suppliers. For example, we may see reduced investment in product innovation by packaged goods companies and an even more cautious approach by banks to funding expansion - or even working capital - for local shops.

One thing local shopkeepers can do is to talk up success, whether it be on your own web pages, with your local suppliers or in the local media. Take a leaf from the Waitrose play-book. Every week it pumps out good news into the market about its innovations and its sales growth. As a privately owned company, it does not have to do this. But it is part of its strategy to create a good news story around itself.

Period after payday is critical

2011-07-12T13:15:00.000+01:00

On 20 June Paul Cheema told me how sales were: two good weeks, one OK week and one bad week. On Monday this week, Dalton Philips, chief executive of Morrisons, briefed journalists that this was a national trend, with grocery shopping being pushed towards the beginning of the month.

What is Morrisions doing? It is concentrating its marketing on the period between the 27th of the month and the end of the month.

What is Morrisons seeing? Big sales in week one and lower sales in weeks two, three and four. Shoppers are fillng their pantries and then trying to last the month. Mr Philips said the trend was evident everywhere outside London.

The average household budget is £100 lighter each month due to higher VAT, fuel and other utility costs. Shoppers are looking for value

Local shops need to watch for two things. One, the timing of supplier promotions. Two, if shoppers are going once a month to the superstore, can they win them for more top up purchases. Think about your buying patterns and make sure you have the stock available at the correct times to maximise your sales. For the alert and nimble operator, the market looks interesting.

James Murdoch closes News of the World

2011-07-07T18:03:00.000+01:00

When we received the press release from James Murdoch's corporte affairs team my first thought was that it must be a hoax - the News of the World is to close after Sunday. What will replace it? Something must. We shall see.

However it is worthwhile recording some of James Murdoch's words: "When I tell people why I am proud to be part of News Corporation, I say that our commitment to journalism and a free press is one of the things that sets us apart."

"The News of the World is in the business of holding others to account. But it failed when it came to itself."

"The News of the World is 168 years old...it is read by more people than any other English language newspaper...it has a proud history of fighting crime, exposing wrong-doing and regularly setting the news agenda for the nation."

I don't know James Murdoch and I did not hear him speak these words but they are fine words and add to the dramatic intesity of this moment.

Printed newspapers are in the middle of a big change. Whether this is an example of social media sites setting the agenda or not only time will tell.

The FT reported earlier today that teams were in place to perhaps introduce "seven-day" working across editorial brands. Rebekah Brookes in an email last week wrote: "There are tough decisions coming. Costs will be need to be cut and savings made." Perhaps the crisis has provided an opening to make one of those tough decisions? Perhaps not?

However, for retailers who sell newspapers, today's announcement is very significant. People have turned to newspapers for information and ideas for hundreds of years. They still visit UK shops in huge numbers on a daily basis to satisfy this need for news. I have seen many news retailers react with anger to the hacking scandal. I have seen a few say that it would probably blow over. But none have so far assessed whether this will provide an existential threat to their trade.

They should take a leaf from Mr Murdoch's words and remind shoppers of all the great things that newspapers have done and continue to do. Keep selling!

A Facebook site for news retailers

2011-07-05T12:12:00.000+01:00

I was asked by Emma Spencer to draw retailers attention to the Newsagents' Helper page on Facebook and I am happy to do so.

The page is open to UK news retailers and is strong on humour and sharing frustrations about the behaviour of shoppers and the failings of suppliers. Amid the general chatter there are some very strong items about issues, such as a post about how an epos system was sold or a post about a spate of armed robberies.

What I like are the posts about when something great happens, such as when a customer switches his Saturday newspaper order to the i but insists on being charged what he was charged before because he does not want the retailer to lose out.

Where I think retailers have to be careful is when they blog about frustrations. There is a danger that you can fall into the trap of sharing your frustrations on line and projecting a negative world view. While it may be frustrating that your shoppers go to Tesco, it is also a fact of life. The solution is to provide a better service, consistently, rather than to be rude about customers behind their backs.

For some reason the previous group called Newsagents was disabled by the good folk at Facebook so the web site has been restarted from scratch. With 61 members and rising, Emma and her fellow retailers hope more news retailers will use the site as a resource.

Make sure your MP listens and don't accept lectures

2011-07-01T14:50:00.000+01:00

Barry Gardiner MP turned out to support his constituent Mahendra Jadeja at a north London business seminar this week and told retailers they were on the right track.
"To get the nation going again we need business to talk to business," he said.
"Think, create and innovate is the model for business. Think what your offer is, produce it and work to that pattern.
"Never think you have got the model. Constantly refine. The product that you were proud to present yesterday and last year should not be today's. Today's has to be better."
This is all good stuff but it is what you want to hear from a consultant and not from your MP. What you need your MP to do is listen. Instead Mr Gardiner rushed off and missed the next speaker, from Philip Morris, who spelled out the regulatory risks threatening local shopkeepers.
Interestingly, Eoin Dardis started off by accepting that regulation was appropriate. "tobacco is a dangerous, addictive substance that needs to be regulated, " he said.
The danger is in the way it is carried out. It is disproportionate. Only two years ago plain packaging was reviewed by the government and dismissed because there wad no evidence to support it. So why Mr Gardiner is parliament reviewing this again? But, of course, he had left the building.
In the UK Philip Morris is a small player, with a 7 per cent share. Worldwide it is number one and challenging the way governments are regulating it's industry. In Spain, it is cutting prices in a way that hurts industry profitability but also government revenues. In the Pacific, it is threatening to sue the Australian government for damages under trade agreements if a plain packaging law is introduced.
Most governments have signed agreements to refuse to talk to the tobacco industry for fear that it will influence their law making. this is hypocrisy as in most areas MPs happily water down regulation. The sunscreen industry, for one, is an area where misleading claims can cost lives.
However MPs will listen to retailers. The message on tobacco is urgent. There are two strands. One is that local shops do a good job of selling tobacco responsibly. This should be encouraged. The second is that industry margins need to be protected. If retailers had to borrow money to buy tobacco they would make a loss. A 6 percent margin is too tight and plans to increase duty by more than inflation may force local shops to close as they run out of cash to buy stock. It is compound interest in reverse. With £4 in every £5 spent being tax, the risk is substantial.

But surely that is good if you no longer sell tobacco, your MP may suggest. Disabuse them. They are regulating local shops off the high street. And what about the smokers? They will buy 'loosies' from street sellers, unregulated and untaxed. Make sure your MP listens.

Power is shifting to local shops - but slowly

2011-07-01T14:43:00.000+01:00

Walmart will be playing catch-up to the lifestyle dynamics of today and tomorrow, versus creating them, Jimmy Wright, a former senior executive, told the FT this week.

After two years of falling sales, the paper ran a feature questioning if the era of the superstore was coming to an end.

Its US stores have reached their potential. Shoppers are buying smaller quantities and expect promotions. The price of petrol means shoppers don't want to drive so far.

Smaller stores in more accessible locations are winning sales.

The story should be familiar to UK local shop owners. Flipped around, the story is one of opportunity for independent shops, especially those working in partnership with switched-on wholesale suppliers.

But the real significance of the FT story is that in the board rooms of major packaged goods companies they will be reading that the day of big box retailers may be drawing to a close. They will be reviewing their strategies and hopefully working out how they can better invest in supporting the independent retail channel.

Unfortunately the balance of power will not shift overnight. Board rooms will also be paying attention to the woes of Premier Foods which lost 22 per cent of its market value after a major multiple, identified by the FT as Tesco, delisted its lines when the supplier tried to impose a price increase. The impact of being delisted was a £10million hit on the bottom line for the first half of the current year.

What this demonstrates is the market power of a Tesco. For the long-sighted executive, it should also demonstrate the need to have a diversified route to market, which means investing in the independent channel.

Hard times can be an opportunity

2011-06-20T18:24:00.000+01:00

The backdrop to my visit to Paul Cheema and his family at their Costcutter in Coventry last week was a deathly drumbeat from the supermarkets as weak trading conditions continued for another month.

"How are you finding things," Paul asked me. I said that during January and February, retailers had been saying sales were very tough. during March and April, independents had been more positive.

While the Cheema family is achieving sales growth he advised that the pattern was good week, good week, OK week, very bad week. What he is finding is that shoppers are running out of money, which is why week four is so quiet. While I was at his shop, trading was brisk.

What are the supermarkets saying? "I have been doing groceries for 28 years now...and this is the toughest it has ever been for consumers," says Justin King, chief executive of Sainsbury. "If you look forward...we see this persisting for the rest of the year." His like-for-like sales in the first quarter were down year-on-year. But better than Tesco.

Increased petrol prices, which are adding £5 a week for the average household, were a key factor. Sainsbury would respond by continuing to invest in convenience shops so consumers could shop locally. Its Basics range was growing fast, showing shoppers are trading down.

Over at Tesco, finance director Laurie McIlwee was providing the sound bites. Higher fuel prices were the the culprit as shoppers avoided discretionary items such as electricals, clothing or general merchandise. Food was holding up well.

The figures from Tesco and Sainsbury are averages. Some of their stores are doing very well. Others are struggling. The same is true for independent retailers. Analysis by the FT shows that some parts of the country like Reading and Aberdeen are doing fine and others such as Dundee and Liverpool are at risk.

The same rules apply to local shops. Be aware of the national trends but position your business for success. In part the supermarkets are talking their businesses down to take the pressure off their forward targets. They can see that the economy is recovering slowly and they are positioning their shareholders to expect lower returns, so that any surprises are on the up side.

Local shops need to ignore their propaganda and look beneath the rhetoric for opportunties. They are still very positive about local markets and fresh food. How will you respond? If you are in a symbol group, ask your wholesaler how they see the next six months. Do you have the cash to invest in promotions? What can you do to keep shoppers in store for longer? Are you a viable alternative to the supermarket shop?

What you need is a strategic approach, backing yourself to be successful.

The magic of retailing and more, a recommended book

2011-06-15T17:26:00.000+01:00

Jeff Pearce was just about to pull the steel shutters down at the front of his store when he noticed a young girl sitting on the ground with a blanket around her shoulders. It was 24 December and cold and Jeff was looking forward to two days off with his family before the sale started at 9am on 27 December.

"Are you all right," he asked her.

"I'll be all right if you've got a black pair of size 10, leather pants for just £1," she said.

Jeff's first thought was that the Liverpool Echo had printed the wrong date for the start of his sale. His small shop in Church Street was doing OK and Jeff thought it could do better, hence the £1 leather pants offer. As an independent retailer, he was experimenting with marketing. He could not believe this girl was planning to spend two days camped outside his shop. He suggested that she could go home. She declined.

Later that night, after talking with his family, he decided to drive by to see if she was still there. He was amazed to find 12 people camped out. As he drove home he passed a fish and chip shop that was open so he bought them 12 suppers.

On Christmas Day he asked a friend who lived closer to the store to drive by and see what was happening. He called back to say that more than 80 people were queueing outside.

On Boxing Day he called another mate who owned a catering business and persuaded him to turn up with hot food. There were 150 people queueing now and Jeff called the local media who came out to cover the event.

Worried now about crowd control, he asked his brother in law and three mates to provide security on the front door the next morning. They agreed. As he drove to the shop the next morning he was pleased to see a big queue outside Army & Navy too. But the queue kept on going until it reached his shop - more than 1000 people. Jeff had to call the police for back up.

As he went to open the front door he heard a cheer from across the road. The 40 members of staff from Chelsea Girl, the biggest fashion store in Liverpool, were cheering him. "Well done Jeff, good luck with the sale," the manageress called out.

At the end of the day, they had taken £25,000 and made the front page of next day's paper and "our little boutique was now a household name on Merseyside."

A Pocketful of Holes and Dreams is not intended as a business book but every local shop owner will find plenty of inspiration within it. Jeff's mother's family had retailing in the blood and despite growing up in poverty, he learned good retailing habits early on.

He is in the camp that believes good buying is the secret to retail success and he explains in detail how he made two fortunes. Even more striking is his integrity, with Jeff sticking to his values when his first company failed. His ideas about banks and wholesaling have resonance today.

Available from Penguin at £6.99, Jeff's book is a must read for any family business. Set in the world of fashion, it's strengths are in how Jeff communicates the simple to say but hard to execute actions that can make you a better retailer.

Getting the service culture wrong

2011-06-13T18:13:00.000+01:00

Walking towards Kings Cross station last Friday evening, I decided to buy a lottery ticket as part of my Plan Z for improving my life. The c-store was inviting, with no door, clear windows and a clear landing strip to the counter. Two people were behind the counter, one standing by the lottery machine and another by the till. Neither looked at me.

I stood at the counter and they continued to ignore me. I pulled out two pound coins and put them on the counter. They continued to ignore me. I waited for what felt like a minute but was probably only 10 to 15 seconds and then picked up the money and left the shop. One called "Sir" as I recrossed the threshold to the street.

What went wrong? As they are immediately next door to at least three c-stores of similar standard, it cannot be that they have too much business. Perhaps they each thought that the other staff member would serve me.

I reckoned that I would pass another Camelot outlet on my journey home. The lottery as commodity. Unfortunately for plan Z I forgot to to buy a ticket. No-one won.

The failure to make eye contact was the worst part of the poor service. If they had caught my eye and smiled and indicated that it would only take a moment I might have waited. However, I was not happy at just being ignored. What not to do.

Benchmark yourself against Sainsbury

2011-06-10T13:21:00.000+01:00

Read through Sainsbury's annual report and you can find some good statistics to use in checking how your shop or shops is/are doing.

One figure I like is measuring sales per square foot. For Sainsbury in 2010/11 it was £20.04 (including VAT, for which is has made adjustments). If you have a 400 square foot shop, then you would need to be selling just more than £8,000 a week to match them. A thousand square feet and it is just more than £20,000.

But Sainsbury also publishes its figures for the past five years that show it has moved from £19.30 up to a peak of £20.42 in 2009/10. Meaning its sales fell by 1.9 per cent in the latest year but are up by 5.8 per cent across five years.

But remember, this is an average across 934 outlets in the latest year and 788 five years ago so its best shops will be doing much better. And its worst...perhaps they will be on the market? At the same time its sales area has risen by 21.6 per cent to just more than 19.1 million square feet.

Obviously, it has invested in a lot of new space and has improved the sales it generates from each extra square foot of space. If you expanded your 400 square foot shop to say 800 square feet then you can use this benchmark to check is the new products were generating sales in a way that maintains your profitability in the medium term and your popularity with shoppers.

A second benchmark that Sainsbury publishes is the underlying operating profit margin from its retailing activities, which was 3.5 per cent in the latest year. This has risen from 2.5 per cent in 2006/07, which is a good achievement. On your £8,000 per week that is £14,560 a year. On £20,000 it is £36,400. In the cased of Sainsbury, operating profit is calculated after staff costs.

PS: On the back of a fag packet, the c-stores appear to be operating at around £21.38 per square foot a week. In the report, Justin King suggests that the market is open for consolidation, which is why it is opening more stores.

Warm words from the IGD about independent local shops

2011-06-10T12:00:00.000+01:00

IGD senior business analyst David Shukri has struck a warm note in his latest briefing on the conveninence industry as regards the performance of independent shops.

Combing through the data, which is widely used by major packaged goods companies in planning their route to market in the UK, Mr Shukri observes that average sales per store increased across all segments of conveninence in 2010 "showing that those who remain...are becoming more efficient and effective operators."

For the first time, the non-affiilated retail sector gets a warm review, with the IGD noting that is still accounts for 20 per cent of sales (more than the multiples). However the stars are the symbol group operators, with sales up 9.2 per cent in the past year, which highlights "how compelling their offer is, both for unaffiliated independent retailers and the shoppers they serve."

The impact of Waitrose and Morrisions will be a further emphasis on fresh food, suggests Mr Shukri.

Overall, the IGD sees three areas for investment:

in store standards to match the multiples, with increasing emphasis on fresh foods
better communication of the value proposition (promotions)
better communication of the values you hold (local-sourcing, community-facing, environmentally-friendly etc).

Altogether, room for optimism, espcially if partnerships with the major packaged goods companies can be developed so independent retailers win back some marketing investment from the multiples.

Independents still outperform in convenience sales

2011-05-27T15:02:00.000+01:00

Some back of a fag packet analysis of the IGD's latest sales figures suggest that the average symbol group shop operating in the UK will turnover £14,862 a week this year, up 6 per cent.

For the average non-affiliated independent shop the turnover is expected to rise 2 per cent to £6,454. Combining the two estimates gives you a proxy for the average independent local store of £10,213, up 5.9 per cent.

The IGD estimates show that both forecourts and co-operative outlets are losing market share in the £32.4 billion market. While multiples are increasing share by 8.1 per cent, symbol groups still top the chart with 9.2 per cent growth.

The independent sector grew sales by £953 million - in cash terms two-and-a-half times more than the c-stores owned by multiple grocers.

The symbol group race - who is counting

2011-05-24T19:08:00.000+01:00

It is a tricky business to keep on top of what the numbers of stores belonging to each symbol group mean. At one level, it could mean that head offices are able to negotiate better deals because they have more shops taking part in promotions. At another, it could mean that more local retailers are choosing one group over another as it is delivering more to their bottom lines. It could be fashion. It could be an exercise in badging for vanity.

However, now that the IGD has updated its annual figures, Booker's Premier symbol group has overtaken Spar UK to top the chart with a 15.9 per cent of outlet numbers versus 15.7 per cent. Bestway takes third spot with a Best-one/Best-in share of 13.8 per cent, followed by Lifestyle from Landmark at 12.9 per cent.

Londis has dropped to an 11.0 per cent share and Costcutter to a 9.5 per cent share. Mace has grown to a 5.3 per cent share and Nisa to a 4.8 per cent share.

Overall, there are 16,288 symbol group stores, up 2.9 per cent on the previous year. This shows both the effort that wholesalers are putting in to delivering good support packages for independent retailers and a certain vitality about the sector as a whole.

Let's not talk down the independent retailer

2011-05-24T18:56:00.000+01:00

The Institute of Grocery Distribution collaborates with William Reed, the publisher of the Grocer, to count how many shops there are in the UK grocery channel each year. It is an excellent project hampered by a consistent bias against the independent retailer.

This year's figures, exclusively published through the Grocer last week, show that the numbers of independent shops in the convenience channel dropped from 35,620 to 35,430 last year, a fall of 0.5 per cent. Within their number, the number of independent shops that chose to be part of a symbol group rose by 3.6 per cent to 15,287 and the number of unaffiliated shops fell by 3.4 per cent to 20,143.

The Grocer chooses to describe this as "terminal decline" and says the multiples' growth comes at "the expense of the independents". Of course, writing a couple of hundred words to summarise a market of just under 42,000 outlets means trends have to be sketched with a broad brush.

Unfortunately, this usually means the multiples retailers get talked up at the expense of the independents. In its market analysis, the IGD projects that the convenience channel will grow strongly as the multiples open more than 1,000 new stores in the next few years.

Many independent retailers have responded to this challenge by joining symbol groups and investing in better standards. Some may well be swallowed up by the multiples. However, at present the independent sector as a whole is doing quite well in the local sector and this needs to be championed rather than dismissed.

Booker is the bellwether for the go ahead retailer

2011-05-20T12:09:00.000+01:00

A short item on the Sun's City pages notes that high street sales were up in April by the highest number for that month in nine years* and linked the good news story with Booker's results. Wholesaler Booker is a good bellwether for the go ahead independent shopkeeper who is investing in their business.

Booker, the Sun reported, said that customers were shopping locally and the paper reported that its Premier store chain had achieved a 10 per cent rise in sales. Wow! The Sun's paragraph may skew the facts but it is a great warm story about the success of local independent shops.

Over in the FT, comment on Booker was missing. However, this does not mean the company is lacking fans. Analyst Dave McCarthy of Evolution Securities says it has world class management and is investing sensibly in development. While some of the upside comes from India and foodservice, it is also doing a great job of serving local shops.

The secrets of Booker's success are not secret. They make a point of telling their customers exactly what they are doing. Steve Fox, most recently in Retail Newsagent, 13 May, spelled out its choice, price and service mantra. What it does for its customers, retailers should do for shoppers.

"The biggest thing we did last year was drive the value message," he said. Through EuroShopper, through £1 ranges, through price-marked fruit and vegetables and through two-for promotions on Happy Shopper.

Another great strength of Booker is that they are close to retailers, talking to them frequently...and listening. Again, this is precisely the same strength that good local shops have with shoppers.

In Retail Newsagent, they interviewed Sam Patel who has developed his Atherstone shop from 400sq ft to 2,000 in the past six years. Mr Patel is keen to expand more. Interestingly, he admits that Booker are telling him to put the brakes on expansion so that he can see the benefits of his current investment.

Returning to Mr McCarthy. He is an analyst who also studies Tesco, Sainsbury and their competitiors closely. He is aware of their plans to swamp the local shop market with more selling space. Yet he still raves about Booker, which is built on supplying local shops. This is good news for your business...if you are a local retailer who is paying attention...because it shows that the fundamentals are strong.

* Of course, very few Aprils have Easter, a Royal Wedding and great weather!

Watching the pennies

2011-05-16T19:42:00.000+01:00

Fiona Dawson, president of Mars Chocolate in the UK, says that local shops need to get behind the big brands in their confectionery displays and support countlines as affordable treats. The price of treats cannot go up and up and up, she says.

However, as retailers know, the rise of promotions means that shoppers are flip-flopping from brand to brand in search of the better deal. This poses some big problems for confectionery sales.

So it cannot help when shoppers at Reading station are faced with variable pricing for Snickers bars on platforms 4 and 5. At the shop called WHSmith on platform 4 a Snickers Duo costs £1.05. At the WHSmith on 5, it costs 99p or two for £1.50.

The secret? The WHSmith on platform four is operated by SSP, the Euston based "food travel experts". The one on platform five is operated by WHSmith itself. A problem for the retailer's brand more than for Mars?

However, a real challenge for the countline snack people may be coming from a different direction. At my local Best-One I stood behind two young lads, one of whom was counting out 36 pennies. He was buying a packet of budget biscuits. Once outside the shop he divvied it up with his mate. To them, 18 biscuits at 2p a unit seemed a great deal.

Which flips to the second part of the countline proposition - the quality of the snack on offer. Some shoppers are paying attention. Others do not.

No new tricks behind Poundland success story

2011-05-16T15:03:00.000+01:00

Jim McCarthy, the man who developed T&S Stores into a chain that once sold to Tesco gave the UK's biggest supermarket a huge lead in the convenience channel, is now heading Poundland, which provides a whole new set of challenges for local shops.

How does the magic work? "What we look for is the cash gross margin," Mr McCarthy tells the FT. "It's all about volumes, not percentages."

Gold products are those with high margins and high volumes, such as fizzy soft drinks. Bronze products are those with very low margins but very high volumes, such as Maltesers.

Most of the products they sell are neither leftovers or short dated, Mr McCarthy says. It is simply about trading off volume and price. In five years he says only three SKUs have been loss leaders, of which the most recent were Christmas selection boxes.

What they are good at is selling well known products in different pack sizes to achieve the £1 price point. A 600g loaf costs £1. The 800g loaf in the supermarket is cheaper by weight.

Mr McCarthy's outlook has always been about getting the retailing basics right. He is making 42p profit for every £10 of sales, which compares well with the figures achieved by the major supermarkets. Shoppers seem to like the concept. Will it work for local shops? Only if you can increase your footfall and sales volumes.

Will the McJob make way for robots?

2011-05-16T14:43:00.000+01:00

A McJob is better for you than a degree, the UK boss of McDonald's told the newspapers last week, shortly before her boss in Europe unveiled plans to introduce robot cashiers in many of its 7,000 European restaurants.

Clearly, armed with a ranking in the Sunday Times's 25 Best Places to Work listing, McDonalds has many strengths. It is also benefiting from rising sales as people with less money in their wallets trade down to cheaper eating out experiences.

However, the move to asking diners to order at touchscreen terminals may open an opportunity for local shops interested in food to go. While the company says it will save three to four seconds for each customer served at a touchscreen ordering point - and with millions of customers that probably adds up to some big cash number - I reckon consumers are going to weary of having to do everything for themselves.

As with the robots at supermarket c-store checkouts, there are times when it is a good option for busy people. But you don't get to upsell or build a relationship. Some McDonalds staff are extremely good at upselling. Some are not. Some local shop staff are extremely good at building a relationship with shoppers. Some are not.

The machines will take business from shops with poor service standards. For those with good service standards, they will surely help boost sales.

How to use a headline grabbing claim

2011-05-16T13:07:00.000+01:00

After a nasty street riot in Bristol, Ed Miliband decided a nice "Enough Tescos" soundbite would get him a little coverage in the national media.

"Local people should have more say over what happens on their high streets," he said, promising a policy review. He knows that some people fear that all high streets look the same. On the other hand, Tesco has not achieved a 30 per cent market share by enslaving people. Shoppers generally vote with their feet and choose to shop at Tesco.

However, at the same time the FT dusted down and published a report from the Institute of Government that showed that academics rate the minimum wage as the most successful policy introduced by government in the past 30 years. The smoking ban comes 10th on the list, behind devolution, privatisation and the Northern Irish peace process. And just ahead of free museum entry and free bus passes.

What are the strengths of the minimum wage? A low starting level and because it makes it easer to pay in-work benefits to ensure that low-paid work is worthwhile.

What makes for good policies? Something that is planned carefully and not knee jerk. Start small and build up. Independent shopkeepers in Mr Miliband's constituency should visit his surgery and see if he can build his remarks into something more worthwhile. Be quick. Tesco has probably already invited him out for lunch to help shape the policy review.

The convenience battle field

2011-05-16T12:38:00.000+01:00

The new Little Waitrose in Shrewsbury

The John Lewis Partnership has parked this Little Waitrose convenience store, which opened last Thursday, just across the road from Marks & Spencer in the centre of Shrewsbury.

On the one hand, this shows that the big retailers in town centres are thinking about competing head-to-head and they assume that their competitors have sites with the best footfall. This may be helpful for independent retailers as they are left unscathed in areas where footfall does not meet the multiples' requirement.

On the other, it shows that the big retailers are deadly serious about competing for a bigger stake of the convenience market. Their intent grows. Justin King, head of Sainsbury, has announced that he will take responsibility for its convenience business, which will be one of the areas where it will grow strongly in the future.

Mr King told the City last week that consumers were "managing their household budgets wisely and well" and this fits with its successful marketing strategy - such as Feed your family for a week for £50 - that demonstrate its strengths of affordability, freshness, quality and ingredients. However, as it makes 35p for every £10 of sales - compared to 55p for Morrisons and 63p for Tesco - independent retailers can see that the costs of investing in quality space and products might generate very slim returns.

Also announced earlier this month, Dalton Philips of Morrisons said opening hours would extend at most of its 440 stores which would now stay open until 9pm or 10pm. This is clearly aimed at tapping into the convenience shopper who choses to use a supermarket in the evening. Talking to one northern c-store owner last week, we agreed that we were surprised that any major grocer still closed at 7pm. Some low hanging fruit for Mr Philips, clearly.

Again, in its internal forecasts, Morrisons suggests that the longer opening hours will cover costs and perhaps do a little better. Like Sainsbury, its move into convenience is not assumed to be offering better margins.

This demonstrates that the market is already very competitive, which many local store operators will already know. The good news is that independent retailers backed by good wholesalers are achieving good returns and sales growth. The bad news is that the multiples will continue to invest time and money in competing for the convenience shopper, which means local shops are going to have to work hard and long to stay ahead. The good news is that so many are still staying ahead.

But it would be wise to benchmark your operating profit against that of the supermarkets. Remember that their numbers are an integrated figure for both wholesale and retail. You will be sharing profit with a wholesale supplier.

Looking ahead, Charlie Mayfield, who heads the John Lewis Partnership, says that it is going to be "a long period of slow, stuttering growth punctuated by confidence moving up and down in response to events. Very different from the past 10 years when we've enjoyed sustained increase in consumption."

The shopper is not going to rescue anyone by spending more.

Electoral opportunities

2011-05-06T13:15:00.000+01:00

It was interesting to see that Fiona McLeod of the SNP has taken the Strathkelvin & Bearsden seat from David Whitton of Labour. Mr Whitton, when I met him at the NFRN Scottish conference two months ago, was an MSP who was not expecting defeat. He was also a well briefed politician - well briefed by the supermarkets - and he bought into their idea that they were good for jobs.

The facts are that an extra 2.7 million square feet of selling space created by Tesco and Sainsbury in the past year was matched by a reduction of 426 in the number of people they employed, ACS research has uncovered.

Perhaps there is an opportunity for local retailers in Ms McLeod's constituency to contact her and provide her with the compelling story about the good job that local shops are doing for her local people and the local economy.

Similarly, there should be retailers in other parts of Scotland, Wales, Northern Ireland and, to a lesser extent, England who have a message for local elected politicians. Remember to share what message you provide and the response you get with other local retailers. Try using betterRetailing.com so that when the politicians gather to compare notes they will find the message is consistent.

Royal wedding window

2011-04-28T10:45:00.000+01:00

A local book shop has taken on the challenge of promoting the Royal Wedding by adding knitted figures to its window display as the big day draws closer. Knit your own Royal Wedding has been the surprise best seller of the season, says Kate Swann, chief executive of bookseller WHSmith, which competes with this local shop.

What I like about the signs, is that the message is not static. It invites shoppers to come back and have another look as they are "Still busy knitting the royal wedding party".

Do you tell your story well

2011-04-28T10:34:00.000+01:00

There is an assumption that local shops run by local people have a competitive advantage over local shops run by multiples, such as Tesco. However, while independent operators may have some strengths, these may not be competitive advantages.

On two recent shop visits I was struck by the stories that the retailers told about their shop's histories. In one case it was about how a former owner had developed the shop to serve the new train station. In the other, it was about how a former member of staff was remembered by naming the bakery area after her. In both cases these stories were not written down and recorded.

I suggested to both owners that some customers would really appreciate knowing about the local history of their independent story. Think about it in the same way that you establish the provenance of a local product that you sell. People buy into the story.

What is interesting is to see how Waitrose in Islington, a newcomer in a former Woolworths store, has filled its windows with local information.

Each of these posters tells the story about the local area. What is the reason that Waitrose is doing this?

Or look at Gap...

...which is telling its story to build a relationship with shoppers.

We know what shoppers think because they voted supermarkets well ahead of local shops in terms of community involvement. A problem for many local shops is that they do not understand their strengths, Tom Fender of research consultancy him! says. Equally, a problem for some local shops is that they do understand their strengths but fail to tell their shoppers about them.

If you do not tell shoppers what your strengths are, it is likely they will forget what they are. Don't miss out on simple PR wins. The multiples promote their strengths it because it works to do so!

Hard times for supermarkets may be an opportunity for local shops

2011-04-07T18:34:00.000+01:00

Last month's quarterly sales numbers for Sainsbury's provide an uncomfortable benchmark for local retailers - shoppers are not spending as much as they used to.

Justin King, the managing director who has been built up as the saviour of Sainsbury's over the past few years, is starting to get negative press. City analysts are lining up to say sell.

Clive Black of Shore Capital noted that "Sainsbury has done more to confirm the magnitude of the deceleration in consumer activity than any other recent update". In plain English, shoppers are spending less at a faster rate than expected. Or as Mr King said: "The change has been quite dramatic. The surprise is just how sudden that is."

And how long. Shoppers stopped spending in January and were still not back in March. Like-for-like sales in his shops were down 0.8 per cent year-on-year. Shoppers were, on average, putting one less item in their basket when they did the weekly shop and buying it later on a top-up visit "to save money by cutting food waste".

Which is good news for local shops, including Sainsbury's own convenience stores that did "particularly well in the quarter and that's a trend that might be here to stay," said Mr King. However, there is an increasing suspicion that the Sainsbury's c-stores are simply cannibalising spend from its own supermarkets rather than taking shoppers from other local shops. While Mr King may like the loyalty, he will not like the smaller basket sizes.

The big problem for the supermarkets is that they are opening too much new floor space at a time when shoppers have less disposable income and are buying whatever is on promotion. Rising inflation is also eating into profit margins. Most Sainsbury's and Tesco shops are now taking less in cash sales than they were a year ago.

This is consistent with what most independent retailers are saying is happening in their shops. If food inflation is running at 4 per cent, this means most packaged goods and food sales are under pressure. Analysts say this is likely to be the case for some time.

For independent retailers, this is nothing new. They have been under pressure for 15 years. However, for the supermarkets the low growth environment will post a great challenge and junior managers will be under pressure. Their bosses will not have experience of the same market dynamics. This should provide enterprising independents with an opportunity if they can follow the shopper's interests (or lead them) better.

Beer and pizza - another Paul Cheema success story

2011-04-06T16:20:00.000+01:00

Taking part is the sign of a good retailer, analysis by Menzies Distribution claims and Paul Cheema, who runs a Costcutter in Coventry learned lots from teaming up with Heineken in the ACS's store challenge.

He was persuaded to remerchandise his beer, cider and ale range and to promote a big night in deal with pizzas selling alongside lager.

Mr Cheema says he delisted lines to bring in new products and changed the flow from cider, ale, lager to ale, cider, lager. This helped him grow ale and cider sales by 8.2 per cent and 31.6 per cent respectively year on year.

Selling two pizzas and eight cans of lager for £10 was a big success. He also used in-store tastings to generate theatre.

As a result of working with Heineken, Mr Cheema says he has been able to do similar work with other suppliers.

For example, working with Cadbury has increased his confectionery sales by 9 per cent. Using supplier insight works. It is simple, low cost and easy to follow.

New stuff I saw last month

2011-04-06T15:41:00.000+01:00

At the National Convenience Show last month I saw some newish suppliers that may be of interest to UK convenience stores seeking new brands to stand out from their competition.

One that stood out was Just Crisps, a family business from Staffordshire, that is attempting to fill the family owned and up and coming brand gap created by Tyrrells having been sold to a private equity firm in 2008. Tyrrells used to get great reviews like "if you can get hold of Tyrrells crisps (usually in health and organic shops) don't baulk at the price. They are well worth it and very addictive. Etc" from 2005.

I bumped into proprietor Anthony Froggatt in the press office and laughed at his claim that his crisps were 100% British, saying surely most crisps were. But oil makes up 30% of the content, he quickly responded, and my crisps are made with rapeseed oil, which is from the UK, unlike other crisps that use imported sunflower oil.

Later, visiting his stand I tasted the product which I can see being a hit with people bored with the usual brands. He reckons a 40g bag will retail at 80p and for those retailers seeking something a little bit different this may be a brand to try. His telephone number is 01543 493081.

Also at the show were the team behind Shaken Udder, fresh milkshakes with real fruit or chocolate. It is a nice product but comes at a target price point of £1.45 to £1.55. Sunnyside retailer Andy Singh, writing in Retail Newsagent, picked this product as one to watch. Founders Jodie Farran and Andrew Howie launched the drinks in 2004 and are looking for wholesale distribution. As an incentive to new customers, they promise 25% off the first order. Their number is 01621 868710.

We're just fooling ourselves

2011-04-01T14:53:00.000+01:00

"We're just fooling ourselves if we think that the staff at Tesco Express can't smile or be pleasant. We've got to be much more than just nice people," an un-named retailer tells wholesaler Menzies Distribution as part of its major research exercise to better understand its customers.

David Cooke, its commercial and marketing director, writing in InPublishing warns publishers - particularly magazine publishers - that they risk losing a large and successful route to market. Why?

His analysis splits the independent retailer universe into four types:

entrepreneurs, who are doing well and join everything, always looking for better ways to do things and will pick up tips and tactics from wherever they can get them. They can compete with the multiples but they are prepared to cut out a category if they felt they would have a better or more profitable business by doing so
traders, who mainly have one shop, know what they want to do but do not have the money or time to do it. Often emotionally attached to news, they are frustrated by the industry and feel at the bottom of the food chain
shopkeepers who took on news (or retailing) without understanding how tough it would be and are struggling and need help with newspapers and magazines
stockists who simply don't pay attention to the category.

While news and magazines remains a core category for these retailers, they perceive it as in decline and that publishers are busy developing subscriptions and digital offerings - letting the "retail channel slide down" and only investing with the supermarkets. In contrast, confectionery, snacks and soft drinks suppliers spend time and money on range advice and helping independents to get their store offering right.

The danger Mr Cooke identifies is that as retailers are "constantly looking at their businesses and tweaking them week by week" then magazines and perhaps newspapers will be squeezed out. Local shopkeepers make decisions on magazines with limited information. They are good at managing their cash flow but hate having cash tied up in returns and vouchers.

Mr Cooke says action is needed and it should be urgent. However, he does not address the one really big factor that distinguishes the packaged goods companies from the publishers. Packaged goods companies know that they have to persuade retailers to buy their product from wholesalers or cash and carries or their consumers may never see it. Magazine and newspaper publishers knowassume that they are pushing their product into 50,000 outlets and shoppers will see it because of the way the supply chain is structured.

In theory, publishers believe their investment in sale or return is enough. In practice, if the industry is to tackle the issues Mr Cooke raises, they need to assume that not a single copy will appear on shelf unless they market hard to independent retailers. Only then will the investment to do trade marketing properly start to make sense.

There is little new in the insight Menzies has obtained, as Mr Cooke admits, but what makes it important is how he has packaged the information and the fact that he has told the market that it needs to do something. It will be interesting to see if the message gets through to the managing directors and finance directors at the major magazine publishers, who tend to take the newstrade supply chain for granted. They will miss it badly if they lose it.

Tim Martin talks sense

2011-03-21T16:12:00.000Z

The FT's View from the top column (see its website www.ft.com/video) features Tim Martin, the chairman of JD Wetherspoon, the pub chain that he set up in north London 30 years ago and which now has more thatn 800 outlets. It is a great read. Good questions and good answers.

For example.

Q: The price of a pint at a UK pub has risen by aobut £1 in a decade, well above inflation. What's going on?
A: The government perceives there is a binge drinking problem in Britain and to an extent that's right, and its approach has been to attack pubs. So it has piled on the regulations, the penalties and the tax.

Local shopkeepers will recognise the sentiment.

Q: to attract more customers, some pubs are opening libraries or bringing in post office services. Is that the future?
A: Libraries and post offices are in the realms of fantasy: [innovation] has to be linked closely to the core business of eating and drinking. We open for breakfasts, which had been in the realms of fantasy for many years, but we've made it reality.

Local shopkeepers will recognise the challenge; and the way Mr Martin has thought through his response to diversification.

Q: Some analysts complain about breakfast denting margins. How do you defend that?
A: It's a perfectly legitimate tactic to invest in earlier openings if you think it will produce revenue in the future, or profits in the future.

Have a look yourself. This was just the first three Q and As printed and does not even include my favourite. It is gems like this that make reading trade titles (the FT in this case) so worthwhile. Well done to Rose Jacobs, the journalist.

Who is influencing your local politicians?

2011-03-18T13:10:00.000Z

David Whitton, a Labour MSP, addressed local retailers at the Scottish NFRN conference in Edinburgh earlier this week. Mr Whitton is a capable politician and has a good mastery of his brief. Despite his claimed affinity with news retailers, independent shopkeepers will find that his knowledge of their business affairs relies heavily on information from unfriendly sources - supermarkets and anti-tobacco lobbyists.

At the age of 17 Mr Whitton found himself delivering newespapers. He recalls that it was "quite lucrative" at the time, with a good mark up and heavy bags. His audience of news retailers smiled, remembering the day.

However, today Mr Whitton was promoting the Scottish Labour Party's plan to win power from May. He may talk about helping entrepreneurs but his heart is really in getting people employed. He wants local shops to employ more people and to train more people. In passing he noted that supermarkets have a "good track record of taking on staff in deprived areas."

In the question and answer session afterwards, recent ACS research into the employment credentials of the supermarkets was brought to his attention. More than 2.7 million extra square feet of selling space by Tesco and Sainsbury in the past year had resulted in 426 fewer jobs. Could the Scottish Labour Party not challenge the supermarkets more when they claimed to grow jobs?

In reply, Mr Whitton, whose constituency covers Strathkelvin and Bearsden, was able to quote the exact numbers of people employed by Tesco and Asda in their various stores within and just outside his local area. He was also aware of their ability to recruit long term unemployed. He remembers his brief from the supermarkets, even if it is "anecdotal".

Similarly, in stating his support for the tobacco display ban, he said that the evidence was that tobacco companies would pay for the changes to retailers' shops to accommodate the ban. "I hope this will prove to be the case," he says.

The message for local shops is clear. They need to share data about the good work they do in providing jobs and then have their trade associations brief MPs and MSPs time and time again. The other side is lobbying as you read this column. Statistics are powerful. The ACS research that shows that supermarkets are not creating jobs despite adding enough space for 2,700 c-stores last year needs to be put in the in-tray of your local representative next week - and repeatedly.

Coffee to go with your breakfast roll?

2011-03-18T12:46:00.000Z

Starbucks provides a cheap place to meet or an expensive place to buy coffee, depending on the shopper's outlook. Aggresively expanding bakers chain Greggs says it plans to increase the number of its outlets selling lattes and cappucinos.

While the media says this is a threat to Starbucks, Greggs appears to be operating in the part of the market where McDonald's is operating and that is its natural competition. What is clear about its strategy is that it is tapping into the same "out of home" food and beverage opportunity that is available to local shops. Greggs says it sold 10 million breakfast rolls last year and 300,000 pots of porridge.

"Convenience is getting more crowded and everyone is our competitor," chief executive Ken McMeikan told independent retailers at an ACS summit earlier this month. Sandwiches and drinks are now 50 per cent of his sales and coffee is the biggest growth opportunity.

His focus is on delivering outstanding service, value for money and to follow the customer (what the shopper wants the shopper gets). It sounds like a strategy most local shops would say they believe in. With plans for 1,480 stores by the year end it should not take you too long to find a nearby Greggs. If you think you can beat it on execution, then give it a go. Don't stand still.

Tobacco ban sticks: promises broken

2011-03-10T10:25:00.000Z

While supermodel Kate Moss chose to celebrate national no smoking day by parading down the catwalk in Paris smoking a cigarette, the UK's health secretary Andrew Lansley disappointed local retailers by promising to keep the tobacco display ban - albeit starting at a later date.

Retailers are disappointed on two fronts: firstly, there is little evidence that similar bans in other countries are working; secondly, the government, when in opposition, promised it would revoke the ban. Local retailers also fear reputational damage, as in the cartoon from The Sun above.

However, The Sun is no fan of the ban saying the display ban smacks of the "overbearing Nanny State." It says the responsibility lies with "parents and grandparents to make sure their kids do not die an early and painful death."

A survey in Merthyr Tydfil finds that the average age for children taking up smoking is just nine. One lad, the Sun reports, got hooked at the age of three because his grandparents thought it was funny to give him fags.

What retailers say is that the problem with youth smoking depends on where you live. Banning tobacco displays in areas where people buy their cigarettes from local gangsters is not going to have an impact.

Local marketing example (Arsenal victory)

2011-03-08T14:32:00.000Z

For people in north London on a sunny Tuesday and looking forward to tonight's football match in Barcelona, this sign has especial resonance. For other people, it may just be words. For quiz lovers, it is a sign filled with misery.

However, it is a sign that captures the ability of local businesses to win local customers. There is an unstated identification with the hopes and dreams of thousands of football fans.

Tomorrow, after Arsenal have prevailed in the Camp Nou, even this post may have a special place in my heart. Or not.

What you can learn from Retail Superstars

2011-03-08T10:43:00.000Z

“Independents do it better. George likes retail mavericks, the places where the visionaries are still at the wheel”, writes Paco Underhill, author of Why We Buy in praise of Retail Superstars, a book from US retail guru George Whalin.

Not published in the UK, it took me six months to get Penguin to send me a review copy and it was worth it. If you are an independent retailer who wants to make your business more successful then Retail Superstars is a must read and easy to purchase on Amazon.

This is not because the “25 Best Independent Stores in America” are like your shop. It is not because you will find some quick wins to use in your shop. It is not because you will find some secrets that you did not know.

On the surface, some of these US shops are just too big. Jungle Jim’s is a 300,000 square foot independent grocers with 150,000 stock keeping units (SKUs) of fresh and packaged foods. Gallery Furniture spends $10 million a year on television advertising. Art Electronics is in a 350,000 square foot shed.

But read on and past the statistics and you will notice how much George Whalin loves retailing and the details that he picks on which show that these 25 businesses have hit many of the same obstacles that you have hit in your business and overcome them. The book tells you how to run your shop rather than letting your shop run you.

For one type of independent they will love Michael Barefoot’s story. “We’re certainly in the food business,” he says. “But there’s a whole other level…we’re here to make people feel better when they leave than when they came in.” What’s his management secret? When he took on his first employee he drew a chalk line down the middle of the shop and said this is my half, do what I do in your half.

For another there is Roger Maxwell’s story about developing In Celebration of Golf based on his learning as a vice president of the Marriott hotel group. His golf shops are, according to George Whalin, as good at retail execution as you can get.

“Throughout the research for this book I looked for keys to the long term success of these retailers. Did they have anything in common? One constant I found was the quality of the people hired to work in the stores,” says Mr Whalin. He is a good story teller and you will be inspired by his selection of great independent stores, warts and all. My only quibble, the photography on the website supporting the book is not great or easy to use.

No good retailer can fail to gain 10 great ideas from reading this book that they can use in their shops. Buy it as soon as you can and use it to invest in your own personal vision. Start right here, right now!

A bad day for UK supermarkets

2011-03-02T15:28:00.000Z

After years of being on the front foot in the PR war as the people's champions, UK supermarkets got a bloody nose on March 1.

First ACS boss James Lowman unveiled his research that demonstrated that while Tesco and Sainsbury had added 2.3 million square feet of selling space in the past year, they had achieved a net loss of 426 jobs. That is the equivalent of 1,500 medium size local shops and no new jobs.

"The government is desperate for growth and jobs," Mr Lowman told the ACS summit in Birmingham. "The supermarkets claim they are the answer and the goverment needs to liberalise planning laws. These facts show they are not."

Local shopkeepers should use Mr Lowman's facts in conversations with their local MP, local authority people and local planners. The supermarkets are expert at influencing local planning decisions and here is some ammunition that may help you stop them opening next to you.

At the same time, analysis by City bank UBS of whether food would become a political issue in developed countries was making headlines in the UK papers. "Supermarkets are ripping off British shoppers," said the Telegraph in its business lead story. "Supermarkets need shake up," wrote Simon English in the Evening Standard.

"What matters is not the rate of change of prices but the absolute level of prices," said British Retail Consortium Director General, Stephen Robertson, defending the supermarkets. He claims the UBS figures missed out on the level of promotions in the UK (38 per cent) and that "Food prices have not risen at anything like the same rate as commodity prices. It's clear that supermarkets are shielding customers from the full impact."

However, the UBS table shows overall food prices have risen by 4.9 per cent in the UK, compared to 3.6 per cent in Germany, 1.4 per cent in France, 1.1 per cent in Italy and a fall of 1 per cent in Ireland.

It also runs a model on processed foods, where around 70 per cent of the cost is for distribution, promotion, advertising and packaging, that shows that UK processed food inflation is running at around 6 per cent when it should have been around 3.5 per cent.

"After two years during which processed food prices have been rising more than 50 per cent higher than the associated costs...it seems unlikely that this position will continue to be ignored [by politicians]," the report says.

As to Mr Robertson's point about promotions, the report says that BOGOF deals are a distraction and will not deter political action as they do not impact on the perception of inflation in the mind of shoppers.

For local retailers, the great news about the report is how the media has picked up on it. Get clippings now and store them up if you are having to argue against a Tesco Express or Sainsbury Local coming near your shop.

Going out to lunch

2011-02-28T15:11:00.000Z

Fresh Kitchen is a stand-alone sandwich shop under the Sainsbury brand that the FT says is ear-marked for an "agressive roll-out" into the UK if the first site, opened in London's Fleet Street last month, is successful.

The paper says that the supermarket chain could open 200 of these outlets, pitching it headlong with Pret-a-Manger and, by extension, with fast food chains like McDonalds. Waitrose, it notes, is already selling sandwiches in some Boots shops and ran its slide rule over the Eat, a coffee and sandwich chain.

"Takeaway foods is likely to be the next battleground between the big supermarkets," the paper says.

Of course, most local shops with a convenience offer are already aware of the opportunity for food-to-go. This story is further validation of their strategy.

While it may be unwelcome to have fresh competition from Sainsbury and others, who are already attacking the c-store market hard, it is still further confirmation that the local grocery market has plenty of life left in it.

Where there are price wars

2011-02-21T17:27:00.000Z

Independent retailers who shop at cash and carry wholesale depots are often characterised as less disciplined business people than their peers who stick to the delivered wholesale route. However, hard times are resulting in price wars between suppliers in some areas and this provides some opportunities.

One London retailer I spoke to this week says he is selling bottles of a leading soft drink for 99p, compared to £1.19 in the multiples. The cheapest buying price he can find from a delivered wholesaler is 89p, which would lose him 6.5p on every bottle sold at a 99p price point, due to sales tax.

But a new cash and carry depot next to two others near his shop means he can buy the product at 69p, which makes the price point achieveable and he is shifting volume at a 19.5 per cent mark up.

He welcomes the battle between cash and carry companies to win his business but also reflects that if they can afford to sell it to him for 69p, then the big supermarkets are probably buying it cheaper and selling it at a vast margin.

This view of the cosy way that supermarkets operate was given weight in two FT stories last week. In the first, which reported that Sainsbury had backed down and restocked Pepsi after losing a battle over pricing with Britvic, an analyst said: "This type of thing is just part and parcel of negotiations. If you are a must-stock product, then if you want a price increase you will get a price increase."

Secondly, in its Lexus column it noted that the big four retailers were all trying to win a bigger slice of a non-growing cake (grocery sales) and with 18 million square feet of new space due in the next four years, some analysts say the next step could be a price war. The FT says a price war is unlikely as the big four don't want to reduce their profits. Instead "of fighting, supermarkets will probably just run on fumes: inflation flatters sales growth even if volume sales are weak".

The rules of business suggest that independents can never win on price in battles against the supermarkets and this must be true. If independents were doing enough to hurt the grocers' sales, then they would put the squeeze on suppliers.

However, for local shopkeepers, efforts to track down low prices at attractive margins will provide some short term competitive advantage - particularly against multiples that are not paying attention and local independent competition. But these opportunities are often short term. For long term competitive advantage you need to differentiate yourself in a way that the multiples cannot match.

A boring, boring story

2011-02-15T09:59:00.000Z

"Coast Ghost" it says in a headline in the Sun today and underneath "Margate worst for boarded-up shops" with a table showing that 37.4 per cent of shops in Margate are empty.

The Local Data Company, which press releases this data every month, really does independent shops no favours with its negative doom-laden coverage of the retail sector. Shops are always opening and closing. Thirty years ago, every high street would have had a TV rental shop. 10 years ago it would have been a video rental shop. Shopping patterns change.

While there is an issue for many high streets, it is often a property development issue rather than a retail quality issue. The problem is that too many people read these stories and think that out-of-town supermarkets are killing local independents.

That is not the story. The story is that local independent shops are doing great. Remember to tell your shoppers about the great products and services that you offer them. Avoid the gloom.

When talking can be a bad habit.

2011-02-11T11:08:00.000Z

"Is it unreasonable to expect the shopkeeper to get off his phone and acknowledge me rather than just stick his hand out for the money?" tweeted the friend of a friend.

My friend passed the message on to me, observing: "I saw this tweet today by one of my friends and I thought you might be interested in it. Independents pride themselves on their service, but the experience my friend had below is a common one (certainly in my experience) and not something that happens in the multiples..."

There is a mix of good news and bad. The good news is that my friends clearly have high expectations of independent retailers.

The bad news is that for shopkeepers who live in their shops, balancing work and phone calls is tricky. Do you have a policy of never serving while on the telephone? Do you stick to it?

The place to start is to stand on the other side of the counter and ask yourself as a shopper, what value is being added by the shopkeeper? If there is ample choice of alternative places to go to buy what you want, then greater attention to good service is necessary. If there is no choice, then good service is less important.

Remember, you do not have to please every shopper and you can choose which shoppers to please. But even so, it is hard to justify speaking on the phone while serving.

A quirk at the tills?

2011-02-09T14:55:00.000Z

My local Co-op c-store managed for a period of two week's to offer the same product at two different price points by two different tills. When I took the photographs, the sales assistant ran the 75p product through the till and it read £1.02. This means either no-one picked up a product from the 75p display in two weeks or no-one noticed that they were charged 27p more for the gum! Either way, the picture shows the power of clear labelling and bar codes in creating confidence that the price is correct - even if it is not.

Phone cards taking over from magazines?

2011-02-09T14:45:00.001Z

Feedback from Steve Denham to an earlier blog that newspapers are a refill business fits with the action in this pair of photographs taken six months apart.

At some point this news/gift outlet just across the road from Paddington railway station has lost its InStyle magazine branding and accepted a new fascia sponsored by a mobile phone card company. It speaks volumes about the relative marketing power of the two industries. Even a year ago the canopy was sponsored by Lyca, which frequently has agents on the station platforms selling top ups to people off the train from Heathrow airport.

However, retailers I have spoken to recently are concerned that the increasing percentage of lower margin "services" products in their mix is hitting profits. While shoppers once refilled with an expensive monthly magazine, now they are looking for mobile top ups.

A sign of retail stress perhaps

2011-02-09T14:34:00.001Z

It must have been four months since this window was broken in the Tesco Express on Pentonville Road and I simply cannot believe that it has not been fixed. This is the sort of lack of focus that independent shops usually get criticised for. The only purpose in sharing this image is to encourage those independents with high standards who are finding the going tough that they can do better than this.

Do you let shoppers know your top sellers

2011-02-09T10:33:00.000Z

Natalie Massenet has made a fortune from setting up and running the Net-a-Porter fashion web site by combining her skills as a journalist with those of a retailer.

"My goal was always to be editor in chief of a magazine, and I feel I have achieved that, only it's also a magazine that you can shop - which is even better," she tells the FT.

At the heart of her success was the insight that good editorial content alongside items of clothing would encourage sales. Much as in a real world shop, good staff knowledge and know-how helps to clinch a sale.

One of her new ideas is to allow visitors to her web site to see real time updates on what other users are putting in their baskets. She got the idea by observing that visitors to her office always stand mesmerised in front of big screens that show sales as they are happening - "so I knew it would be exactly the same for users."

This tells you two things. One, that people shop in herds and will buy what other people are buying. Two, listing top sellers helps sales. Which makes me think how can a local shop use lists of top sellers to encourage sampling and sales.

For example, could you monitor sales of new products (stocked for under two months) and weekly print out and display a list of top sellers so that shoppers could see what other people are buying? Or would a list of top selling link purchases help shoppers think about buying more when they are in store?

Letting shoppers know what other people are buying in your shop might help nudge sales upwards. Monitoring the trends should help you build up a better idea of what your shoppers will buy.

Identifying trends and bringing them to people are what Mrs Massenet says are her strengths as an editor and a retailer. She also provides a shortlist of differences between women and men shoppers that is useful to think about:

Women are trend-led, men are not
Women like to look at fashion shows and models, men like to look at their peer group
Women don't mind having shopping web sites on their work computers, men do.

Imagine what your perfect shop could look like

2011-02-09T10:14:00.000Z

The reason that US bookshops are failing is not because of competition from the internet but because selling books in big box out-of-town warehouses dos not work, suggests maverick Financial Times columnist Tyler Brûlé in his latest Fast Lane column.

We need to “challenge the ingrained notion that … a super-size store is a superior place to shop.”

Mr Brûlé does not declare an interest but his Monocle shop just of Marylebone High Street in London is one of the smallest I have visited. However, on the subject of bookshops he argues that if you ask most people what the perfect one looks like they think about:

 Small windows stocked with titles selected by the shop’s long serving staff

 Well worn tables stacked with a combination of new releases and classics

 A comfortable atmosphere with room to browse

 Decently paid staff able to offer advice, the men wearing “cosy cardigans” and the women favouring “loafers, kilts and turtlenecks”.

“Perhaps the most important detail is that you can see all the way to the back of the shop from the front door but once inside you discover there are enough cosy nooks and corners to get lost in…”, he adds.

Moving on to corner shops and convenience stores, what do you imagine the perfect shop looks like? What do you think your perfect shop looks like?

This is a great exercise for you to do with your team; holding a meeting to write a long list of all the things you believe a great local shop should offer. Then try and edit the list down to the really important things and measure yourself against these things. Before tackling the news and grocery channel, get people to start thinking by using the bookstore example above.

Armed with a short list of what you believe makes a great shop, send the team out to look at how good your competitors are and then benchmark your own business. Encourage people to identify three things that you are doing well and three areas for improvement. Always keep the focus positive.

A second thing to remember is that you should always add value to what you sell to shoppers in a way appropriate to the product.

Carefully putting goods in your own bags conveys that you value what you are selling. Encouraging your team to engage with shoppers on how they will use goods and then to suggest extra purchases shows you are concerned with adding value. Appropriate little touches make a big difference.

Profit per customer visit

2011-01-25T15:33:00.000Z

In Good to Great by Jim Collins he devotes a chapter to the Hedgehog Concept, the one big thing that a company must focus on to become a great company. Every business can learn from this.

The retail example that he uses at the start of the chapter is a company called Walgreens, which is what Americans call a drug store and in the UK we call a chemist. Its strategy was to be the best company at operating convenient drugstores and its economic denominator was to measure the profit per customer visit rather than profit per store.

The economic driver is interesting as it systematically closed all its shops that were in inconvenient locations and opened new shops in convenient locations. "If a great corner location would open up just half a block away from a profitable Walgreens store in a good location, the company would close the good store (even at a cost of $1 million to get out of the lease) to open a great new store on the corner," wrote Mr Collins.

It pioneered drive through pharmacies and in urban areas it clustered its stores tightly together so no-one had to walk far to reach a Walgreens.

Next it added high margin services like photo developing to increase its profit per shopper visit. "More convenience led to more customer visits, which, when multiplied times increased profit per customer visit, threw cash back into the system to build even more convenient stores," writes Mr Collins.

Simple really, which is what Cork Walgreen said when he was interviewed by Mr Collins. "Look, it just wasn't that complicated! Once we understood the concept, we just moved straight ahead."

Sounds simple but it is not. Understanding your concept can take years - four on average suggests Mr Collins - and then you have to have the guts to stick to it. A great many successful local retailers understand what to do and are successful. However, the profit per customer visit idea is like compound interest and is what local retailers need to search for.

Fusion ProGlide launches in UK

2011-01-25T15:13:00.003Z

Today is the official launch date of the Fusion ProGlide shaving system in the UK and after a brief exposure to the power of the Gillette marketing machine last week I would recommend that local shopkeepers stock it for their shoppers today - enough so that shoppers see it in your store.

Behind this recommendation lies two thoughts. The first is that the product is good. People who choose to upgrade from their previous razor are not likely to be disappointed. I am already trying to work out whether to write off my three new cartridges for my old razor - and they were not cheap. Already, after a week, I remember to press the button so the razor vibrates slightly so I "barely feel the blades".

The second is the track record of Gillette, now owned by Procter & Gamble, which is celebrated in Jim Collins' Good to Great. In his book, Mr Collins identifies that great companies are all powered by simple ideas. In the case of Gillette it was that it could be the best in the world at making "billions of low-cost, super-high-tolerance products (e.g. razor blades)" and at brand building and it would focus on cost per customer through repeat purchases and high profit per purchase - ProGlide not disposable razors.

At the press launch in London, the team from P&G were all very excited that the vice chairman for global beauty and grooming had flown from the USA to say a few words. The scientists that I met, a pharmacologist and a physicist, told me that P&G had invested a lot of money in setting up the production lines which validated their work (other scientists don't get to see the product in action like they do) and also were confident that the quality of the ProGlide could not be copied in the far east.

Ed Shirley, the vice chairman, did not disappoint. He spoke quietly about the heritage of Gillette, now a 110 year old brand and the work put in by the team in Reading to develop the product. He said this launch is big, the biggest in Gillette and Procter & Gamble's history. He told a story about when he first heard about how ProGlide would succeed Fusion (which was launched in 2006) and he asked himself how could they make it better? He had asked the same question when Sensor was launched in the early 1990s, when Mach 3 was launched in 1998 and when Fusion arrived. "But each time it is better. It is not a marketing ploy," he said.

How do they test whether it is better? Gillette constantly tests new products on Fusion users and only launches when it gets a two to one vote in favour of the new system.

Fusion, launched in 2006, has 35 million users. Gillette keeps on supporting its old systems. Not every man will trade up. But it reckons enough will and it is investing in TV advertising to encourage this. At £9.99 for the manual razor and £12.99 for the power version, this is the sort of product that local shops may leave to the chemist and supermarket. But that would be a mistake. With millions of repeat customers and high margins, it is the sort of business you should be striving to win.

UK c-store values nudge upwards

2011-01-19T14:01:00.000Z

The value of retail outlets sold by Christie + Co rose by 2.1 per cent in 2010, with the number of transactions it completed up by 24 per cent (excluding its sale of 300 outlets from the failed First Quench off licence chain).

As business agents, Christie + Co do not focus on high street shops so its estimates are a good proxy for owners of c-stores and CTNs, suggesting that prices are firming up again after two years of falls. The company says valuations are supported by the favourable market conditions for independent traders, despite the move of multiple stores into the channel.

Managing director Chris Day is confident that the banks will be supportive of the property sector as a whole. However, for independent operators this is unlikely to translate into easier access to finance.

"The independent shopkeeper is finding it difficult to get funding," Tony Evans, head of retail, said at the launch of its Business Outlook 2011 document in London this week.

"One experienced operator I was speaking to before Christmas said before 2008 his funding criteria was to drop the bank an email and he would get the OK back by return. Now he has to put together a 50 page support document.

"The funding is there but retailers have to go through more hoops. Many are being asked for extra security and they need to show the value in their business plans."

In some respects, Mr Evans says that the multiples are getting easier pickings as with their funding in place they are getting first pick of good sites.

Another agent told me a fantastic story of how Christie can add value. He heard that a local retailer was inclined to accept a £450,000 plus offer for the lease of his shop from a major multiple. However, knowing that his valuation would be £850,000 he set up a process where the multiple paid more than £800,000.

While the data Christie provides every year is a bit opaque, the important thing for independent retailers is that they publish it every year and demonstrate a commitment to the convenience sector. Equally encouraging is their confidence in the future for independent local shops.

Three reasons why local stores do well in Poland.

2011-01-19T13:40:00.000Z

The Financial Times has covered the success of the Eurocash wholesale operation in Poland, a country where independent shops still retain a remarkable 40 per cent share of the grocery market.

"Shopping is not entertainment. Buying yoghurt and iPods in a single shop is not convenient for customers. You need quality shopping close to home," Luis Amaral, the Portuguese owner of the wholesaler, tells the newspaper. It is clear from this that Polish shoppers are not UK shoppers, who regularly put undergarments into the same trolley as their raw poultry.

However, one reason why Polish local shops do well is said to be the poor state of roads in Poland, which makes travelling to a hypermarket difficult. This impact may transfer to the UK as the price of petrol soars and councils cut road maintenance budgets.

Another is that 25 per cent of Poles shop daily and find it easier to go to a neighbourhood shop. The multiples have opened neighbourhood shops but the independents compete on service. "We notice our clients and they tend to do most of their shopping with us," Anna Rowena, owner of a local shop in Warsaw, tells the FT. Again, this is a trend towards top up shopping that is helping local shops in the UK.

Finally, Eurocash invests in the quality of the products it supplies and there has been a big improvement in the quality of the people who go into local retailing. Today's shopkeepers are "much more professional," says Mr Amaral. The trend in the UK is similar, with the leading wholesalers investing heavily in supporting local traders, who are more professional that the previous generation.

Even in Poland the indepedent sector is under pressure, with lots of shop closures. However, Mr Amaral is confident that local stores can maintain a market share in the high 30s. An ambition worth importing from Poland for the UK independent channel!

Being generous in the teeth of a price war

2011-01-17T09:58:00.000Z

Asda's price guarantee, that it will be 10 per cent cheaper than rival supermarkets, was clearly a marketing stunt from the off. Few people are going to have the energy to complete a major shop in Asda and then check what price the same products were across town at Tesco.

However, Tesco has said that it will protest to the Advertising Standards Authority about the "confusing and misleading claim".

"It is vitally important that the whole industry acts in a way that deserves the trust of customers," says UK chief executive Richard Brasher. "In our view customers are being misled by false Asda claims."

What is remarkable about this is that Tesco is getting twitchy - following on from last week's weak results statement. Local retailers may take comfort from the inference that the market leader is finding things as difficult as they are - whatever you think about the actual issues of the way that supermarkets represent themselves to the media and to shoppers as the consumers' champions.

There is, over a 40 year horizon, a great deal to support the supermarkets' claims to champion the interest of ordinary shoppers. However, the independent shop sector and its wholesale supply chain has got its act together and is capable of providing shoppers with a good alternative - as demonstrated in the current NISA Local television commercial. The market is tough now for almost every participant.

What to do? I am currently reading Linchpin by Seth Godin and it may help you to become indispensable to local shoppers. He provides the following food for thought: "Wal-Mart wins because it is cheap and close. Everyone else who wins must do it by being generous."

Tough times need tough benchmarks

2011-01-13T14:54:00.000Z

Underneath the hype, the Christmas announcements by the major grocers demonstrate tough trading conditions, with Tesco saying that like-for-like sales in the UK were up by just 0.6 per cent. The analysts will be having this in negative territory in no time.

The impact of Tesco's investment in new space is a 3.6 per cent increase in sales yet the Kantar Worldpanel figures show its market share remains unchanged at 30.5 per cent. The two sets of figures are not strictly aligned but local retailers can see the picture.

Across at Sainsbury, which is doing well, the Kantar Worldpanel figures show it adding 0.3 per cent of market share to 16.6 per cent, just behind Asda on 16.8 per cent (which lost a 10th of a basis point). Sainsbury reported like-for-like sales growth of 3.6 per cent but City analysts cut this down to almost zero after stripping out new space, VAT and food price inflation.

The Tesco press release highlighted "Steady UK Performance" and Sainsbury trumpeted a "record Christmas performance". Earlier Morrisons had said that around 40 per cent of sales were on promotion and the average family was having to spend £10 a week more in petrol costs.

The Kantar Worldpanel figures show that independents grew sales fractionally behind the multiples but Ed Garner noted that the supermarkets' baskets were filled with DVDs, toys and books. Grocery inflation remains at around 3 per cent, his data shows.

To benchmark your sales, add up what you sold in the final quarter of 2009 and add 3 per cent. Then compare this with what you sold in the final quarter of 2010. If you have a positive number, then you are doing very well. Remember to tell your suppliers you are doing well and keep it up.

Poorer and less obese: your average shopper?

2011-01-13T14:28:00.000Z

Writing in the Sun, Kelvin MacKenzie, recounts how he took part in a television discussion about the links between obesity and poverty, when a fellow panelist said to him: "It's all right for you, shopping at Waitrose".

Mr MacKenzie then defends his choice of supermarket by saying it is the nearest to where he lives and as "any food retailer will tell you - thanks to their extensive research - no customer wants to travel more than one and a quarter miles to shop. It's why supermarkets build more and more stores".

If he is correct, then Waitrose must locate its shops where there are fewer obese people - and as it adds more stores then it will have more "problem" shoppers, where I use the term "problem" loosely.

Research by Kantar Worldpanel shared with me by Ed Garner before Christmas plots the major supermarkets and independent shops on to a graph where the two axis are the percentage of upmarket ABC1 shoppers and the relative number of shoppers with a body mass index of more than 30.

At the top right of the graph sits Waitrose, with around 73 per cent of shoppers being ABC1 and 35 per cent fewer overweight shoppers than the average grocery shop. Tesco is slightly overweight on ABC1s, at 55 per cent and has around 5 per cent more overweight shoppers than the average.

Independent local shops are massively underweight on ABC1s, with around 37 per cent, and have around 6 per cent fewer overweight shoppers than the average.

Which tells us that the average local shop is likely to be trading with fewer upmarket customers than the supermarkets but its shoppers are less likely to be obese. By extension you could say that local shops serve more poor people, but fewer obese people.

If independents, which only have a 2.1 per cent share of the market as calculated by Kantar, were a multiple, its management would be seeking to increase the number of ABC1s they attracted and to attract them with a healthy range.

The competitor they would be benchmarking themselves against would be the Co-op, which has 47 perr cent ABC1 shoppers and 15 per cent fewer overweight shoppers. If you are interested in the Co-op model, it has plenty of new c-stores open around the country - one in every post code.

Monocle's four food trends for 2011

2011-01-12T14:38:00.000Z

Buried away inside issue 39 are four trends that the Monocle team of trend spotters say will change the "business of what we eat and drink". They are:

Blueberry juice and its ilk will sell more based on the trend towards "super-foods". Khaled Yafi, who set up the Berry Company in 2006, is expecting fruit bars and frozen desserts to take off.
Less fancy dining. For example, Michelin starred Hamburg cook Cornelia Poletto is giving up her star and posh eatery to open a place where customers can "buy cheese and ham over the counter, or have a coffe at the bar".
The rise of Korean food as the new Japanese food with soy or chilli-marinated meats, lead by Jung Sik Yim opening a restaurant in New York.
The rise of part-time urban farmers and the Slow Food movement, with people growing fruit and vegetables on their balconies or in their basements.

Before you scoff or say these are the same old same old new things, pause to consider what you see shoppers doing and what outlets like Bill's Produce are doing. If you are in London near Waterloo, visit Buen Provecho on the street at lunchtime in Lower Marsh Street. Here is a consumer blog to get you thinking http://helengraves.co.uk/2010/05/buen-provecho-seriously-good-mexican-street-food/.

The great thing about short lists (rather than the ones with 100 trends for 2011) is to roll them over in your mind and think what they might mean for your business. Enjoy!

A shortage of selling space for magazines?

2011-01-12T14:16:00.000Z

I aim next week to visit the Monocle shop, which is said to be very small and sells mainly back issues of the Monocle magazine.

Looking up the address on its website I flicked over to the listing of what's in the current issue. A few of the headlines caught my attention and I made a note to buy the December/January issue before it was off sale. I also made a note not to buy it from WHSmith, which is easy as it has outlets at Paddington and Reading stations, which are two parts of my commute. Instead I got off my bus early with the intention of visiting the newsagent at Angel.

As I approached, I could see the shutters were up. I had been an infrequent visitor to this shop. While it had a big magazine range, its service was poor. Nothing really made you want to journey two minutes off route to visit.

No problem, I thought, I will go to the shop that we buy our newspapers from. It is tiny and used to be stuffed full of magazines. Now it is tiny and stuffed full of snack products. Its magazine range is the usual suspects. It has two and a half shelves of magazines, not fully stocked, where it used to have seven crammed full.

I turned around and walked back to the kiosk outside Angel tube station, where the issue was available. But it is a shock to find as a consumer that the easy access to magazines that you take for granted can disappear, almost overnight.

The impact of the VAT rise

2011-01-06T14:51:00.000Z

A friend of mine whipped out this booklet of vouchers that he was handed in Starbucks, with a 50p off your favourite beverage voucher for each day starting 4 January and lasting about a month.

Mark quoted me the total value of the coupons and how pleased he was to be handed them when he visited the coffee shop for a drink. Thinking about it, he said that he probably would use less than a fifth of the vouchers.

However, Starbucks had achieved a little bit of a coup in turning Mark into an advocate of its attitude to shoppers and its approach to the VAT rise to 20 per cent. Many local shops do something similar. Any examples would be welcome.

Understanding customers: price-marking

2011-01-06T14:35:00.002Z

There is an advertisement from Coca-Cola Enterprises in the last issue of Retail Newsagent of 2010 that says: "71 per cent of customers are more likely to buy a product with a price-marked pack." The research by HIM that supports this view is not particularly new but the execution of the advertisement by CCE is very impactful.

It is illustrated with an array of 10 strong CCE brands in price-marked packs. The message underpins a huge change in what independent retailers are prepared to stock. When Mars, armed with similar insight, tried in the 1990s to champion price-marked products, the retail trade refused to stock its products. Today, shopkeepers understand the power of price-marking in generating sales and often seek out the price-marked option.

However, with a fixed price comes a fixed margin. In making this trade off, retailers need to be clear about the overall impact on their sales and to get the mix of price-marked and higher margin products in the right balance.

To help you think about this I would first like to digress. One of my sons, back from university, was telling me how one of his housemates buys an Irish ketchup and fails to believe him that Heinz ketchup is the best. It is an argument that will have no end.

At around the same time, Seth Godin blogged about Heinz ketchup (if you are interested read here http://sethgodin.typepad.com/seths_blog/2011/01/its-just-better-ketchup.html) that it was not better ketchup but better Heinz ketchup. Mr Godin argues that most people choose the ketchup that their mothers served to them. He goes on to say "One thing that marketers do is sell us a feeling [and] we rationalize it as 'better ketchup.'"

So in the case of price-marked big brands what is going on? The shopper clearly values the brand but wants to be reassured they are paying a fair price for it. Some shoppers may choose between brands based on the price that is printed on brands of equal relevance. Most shoppers will assume that a local retailer is more expensive than a supermarket. By using price marked big brands the local retailer helps reassure the shopper that they are not being overcharged for their business.

But remember that HIM research is about the attitude of shoppers. It does not measure their behaviour. What people say and what they do are different things. Most shoppers would say that they are reassured by price-marking. But this alone may not drive their shopping decisions. Price-marking is a tool that you need to use to grow your profitabilty so in using price-marked products you need to keep careful records of what the impact is on your sales and profits.

Three things that made Leahy successful

2010-12-29T07:44:00.000Z

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 Tesco was an innovator and got it right when the City doubted that it would.

Will his chosen successor have the same ability? Perhaps. Tesco is still tipped to gain more market share in the UK as it opens more neighbourhood shops.

Many successful local retailers should think about the attributes above, whether they share them and whether they should use them more.

A defence of Happy Meals!

2010-12-20T14:48:00.000Z

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 of tobacco measures, these kinds of initiatives still appeal.

For a company like McDonald's to feel confident in taking on the "food police" as Mr Skinner labelled the special interest groups must be good news for small retailers. Think about the lobbying that small retailers are doing on the tobacco display ban and the lack of public comment by the major sellers of tobacco products, including Tesco! Big corporations don't want to be caught in a backlash.

However, Mr Skinner appears to believe he knows why people buy from him: Happy Meals have been working for my customers for 40 years and they still love the format. Shoppers will vote with their wallets. You need to build up a similar story based on your shoppers and use this to provide stories to the local media and local regulators. One thing that will make an MP pause is the concern that he might do something that will be unpopular with a significant number of local voters.

Learning from the malls

2010-12-20T14:31:00.000Z

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 needs to provide easy access and a high specification of built environment that people will want to dwell in.

These same rules apply in local shopping but scaled down. Most shoppers will live locally and you will be competing with their other shopping options, including multiple grocers and the internet. In order to be a destination for your customers you need to ensure that your shop is better than your competitors'.

Many local shopkeepers will be operating in what developers would see as poor locations. But that does not mean that you cannot be successful. Your aim must be to be better than competitors that are easy to compare, which is why Tesco Express is such a useful benchmark. While shoppers will likely be on a different mission when they visit your shop (remember many Tesco shoppers go local to buy trusted chilled food instead of driving to a superstore) you need to be competitive in terms of that mission, be it to buy cigarettes, snacks, alcohol or a newspaper.

If DTZ is correct and only 12 per cent of shopping centres will attract the big names in retailing, that also means that 88 per cent are surviving by meeting other shopping needs. Those needs may not be as glamorous or generate as much revenue but properly managed they can be profitable.

Keeping the shop friendly and tidy, and having at least three good promotions are a minimum requirement. How can you do better?

How do you shape up? #2

2010-12-07T15:47:00.000Z

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 the back of his shop? Where is the energy? Where is the momentum? Passive shopkeepers will lose customers later or sooner.

Seven great benefits; how do you shape up?

2010-12-07T15:30:00.000Z

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 number of words on it as this makes Google easier to use.

What has this to do with your shop? Think about the seven benefits you offer shoppers. List them. How do they compare with Google's?

Think about Marissa Mayer's job. Who does it in your business? Who solves the shoppers' problems before they know that they are going to be problems? More on this in my next blog.

Alert your MP to the bank lending imbalance

2010-12-07T14:34:00.000Z

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.

Three reasons why paper books will last - or not!

2010-11-29T11:22:00.000Z

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 books is that you can lend them to people. In the e-world, you cannot.

PS If whoever I loaned my Jim Collins' book to is reading this, I would like it back!

Look on the bright side

2010-11-26T14:02:00.000Z

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 said. "We are already significantly ahead of plan on things like decorations and trees". But in reporting this the FT repeated analysis that suggested Tesco's sales are being inflated by sending out £100m worth of extra discount vouchers.

Waitrose, part of the John Lewis partnership, weekly pumps out good news; that latest update showing its sales are up by 8.0 per cent across the first 16 weeks of its financial year.

But Waitrose may be the execption. One major multiple that took on 100 extra staff for a flagship store in the south, has now laid off 99 of them and has constraints on overtime, a local retailer tells me. The big stores have to talk up how well they are doing; this underpins their dealings with suppliers and encourages shoppers. Behind the spin the market is tough.

It is important if your sales are down that you watch your costs and protect your margins. It is not a great place to be but you must remain positive. Be postive with your customers. Find your success stories. Keep your shop a happy place. Invest in the future if you have a good plan.

Overcoming a price disadvantage

2010-11-23T10:11:00.000Z

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 even higher. Its margin advantage is not new. You have been competing against it for some time. It is possible to compete with Tesco on price - across a narrow range of products - as local suppliers are sometimes able to produce quality products at better prices than the national suppliers that Tesco is forced to use. But mostly you will have to compete on the quality of the shopping experience that you offer.

The big four supermarkets have 76 per cent market share but Tesco's three competitors all operate at a margin disadvantage to it. The independent channel needs to be robust about defending its market share. The pressure is on but it may be that it is one of Sainsbury, Asda or Morrisons that fails under the pressure from Tesco rather than your business.

Where Tesco may be going next

2010-11-19T16:05:00.000Z

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 companies, it tries to develop neat IT solutions in house. In part Tesco has done this because it has been leading the industry. For example, Tesco set up a web site before most people had heard of the internet and it decided to pick orders from the shopfloor because the cost of special warehouses was too great.

The downside to its competitors of this approach is that outside suppliers do not get a look in at the IT developments and Tesco gets to keep its advances in house.