nickshanagher

“To really excite and delight customers there has to be something unique and special about what you deliver,” writes John Hoerner at the end of How To Sell: Recipes For Retail , his brilliant book on everything he has learned in a stellar 50 year retail career. Put this book on your Christmas list. Hired from the US in 1987 to run Debenhams Hoerner was so successful he ended up running the Arcadia group until he retired in 2000. A year later Tesco recruited him to develop its clothing business. This book is organised as a series of recipes for success. He argues that his lessons will work for any retail business and I think he is correct. While convenience stores are not in the business of markdowns or as exposed to not buying the latest fashion must-haves, they still have to get the basics right and then find the magic ingredient that makes their shop special. “When you get it right for customers, almost EVERYTHING ELSE works…when you don’t get it right for customers, almost N...

This is a story about how a man started out with one market stall and 25 years later sold his chain of 1,000 shops for more than £500m to Tesco. But Kevin Threlfall’s book One Stop One Life is more remarkable than that. Any modern convenience store operator wanting to learn about business should read Threlfall’s remarkable life story. You will pick up some neat ideas about how to exploit loopholes and spot profit opportunities. But mostly you should just pick up his zest for life. His parents had a knack for sales and after his dad opened a cut-price market stall in the 1950s they had enough money to pay for Threlfall to get a good education. Knowing how much money could be made from market stalls, he went into partnership with his dad selling special offers and top-up shopping. In competition with the supermarkets, Threlfall made a list of all the “must buy items” and priced them lower, sometimes making as little as a penny per pack. “In being cheapest on known value items ...

We can read lots into Warren Buffett telling CNBC that he made a mistake in investing in Tesco. “I am going to make mistakes,” he said. “But not because I buy businesses that I like as they go down in price but I am just going to be wrong sometimes on the facts.” The interview that we can see does not go on to examine what these facts might be. What I would suggest is that Buffett is saying that Tesco is a well-run business for the world of shopping that used to exist when he bought into Tesco in 2007. The supermarket retail world has changed beyond recognition since then. Morrisons under Dalton Philips claims it will be the first retailer in the world to price match Aldi and Lidl with its Match & More initiative (based on its mid-range own brands, not its value range). If he reads Dieter Brandes' BareEssentials Philips will see this is not the case. History is littered with retailers who have tried to beat Aldi on price and failed. But is the Aldi UK model ...

How Philip Clarke must have been hoping for an interesting Queen’s Speech. He did not get one. Its absence meant Tesco’s worst results in 40 years were the news. But don't kid yourself. Tesco is still a great business doing lots of things right. On the front page of the Financial Times were three graphs showing how badly Tesco is doing: ·         Five quarters of no growth in UK like-for-like sales (down 3.8% in Q1 201) ·         2.0 per cent fall in market share since 2010 as measured by Kantar. Aldi is up 2.7%. Lidl 1.2%. Waitrose 1.1%. ·         Total shareholder return since March 2011 down 13.9%. Only Morrison is worse at down 16.9%. The FT says Tesco’s big stores are out of favour with consumers who are “switching to convenience stores, German discounters and online grocery shopping”. Analyst Bruno Monteyne of Bernstein told the paper that half of the like-for-lik...

 You get the impression from Bill Grimsey, the former boss of Wickes, Iceland and Focus DIY, that all it takes for success is some vision and some guts. He may be right. His book, Sold Out , aims to propose ways to save the high street and by extension independent retailing. What makes his book stand out, however, is not his pitch but the detail of his career in retail. For independent c-store operators there is much to think about. Grimsey provides a useful overview of how the supermarkets took over in the 1960s as more and more households bought fridges and the weekly shop became possible. The next step in giving supermarkets an edge was widespread car ownership. Grimsey describes the success of Tesco’s price cuts in 1977. He was personally involved in the next step forward, helping to deliver improvements in customer service in the late 1980s. On page 150 he provides a very useful four point summary of how to create a good impression with shoppers. Moving forward to...

The Harris and Hoole story about Tesco's not so independent coffee chain has several lessons for independent retailers. Broughtonscoffeehouse has written an interesting blog on how the national press has got the story wrong. Coffee industry insiders, it says, know that this is a case of an artisan coffee shop getting the backing of a big supermarket chain. Not, as the papers say, a case of Tesco dressing up its multinational offering as something local. Just as Paul Fisher may feel the only way he could preserve his independent supermarket was by way of a joint venture with Sainsbury, so Nick Tolley of Harris and Hoole sees the Tesco deal as integral to his business plan. He says he wants his managers to think about the local community, to source product locally and to hire locally."We design each of our shops individually so that each local town or neighbourhood feels like it's got something unique to call their own; we're not some pre-fabricated, soulless temp...

Two pieces of analysis in the Financial Times this week offer food for thought for local retailers in follow up to Tesco boss Philip Clarke's claim that shoppers would order ahead while driving to the store. His vision of drive-thru Tesco stores, captured by Chris Gamm in Retail Newsagent last week, includes the following: "As consumers become increasingly connected to the internet we will probably know your lounge light bulb blew this morning, so we will have already added a new one to your order as well." The first analysis by Jonathan Guthrie concerns the plight of Ocado, the delivery only service that purveys "chard and kumquats to yummy mummies". Its problem is that its supermarket competitors "appear happy to subsidise their own lossmaking online operations indefinitely." There is a persistent question mark over the business model of online grocery sales, which is that the cost of delivery is greater than the margin, which means the bricks ...

City analysts are in the business of talking shares up and talking them back down again. So you have to treat what they say with caution. Even so, their feedback about Tesco, offers some pointers about where the convenience market may be headed. At Citigroup they talked about a future Tesco that within a few years would be an "entity without growth or cash flow generation." That is, it would not longer be opening new space and it would be forced into cutting prices. The issues are: concerns that new space opened will reduce profit margins (which may include on line sales as delivery costs are subsidised by bricks and mortar shoppers) competition from Aldi, which is about 25 per cent cheaper and growing strongly. In the UK, Tesco has 39.1 million square feet of selling space. In the last half year it achieved sales of £23.9bn in the UK. That is just over £23 of sales a week per square foot. This compares with estimates for Spar of £13, Premier of £12 and Londis of £11...

How much do suppliers really value local retailers, is a question that independent shopkeepers often ask themselves.   Open to the same competitive pressures as the big supermarkets and competing for the same shoppers, independents often feel they are locked out of the best deals and can’t buy at the prices the grocers sell for. A new edition of Store Wars , co-written by businessman Greg Thain and former Cadbury marketer John Bradley, provides some great answers to the question. Most importantly, they advise manufacturers to support weak retailers. Before independents get too hopeful it has to be said that Thain and Bradley argue that in the past 10 years a major switch in power has happened. After around a century in control, the big brand manufacturers are now number two to the likes of Walmart and Tesco. This has implications for all local shops. There are two reasons for the success of big retail. Firstly, they now know more about their shoppers and market to the...

Analysts from ING helped to push the share price of Tesco down 1 per cent on 4 July by suggesting that it has its strategy wrong. Their prognosis is not new. For a couple of years, various analysts have said that Tesco needs to start a price war. What are they looking at? At a price gap between Asda and Tesco, which they say is widening. "We feel that deeper price cuts are the only way to prevent Tesco customers from switching to Asda," ING says. "Ultimately, lower prices should lead to higher volumes, higher sales and higher profits, which in turn can be reinvested in lower prices." ING says that if Tesco continues on its current track it will be unable to convince "Tesco-tired customers" to come back to the store. The analysis is like the rain-laden clouds that have soaked Britain all this summer. It is a known unknown that makes business planning difficult. What investment decisions should a local retailer make? What should your wholesale suppli...

Ed Garner of Kantar Worldpanel reckons he has the best tool for knowing what is happening in the UK grocery market and his data says Tesco's strategy does not work. Nine out of 10 people already visit Tesco regularly and no matter how hard it tries, this number is unlikely to become 10 out of 10. Sitting in a room with 9 businessmen and one environmental campaigner yesterday I mentioned this 9 out of 10 statistic and they simply did not believe me. How many people shop at Tesco, the chairman asked and only two of us put up our hands. The other shopper said he mainly used Tesco late at night when he had to make a distress purchase. Which got me thinking about my visit the previous evening to buy toothpaste. I had caught a train out of Paddington and planned to buy the toothpaste at Sainsbury's busy c-store in the station. Thinking ahead about this purchase and after hearing at the Independent Retailer Conference about how multiples organised their shops around shopper missio...

On the one hand, the government wants small retailers to take on young people as apprentices, with details of a £1,500 support package due any time now from Skillsmart Retail. On the other, different retailers have different priorities. For a supermarket like Tesco, with 3,000 places on its in-house apprenticeship scheme, it is about developing its people and building team spirit in its stores. It's oldest apprentice is 67, says UK personnel director Judith Nelson. For a discounter like Aldi, it is a great way of attracting talented people to join its company with the promise of becoming managers in the future. "There are people who want a career in retail," says finance director Matthew Speight. For an independent c-store operator like Rav Garcha, it is a way to build the self-esteem of his team and to get his staff delivering on their mission to make "a difference locally". Unlike education that is designed to get a class of students to a median level, t...

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...

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 c...

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 qu...

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.

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 ...