nickshanagher

Abstract: Thoughts on how to influence independent convenience retailers, a disparate audience that is becoming increasingly important for FMCG manufacturers. Combined they are as significant in size as a major multiple, but a tailored approach is needed to reach them as individuals.   Independent convenience stores have a 13% share of the UK grocery market, says the Institute of Grocery Distribution. Sales will rise from £22.2 billion today to £29.4 billion in 2019 at a much faster rate than the grocery market as a whole.   The growth story is driven by changes in how UK shoppers behave and also by the better store standards achieved by most independent retailers. The challenge for FMCG marketers is how to effectively be a part of this growth story. There is so much variability in the way that these shopkeepers operate. They are promiscuous buyers prone to chasing the best price available and from a wide range of suppliers. Even the many distributors, who...

 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...

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...

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 resp...

Local shops can make high impact promotions work for them with the application of a little thought - and sticky tape. My thanks to Andy Singh for following up my comments last week with this photograph showing a new promotion he is running. Through his wholesaler, Andy bought into a buy a Pepsi and a Wispa Gold for £1 deal. He took some time to tape the chocolate bars to the cola drink with the aim of making the promotion as simple as possible for his shoppers. "It is flying out with the teenagers," he told me today when I asked him how the promotion was going. From a question I asked him last week, Andy decided that he needed to check whether shoppers could easily understand the promotions he was running. The easier he makes it for them to buy, the more they will buy.

If you set up the promotion, shoppers will buy it. Andy Singh invited me to visit his family shop in Sunnyside, near Gateshead, and I spent an enjoyable hour with him talking about business yesterday. We were consistently interupted by shoppers popping in to top-up, which was great! When I arrived, Andy pointed me to the space in front of his till where he had put pancake mix, honey, Nutella, and golden syrup. Pancake day, he said. I was surprised but within minutes the first shopper arrives in store asking if he has pancake mix. Just here, he said. Great said the shopper, adding a tin of golden syrup and buying a big bar of chocolate on promotion as Andy had run out of chocolate sauce. Remarkably, more shoppers came in to buy materials to make pancakes and Andy was able to send them all home happy. Andy, with his dad, runs a great shop. He is on first name terms with most of the shoppers. Everything is well merchandised and clearly priced. By having a strong and trusted relat...

There are two lessons for local shops from this tale of lottery balloons. Last week in the corner shop across the street a big poster appeared in the window announcing an £89 million mega draw in the lottery. Inside the shop, the Camelot stand was decked in blue and white balloons and looked festive and happy. This week, with the draw up to £111 million on Friday, and the balloons had gone. Today a new poster was back up with the bigger draw announced. "Where are the balloons," I asked. "Why did you take them down?" The assistant told me that a courier had brought the point-of-sale pack the previous week and they had put the balloons up as requested. The pack for this week was still to arrive. The lessons are: 1. Point-of-sale works. Last week the shop looked really happy and I was prompted to buy a lottery ticket. I did not expect to win. It was a brief fun flirtation with the opportunity of winning. The shop was a brighter and happier place to be in. 2. Som...

Steve Fox, retail sales director at wholesaler Booker, has put down a marker for what he thinks is important for local shops to focus on in 2010. This week, just as City analysts were fretting over a higher than expected rise in retail prices, Booker has announced a deal to keep the price of bread and milk low until the end of September. "Bread and milk are the two most important products [for] convenience stores," says Mr Fox. "By guaranteeing the price to September, we are giving our customers the confidence that they will be able to offer their shoppers consistent pricing that helps them to compete with the multiples." Consistency is an important word. As a local retailer you need to be able to promise your shoppers that they will always find good value in your shop. As footfall driving categories, you need to have good prices on bread and milk to set the tone for your overall offer. The independent sector needs strong pricing support like this. Think about how e...

The FT headline spoke volumes in saying "Vouchers flatter Christmas at Tesco" as the UK's top supermarket chain was forced to come clean on the impact that issuing £100m of money-off vouchers to Clubcard members had on its growth. Taking away the £34m extra spend covered by vouchers, its like-for-like growth dropped to 4.1 per cent and behind that achieved by Sainsbury. One analyst told the FT, the fact that less than half of the extra vouchers were used looks disappointing to us. For local shops, the small print needs careful scrutiny. That £34m is money invested by Tesco itself in winning shoppers. It is on top of the extra promotional funds that it has secured from suppliers of big brands. It is on top of the margin it has squeezed out of many suppliers. (One service supplier I spoke to at Christmas said that he had to do 20% more work for Tesco last year to make the same money as the year before!) The PR war from the big supermarkets is being backed up with serio...

There is a statistic from Neilsen that says that 35% of sales by supermarkets this year, measured in pounds, was on promotion. This compares with 26% in 2008. The cost of this activity was shared by the big grocers with their suppliers. Assuming that the buyers for the big stores started out with the best prices and margins, this statistic suggests that their suppliers have had to stump up 34% more money in extra sales support. The impact is likely to a greater than 34% reduction in the suppliers' margin. This seems like good business to many suppliers because they think there is only one game in town, selling to the public through the multiple grocery channel. Selling through independents looks to hard. It looks too difficult to measure. But that does not mean that the independent channel's sales are not measured. Figures from wholesale and cash and carry sales to independent shops compiled by Sales Out show that corner shops are doing better than multiples. The positive...

Suppliers are spending more and more money on trade promotions and the more they spend the more it seems they complain about compliance, which is when they measure how good retailers are at delivering the promotion the supplier has paid for. Mostly, suppliers assume that multiple retailers are better at compliance than independent retailers, which means that local shops lose money from the start. But this is a notoriously subjective area and few suppliers share their data with their trade partners. This makes a new survey from the USA quite interesting. AMR asked suppliers to rate how good retailers were at compliance on a scale where 1 = poor performance and 10 = good performance. The grocery channel rated OK, with a best score of 6.1 on price promotions and a worst score of 2.3 on cross-category promotins (like meal deals!). According to AMR, the most money has been wasted on special events, where difficult to execute promotions (including floor displays and customised products) s...

How hard: it depends how big you are and how much you know about your customers. For a large multiple, a huge amount of science goes into developing deals for their shoppers. They try to deliver promotions that are timely and targeted. They have complex buying, marketing and merchandising operations to keep synchronised. For a local shop, you can see the customer you want to focus on and you can ask them what they are looking for. Next you can source the deal and then deliver it on time in your one location. However, if you want to maximise the investment of suppliers in your promotion, then you need to impose greater discipline. If you want to earn overrider payments, you have to take promotions designed for the average shopper, not your own customers. If you choose to step up a level, then you need to improve your own disciplines. The first thing you need to do is tell yourself that you will have regular promotions. Perhaps 13 times a year, perhaps more. Some could be obvious...