Time To Step Up In Convenience. Again.

Another anonymous wholesaler has joined Bestway and Costcutter in voicing concern that they will face excessive competition once the Tesco merger with Booker goes through. They are right to fear the merger, but not for the anti-competitive arguments they are putting forward. Booker already negotiate hard with manufacturers, which you would expect with 5,000 distribution points up for grabs, but it terms of market share it won’t take Tesco into much more territory than they already are. The reality is that it will be the actual competition at store level that scares them, not academic concepts such as buying power.

Tesco have twice disrupted the world of c-stores and forced the competition to step up its game. It’s hard to remember now, but there wasn’t a great local convenience offer in most places before Tesco unleashed the Express format onto the sector, closely followed by Sainsbury’s

The better symbol and fascia groups upped their game in response. Spar stores started looking as good as their European counterparts and Nisa have developed more attractive formats. Indeed, Spar look ready to go again with a £2m investment fund which will help prepare for the new world after the merger. It’s a shame that many local shoppers were only deemed worthy of having better shops after a competitor came into the market, but sometimes that is what is needed to snap an industry out of complacency.

And now, more recently through OneStop, Tesco are changing the game for franchise shops. Although One Stop are managed at arms-length from Tesco, their single minded approach to finding shopper led solutions has clearly seeped into their psyche. The result is a format with clever ranging, well laid-out and good looking stores. With that kind of approach, it’s no surprising that many indie grocery owners are ditching the old guard.

Quite often all you get from a symbol is not much more than a pretty sign, some posters and a recommended shelving supplier who gives kickbacks to the wholesaler for each order placed. Creating a great store is more than just a bright external sign and some window graphics with hi-res photos of fresh produce. If you still have a poor look and feel once your inside the store, you’re disappointing your customer. This was the big mistake that Co-op Food made with their old green fascias, which created the impression of fundamental change inside when in fact nothing of note happened. Co-op have bounced back from that and their new look takes the brand inside which, coupled with steadily improving range selection and space planning, is creating shops that really do benefit their communities.

The common myth is that good quality store fitting is costly. And while many agencies try to keep that myth alive, the reality is that it doesn’t need to be expensive at all. You don’t need lots of real or fake wood and high end design, just clean, tidy and functional – something that is timeless and easy to maintain. If you approached a fit-out with a view that it should last you 20 years, but allows for cosmetic refreshes, then you will create a great store.

 

Not every customer will chose a store because how it looks, but most will be put off if the range selection isn’t right for them. For many independent retailer, this goes wrong fro them when they visit the cash & carry depot and choose by margin rather than customer.

This is where I’d expect, or at least hope, Tesco could add maximum value to the Booker operations. Cash & Carry depots are places where cash is king and the needs of categories or shoppers are completely lost. It’s where products that would never be listed by a multiple come and get masses of distribution points because there is a £1 price marked pack and a tasty margin for the retailer. The wholesale trade is dominated by traders in commodities and the idea that one of their own might start helping their retailers meet shopper needs and grow turnover is a scary thought.

After the reaction of the direct wholesalers such as Nisa and Spar, I hope that the cash and carry businesses will also respond with an improved proposition. It will require a cultural change, but could open the era for independents to genuinely cash in on the trends back to local shopping. Working collaboratively with their retailers to collate and share insights, plus doing more to tap into category insights from manufacturers – rather than just tapping them up for funding – can only benefit the sector. But it will also require a willingness from retailers to listen to category advice from a number of sources and then blend it in with their unparelled knowledge of their local shoppers. Learning to say “no” to field sale reps and turning down the huge margins on a product you’ve never heard of are the steps to creating a shop with more customers, buying more and visiting more frequently.

All great retail thrives off change. If the other wholesalers don’t put the same energy into preparing for a stronger competitor as they have into lobbying against it, it will be their own fault for driving their customers away to the new Tesco-Booker business.

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