Advice from the Partners for Growth retail experts
With winter fast approaching and 2024 looming large on the horizon, many shoppers will be pleased to see the back of what has been a challenging 2023, a year dominated by the cost of living crisis. It’s meant that many shoppers have struggled to make ends meet, forcing them to review their priorities in terms of what they spend their money on, and where they shop.
To set themselves up for a successful 2024, it’s more important than ever for retailers to ensure they are focused on catering for their shoppers’ new priorities, whilst at the same time ensuring they focus on the health of their business too. Our retail experts on the Retailer Advisory Panel shared their views on the key things retailers should be focusing on now, to do just this.
Business Focus – 5 key things retailers should be focusing on
1. Review your range
Making sure your store and range offering meets your shoppers’ needs has always been key to a successful convenience store, but with shopper priorities and need states shifting, it’s now more important than ever to keep on top of your customers’ needs and range accordingly. Keeping a close eye on your Epos data and other business fundamentals, will give you an indication as to how the cost of living crisis is affecting your store. It will help you understand how many shoppers visit the store compared to before, perhaps indicating that you have lost some shoppers to more value focused retailers, how much your shoppers are spending each visit, what categories they are shopping and what they are currently buying. If for example they are buying more value-oriented products or products on promotion, it will help you adjust your range accordingly and cater for more value focused shoppers.
Retailer Advisory Panel member Ramesh Shingadia comments: “As retailers, we know that many of our customers are really struggling to make ends meet, so we need to try to keep prices as low as possible, flex our range to include more value products and PMP’s, so that we can be competitive. However, with the rise in energy and food costs driving up inflation, resulting in margin pressures, retailers will face challenges doing this, so they will need to look for other ways to refine and adapt their category ranging and store offering to help, such as vaping and food to go which has been very successful for us.”
Now that availability issues have eased, we would recommend you review the recently updated Partners for Growth unbiased advice, to help ensure you are representing all the need states across your categories and are better catering for your customers’ new priorities.
2. Focus on your Convenience Strengths
The primary reason shoppers come to your store is to satisfy a mission. By tapping into the experiential mindset of convenience shoppers, retailers can make their store a destination for their community and use this to generate incremental impulse purchases across a variety of categories. By optimising category ranges and focusing on the best selling lines, retailers will not only make their fixtures easier to navigate, but they will create space to introduce new products and services, such as slush machines, vape stations, or a deli counter, all of which deliver higher margins than most other categories. These new products and services will help offset some of the categories offering lower margins, helping the retailer maintain their overall store gross operating margin.
Panel member Mandeep Singh, of Singh’s Premier comments: “We recently introduced a Refreshment Station, which offers twice the margin of traditional soft drinks, and has attracted a huge number of shoppers looking for a simple, low-cost family treat, at a time when they can’t afford to go out for a bigger treat.”
There has been a dramatic increase in store theft, often accompanied by violence towards store staff. Whilst larger retailers have resorted to the hiring of security guards, this is unlikely to be a viable option for the average convenience store, but there are a number of things retailers can do to combat theft.
- Better CCTV will put off some would-be shoplifters, as well as provide evidence to their crimes.
- Merchandising high value products such as health and personal care products, close to or behind the till point or merchandising empty packets which are fulfilled once the product has been scanned at the till point
- If a store refit is planned, now might be a good time to build in plans to relocate the till point so that it enables a direct view down the aisles, as Budgens retailer Ramesh Shingadia has done.
4. Maintain your margins
Although inflation has fallen back slightly, it is still significantly higher than previous years and for this reason alone, it is important that retailers keep an eye on their business fundamentals and in particular how their categories and overall operating margins are holding up in the face of the cost of living crisis.
But this can be a real challenge for many retailers, so they will need to strike a balance between offering competitive prices and maintaining their margins as best as possible. If this isn’t feasible, then convenience retailers should look to identify higher-margin products or services to offset wider margin pressures.
Spar retailer David Charman comments: “Most convenience retailers won’t have experienced inflation at these levels before, and this new inflationary climate necessitates a different mindset to running a retail business than over the last 30 years. It is key to review your business fundamentals and prices regularly, to get a clear understanding of how the cost-of-living crisis is affecting your business. It is essential to pass on price increases to customers in order to maintain your margins. Failure to do so really could put your business in jeopardy.”
5. Staffing, Recruitment and Wages
Inflation is driving up the cost of labour, not just in convenience, but in all sectors that tend to rely on the same pool of part time workers. This presents a big issue for convenience retailers, as they need to ensure they offer competitive salaries, in order to attract the quality staff. What’s more, retailers need to ensure they offer a positive, enjoyable and caring work environment, so as to reduce the risk of losing their best staff to other, perhaps more appealing jobs – it is far cheaper to retain good staff, than it is to recruit and train new staff.
In addition to the above, having a clear vision of how the business is going to progress is key to successful retailers. From Profit Calculators, Business Plans, Staff Appraisals and Marketing Tools, the Partners for Growth offers key Business Tools to support Convenience Retailers in growing their businesses.