Skip to main content

Plenty of local shoppers in search of your store

While the Grocer indulged in its usual agenda of knocking CTNs through the medium of Jerry Marwood, boss of Spar, two week's ago, his rather more insightful interview in the same issue provides two thoughts for local retailers.

The first is that the "one-trick pony" is dead in the retail water, by which Mr Marwood means that retailers who buy an off-licence or a newsagent cannot expect to make a living on its core product range.

This is not news. It was true that until the mid 1990s you could make a very good living on just selling confectionery news tobacco (CTN) or beers wines and spirits (BWS). It is also not news because both shop formats are in decline. Combined they account for fewer than 7.8 per cent of outlets. C-stores account for 44 per cent. It is also not news because the stores that remain are increasingly in locations where the business model makes sense - by travel points for example.

However, the CTN owners and off-licence operators of the 1990s have not gone away and the really strong point that Mr Marwood is making is that there is no magic format that will guarantee you sales success. What you have to do is to identify the shopper missions that will work in your store. Mr Marwood is a big fan of stocking products for "tonight's tea" - an area where Tesco Express and the multiple c-stores have an edge.

The second point he makes is about the relative success of Spar stores, with average weekly sales of £19,714 a week through its estate against £12,120 for Premier shops and £13,165 for Londis. If you assume that the average store size for a Spar is 1500 sq ft and for a Premier 1000 sq ft and for a Londis 1200 sq ft, then you get sales densities of £13.14, £12.12 and £10.97 a square foot respectively.

While these all compare well with Tesco's One-Stop chain, at around £12.50; they are well short of the sales densities achived by Tesco Express at £25. Sales densities are only part of the picture. As you sell more fresh and chilled products, your overheads and your waste costs will rise, reducing the overall margin.

Spar's £2.6bn worth of sales, growing strongly year on year according to Mr Marwood , should provide local retailers with optimism that there is plenty of demand from shoppers for local independent outlets. However, you do not have to feel pressured to join a symbol group. Work out your own weekly sales figures and divide these by your selling areas and see what your sales density looks like. If you are going to add new products, use this tool to work out what return you will expect.

Mr Marwood is correct to say that standards need to rise if you want to win more shoppers but there is more than one way to achieve success.

Comments

  1. Interesting Nick,

    Should we be looking to build a 'Tool Box' on BR for helping retailers measure their businesses?

    Steve

    ReplyDelete

Post a Comment

Popular posts from this blog

Digital disruption in the UK wholesale space

“Twenty years ago I was driving boxes to the post office in my Chevy Blazer and dreaming of a forklift,” says Jeff Bezos in his most recent letter to shareholders. A blink later and he points out that the company has grown from 30,000 employees in 2010 to 230,000 now. But his ambition is the same. “We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness and risk-acceptance mentality that is normally associated with entrepreneurial start-ups.” Amazon is great at disruption because of its customers focus and the fact that the internet means it needs none (or very few) people between its warehouses and the shopper. The threat of Prime, its membership service, is the biggest challenge facing the UK retail market and the wholesale market by extension. It is both a direct threat and an indirect threat in that is inspiring countless numbers of othe...

New look: big copy small?

The owners of B&Q are talking up how they have cut the price of a store refit from £2.5m to £1m by using wood-effect vinyl instead of wood and painted MDF backboards for displays. Managers are learning to live with grey shelving instead of a warmer-looking cream. Shoppers notice the produce, not the fixtures, suggests one executive. Up to a point! Most local retailers will extract the maximum possible life from their fixtures, sometimes taking too long to change equipment that has become tired. As in all business, it is getting the balance right. Shops need to be refreshed and with a purpose.

What do shoppers see

I read a good post (http://www.newsagencyblog.com.au/2009/08/28/what-do-newsagents-charge-for-faxing.html) asking what price local shops charge for providing a fax service. The blogger had attached a photograph of his sign with his prices on it. What struck me was the message on the sign. "You drop, we fax," it said. "Pressed for time, drop your documents with us and we'll do it for you at no extra charge." That is a message that will persuade most shoppers that you want to give them good value, even if they stay to do the copying or faxing themselves.