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Retail trends â whatâs cooking!
This week I am sharing some thoughts on current retail trends We are living in a fast developing world that is evolving at a rapid speed helped by technology â and I reckon that âwe ainât seen nothing yet!â. Social Media - seems to have been around forever but when you consider that it was only in 1989 that Tim Berners-Lee whilst working at CERN invented what went on to become the World Wide Web that was donated by CERN in 1993 to the world, it is a very recent development. I believe that Social media will continue to massively influence the decision making process of the worldâs population and is still in its relative infancy. We will see phenomenal development in the coming years that will make todayâs activities look like childsâ play, such will the speed of development be. High on the importance list is Omni-channel retailing â allowing shoppers to shop in the way that suits them best and allowing them to take control of the experience rather than purely being dictated to by retailers. They can purchase online, look in store at what is available and buy then or later at home or even in the pub by mobile phone or tablet, if they want to return a product or exchange is needed this can be by post, carrier or returned direct to the store. The days where stores dictate the terms has gone, shoppers now want to be in control and the most savvy retailers are recognising this and driving profitable sales. Those who ignore the rapid changes do so at their peril. Mobile payment mechanisms such as by using smart phones are changing the payment landscape â but this is being held back by the implementation costs that retailers think that they cannot afford, whilst those who are investing are winning. It seems a lifetime away that that Exxon introduced the innovative Speedpass in the States some 17 years ago that was a simple transponder that customers kept on a key ring and when a purchase was made, the gadget automatically sent a signal to the credit card account and applied the charge. With over 10,000 fuel sites using the technology and even MacDonaldâs trialling 400 restaurants, this was overtaken by other faster and more secure EFT processes and faded into obscurity especially when a group of students from John Hopkins University broke the proprietary encryption algorithm used by the Speedpass. What a shame that we are still waiting so long to see rapid and secure smart phone payment technology as the norm. PayPal Beacon will make paying all but invisible. It will be faster than using a credit card or tapping a mobile phone at the point of sale. People don't have to be connected to a Wi-Fi or rely on the mobile network to be recognised when they enter a shop. And, because it takes advantage of Bluetooth Low Energy technology, PayPal Beacon won't drain mobile phone batteries the way other geo-fencing services do. Locational technologies such as Applesâ new iBeacon can alert you when approaching or leaving a location with an iBeacon. In addition to monitoring location, an app can estimate your proximity to an iBeacon (for example, a display or checkout counter in a retail store). Instead of using latitude and longitude to define the location, iBeacon uses a Bluetooth low energy signal, which iOS devices detect. But, Philips the electronics giant are aiming not to be outdone, they are piloting a lighting unit that includes a built-in beacon that can relay location and product information to smartphones. By opening a companion app, shoppers can see a map of the store they're in, including their exact location as determined by the beacons' communication with their phone. From there, a shopper might search for a product they're looking for, while the beacons track their movement and provide directions to the right aisle. Letâs not forget the Street food market that is growing at a rapid rate of knots, maybe faster in the major cities such as London than others but just watch this develop apace with many niche operators exploiting consumersâ quest for innovative and differentiated cuisine from around the world. Maybe midwinter in the UK isnât the ideal place to have a street pitch however interestingly, property landlords such as the owners of the Trinity shopping centre at Leeds where, in addition to the usual mix of restaurants and takeaways at the Trinity Kitchen have a busy location inside specifically for street food. Every month they lift five of the UK's very best street food tradersâ vehicles into the 1st floor of Trinity Leeds, above the Boots store. Genuine street food vans, carts, sheds and trucks taking residency for one month each before they lift them back out and bring in another five, ensuring that there's always something new and unique to tantalise shoppersâ taste buds. Each street food trader has a really unique story behind them and the food they serve is of the very highest standards. I expect to see the superb Hay⌠- (pronounced like aye, not hey, it is Yorkshire based!) serving delicious South American cuisine in Trinity Leeds later this year - Twitter @haylatinamerica Mobile businesses will continue to boom, where they can be operated from a vehicle without the need for expensive premises and at the same time delivering a greater service level. A recent example being when I had a puncture requiring a new tyre, I called out a mobile fitter who operated a business that was almost totally self-contained with the front seats of the van being his office. Immediately on my making payment by card using a hand held terminal, the invoice dropped automatically into my email in box. From call out to being back on the road â that included the owner operator travelling to obtain a replacement tyre was just 87 minutes, now thatâs service. Twitter @HarrogateTyres Mobile payment technologies, backed up by Social media makes operating not just food vehicles but flower sellers, fashion vans and even mobile beauty salons complete with retracting couch, nail desk, side seating and spray tanning area all part of the UK retailing scene. Card based Loyalty schemes are losing the sparkle that drove them in the early days and schemes must be much more dynamic in future to retain consumer loyalty. Millions of shoppers have a Tesco Clubcard but holding the card doesnât drive real loyalty any longer and whilst the cards are used in-store, this is just to claim what shoppers see as their justified reward. The Financial Times reported recently that every time one of Britainâs 16m adults swipes their Clubcard at a Tesco checkout, the retailer adds the information to a giant electronic brain that processes the data into a sophisticated profile of the customer. My view is that Dunnhumby who crunch all of the Tesco data and now wholly owned by Tesco, possibly know more about the UK population than is healthy. Their data mining has been described as invasive and whilst this goes to show just what Tesco will do to retain their retail domination, maybe it is a salutary lesson to other retailers to get to really understand their customers. The move to more specific rewards for shoppers will win the day where greater loyalty to a retailer will be rewarded and those retailers who provide the highest levels of customer service will not just retain but grow their customer base. This is another massively changing arena. Click & Collect continues to develop and the majority of managed retail chains now offer this service that has been credited as driving profitable sales from time pressed consumers. Coupled with services such as Collect+ from PayPoint, this provides a convenient way to collect and return parcels ordered from over 260 mail order and online retailers from more than 5,500 PayPoint stores across the UK, in association with Yodel, the parcel delivery company, allowing the convenience sector to capitalise on the growth of this channel. Twitter @CollectPlus In my Blogs, I may sound like a stuck record player (whatâs one of those!) however one of the biggest points that is always vital is that retailers, regardless of the sector in which they trade must really strive to employ and constantly train the very best people â who will always be a key determiner in the reason why shoppers will visit retail outlets. Time pressed shoppers need a fast and efficient service and will not wait to spend their money, they will go to where they gain the best levels of service. Furthermore, we all naturally like to be treated well and we normally respond to good service by returning again and again. In turn the good employees should not worry that they may be replaced by a hand held terminal, the reality is that system driven processes whilst logical, are constrained by the parameters written into the code that they operate by â whereas good humans possess the ability to think laterally and compassionately and can interact with customers and when you consider that a human brain has the processing power of about 100 million MIPS (Million computer Instructions Per Second) it is a whole lot more powerful âsize for sizeâ than any computer. People are safe for the time being! Twitter @JohnHeagney
Great customer service â The Customer is King
This week I am sharing some further thoughts on customer service â or the lack of it and the impact on cost! Great customer service should be the norm â but sadly this just doesnât happen often enough. When did you last go into a shop or pub and experience really exceptional customer service? Probably longer than you would care to remember. I travel fairly extensively and witness a huge variation in the standards of service, whether in the UK or overseas. What I really enjoy is exceptional customer care and service â this interestingly drives sales and therefore profit to these businesses â so why do we so often experience very average service? Is this all down to training? Whilst training is crucially important, the start point is actually selecting the right people to be part of a team. When recruiting, I believe that too many employers are not demanding enough because it is all too easy to select the first pair of hands to walk through the door â and that can have a disastrous long term effect on the businesses. Employers need to start with the right material and select people who are smiling, interested and possess a naturally happy disposition. Being smiling and happy is infectious and if a person smiles at you, it is almost impossible not to return a smile, whereas a miserable person giving out negative vibes is more likely to have a negative effect. Given the option of visiting two shops or pubs, which would you prefer to enter? One where you are recognised, greeted with a smile and a âhello, how are youâ or one where you never receive recognition? I donât have to confirm the answer. A couple of years ago, my wife and I went into a local pub and were served by the sour faced landlady, we went back in a week later and then again a further week later â and there was not the slightest recognition that we had ever been in before and there was more likelihood of the Pope getting married than us receiving a smile. We have only been back once since then. Counter this with another pub in the opposite direction, on entering you are immediately given eye contact even if there is a packed bar and a queue â and then served efficiently with a smile and banter â this encourages return visits and achieves this. So which is the busier â itâs obvious and not surprisingly, the sour faced landlady is no longer running the pub. The irony with good service or the lack of it is that the employers are probably paying the surly staff the same pay rates as the good staff â so why the huge differentials? Good employers employ good staff and then they look after them by treating them well (not necessarily paying them more), they select the best staff that they can find and then give them respect, train them to do the job to the best of their ability. Not surprisingly this is repaid in bucket-loads by staff staying long term and delivering a higher level of customer care and this in turn delivers great continuity that customers like and respond to. Furthermore, the cost to employ a good and diligent member of staff is effectively lower than a poor member of staff because the good people are generally more productive per working hour, attract more return customers and so are of far greater value. Excellence doesnât just happen, it is embedded into systems and processes and nurtured. The worldâs biggest brands achieve their brand positioning by being the best and through not accepting mediocrity, my plea to everyone in the service sector to do everything possible to continue to raise the overall standards of customer care. The payback will follow.
Shoplifting â Out of court penalties for shoplifters
This week Iâll be sharing some further thoughts on the plague affecting retailers, shoplifting â and out-of-court penalties.
I have previously written and make no excuse for repeating that one constant in the retail food sector that has for many years been a major issue to retailers small and large is the quaintly named âShopliftingâ. What a misnomer. This is plain and simple theft and the perpetrators are thieves. The CEO of the Association of Convenience Stores (ACS) â James Lowman has raised this issue on a number of occasions and the industry should thank him for keeping it on the agenda. In the latest copy of The Grocer magazine, it is reported that he has urged the government to limit the use of out-of-court penalties to [only] first time shoplifters. My views are a little stronger â whilst this is referred to as âfirst-timeâ, the reality is that in the majority of cases, it is just the first time that they have been caught. The ACS CEO was responding to the Ministry of Justiceâs review of out-of-court disposals where in a submission he said that regular use of penalties, which Police use to avoid taking offenders through the court system âperpetuates the myth that shop theft is a victimless crimeâ and did not act as an effective deterrent. The Grocer refers to James Lowman stating âRetailers are not adequately consulted on the penalties and cautions issued to shop thieves, resulting in too many repeat offenders not being dealt withâ and he urged the Ministry of Justice to take action to ensure that the out-of-court penalties are only used for first-time offenders and asked for a simplification of the out-of-court disposal system so that retailers and the public can understand how offenders are being managed. I have previously laid the blame very firmly at the door of the judiciary. Shoplifting is still seen by those who have little real knowledge as insignificant, the reality is far from this â there is a huge industry out there of people who shoplift as a career â in the knowledge that even if they are caught, they will probably receive a number of cautions before they are taken to court and even then stand the chance of just getting âa wrap on the knucklesâ. I am aware that some will say that the judiciary have many other more important issues to handle and I do not underestimate these, however to turn a blind eye is akin to condoning. The time has come to act and allow just one out-of-court disposal â and if there is any repeat offending I believe that the judiciary must work to impose tough sentencing for theft in all of its forms â shoplifters are more likely to be deterred if they actually have a much higher chance of being caught, prosecuted, fined and even jailed for transgressions. The law abiding population of the UK also need to take a stand and say that enough is enough. Why should these thieves get away with theft and why should the staff in stores throughout the country who are going about their lawful employment be subjected to this unsavoury practice, at times being subjected to violence and aggravation from shop thieves? The Home Office statistics reveal that 94% of all incidents against the retail and wholesale sector are theft related. Surely, this is evidence enough for a hard line to be taken?
Has the UKâs love affair with the large out of town supermarkets lost its sparkle?
This week I am putting forward some thoughts following the Christmas results issued by the major supermarket groups The results from the UKâs supermarkets this week has seen share prices fall on the back of lacklustre figures at the nationâs large supermarkets. Whilst not all bad, there will be many uncomfortable conversations at head offices where discussions will be taking place as to why their strategies had gone wrong following some serious slippage on sales and therefore profitability. Tesco, once the nationâs favourite, reports a sales a decrease of 2.4% in the UK, a huge reversal when this time last year they were reporting the strongest growth in UK Christmas sales for three years. When you also consider that this year Tesco report a ÂŁ450m UK online sales in just six weeks, this shows the enormity of the sales decrease at the chainâs large stores â and especially as they are claiming âup 25% Positive LFL sales growth in Express convenience store businessâ. Morrisons with a decline of 5.6% are well aware of their shortcomings and the mountain that they have to climb with their new home shopping development with Occado and their catch up plans by getting onto the convenience store band wagon â albeit very late, they will probably be in a much better place this time next year. Interestingly, whilst M&S have again reported that its underlying sales in core general merchandise fell with a worse than expected decline of 2.1% over three months, strikingly and perhaps embarrassingly for Morrisons and Tesco - M&S's food sales were 1.5% higher on a like-for-like basis over the eight weeks of Christmas, and 1.6% higher over the third quarter of its financial year. Waitrose, part of the employee-owned John Lewis Partnership, said on Wednesday that for the five week period ending on December 24th underlying sales excluding fuel were 3.1% higher than last year, this is significant insofar as this would seem to indicate that price (as at M&S) is not playing a huge part in the Waitrose shoppersâ decision as to where they spend their money. The discounters appear to have continued to perform well by delivering a strong value proposition and the convenience sector has been buoyant as continued improvement in their overall offerings shine through, allowing consumers to shop with confidence in high quality community stores â however the bottom end of the convenience sector, operated by weaker retailers not delivering a strong consumer offer will have, not surprisingly have seen sales declines. Even the beleaguered Co-op convenience stores delivered like-for-like sales growth of 5.4% at their convenience stores whilst Nisa said sales in December grew 15.3% year on year. So what is driving the mass exodus from the out of town superstores? Consumers are becoming increasingly savvy and whilst it is reported that 20% of the Christmas spend is now on-line â just how robust this figure is I cannot confirm. The debilitating drag around the large, faceless and impersonal superstore where shoppers are tempted by âbargainsâ seems to have lost its sparkle. Shoppers are being attracted by the strength of the discountersâ offer, increasingly confident that the smaller local stores can satisfy their requirements at reasonably competitive pricing along with reliable availability of stock, delivered by friendly and interested local staff. They are also making more use of home shopping and changing the dynamic of their shopping that keeps them more in control of their spending. There is a mad scramble by the UK multiples to get further embedded into the previous preserve of the independents - the convenience sector in answer to the cold, faceless and bland out of town âsuperstoresâ that are finally showing serious signs of falling out of favour with the UK shoppers through diminishing sales â it has been a long time coming.

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Who perpetuates the price paranoia that many food retailers believe exists?
This week I am putting forward some thoughts on price paranoia and is price the most important driver of customers to stores? Who perpetuates the price paranoia that seems to be constantly prevalent? Let me be very clear, it is very important that retailers provide a competitively priced offering, consumers soon realise if they are being charged excessively and will vote with their feet away from these retailers, however there has to be a balance to be found between acceptable pricing and what is deemed to be excessive. In the latest copy of The Grocer magazine dated 14th December 2013, the annual âChristmas Grocer 33â report positions Tesco in the lead with the lowest comparative Christmas trolley shop cost, beating Asda who have previously taken the top slot for the last four years. So how valid is this? Delving deeper into the results, Tesco at ÂŁ135.80 are 41p cheaper than Asda and Waitrose takes up the bottom position at ÂŁ147.55 â and as The Grocer states â are a whopping ÂŁ11.75 more expensive than Tesco. This will not translate into Waitrose having a poor Christmas trading period â far from it, their checkouts will be packed with shoppers happy with the Waitrose offer and experience. Morrisons were closer to the two leaders whilst Sainsburyâs were just ÂŁ2.41 away from Waitrose. Maybe Tesco just tactically outfoxed and beat Asda? The fact is that just one product, Barefoot Shiraz was ÂŁ1.26 cheaper at Tesco than at Asda and this was more than enough to win the day. Anyone who thinks that shoppers are really aware of the minutiae of each supermarket groupsâ pricing are way off the mark. To think that price is the âbe all and end allâ is folly. My view is that too many retailers are price paranoid, they think that they have to aim to be the cheapest and the effect on their margins can be catastrophic. The old saying âturnover is vanity and profit is sanityâ is just so very true. So why do shoppers choose the retailers that they shop with? It is very much more than just price. Yes, the discounters are trading very well at the moment and this shows no evidence of changing whilst the economy remains generally tough. The growth of the discounters has been fuelled by the pressures of the economy and they deliver a simplistic shopping model, small sku (stock keeping unit) count coupled with low cost of goods, frequently not brand leading and aggressive point of sale material that reinforces in the minds of shoppers that these stores are âcheapâ. Consumers are deal savvy, they want to be comfortable that they are able to pick up deals, they want to know that they are getting value for money wherever they shop but there are many other elements that decides where they shop, and price is lower down the scale than many retailers believe. Convenient location, clean bright stores, great well trained staff who happily interact with and care for customers are crucial in the decision making process in the minds of shoppers, all supported by a strong in-store promotional programme that subliminally tells shoppers that the store is competitive are all key, but trying to be the cheapest is not the road to success. The smart retailers are those who understand their customers better, are able to generate a higher gross margin through the sales mix and pricing policies of the goods that they sell and because they offer an overall stronger complete package than their competitors. A great case in point is my local pub. This has a great atmosphere, good friendly and generally attractive bar staff who smile at and chat with customers whilst pulling their pints and a landlord who makes them feel welcome. Contrary to the general picture of pubs, this one is almost always busy and additionally produces great, well cooked and presented food. This is not rocket science but my local does all of this very well and deserves to be busy. Does the pub sell on price, far from it on both food and drink. Whilst Wetherspoons (another good business with a differing model albeit geared up for volume selling) sell beers from ÂŁ2.15 and have a great reputation for selling low priced beers, in my local we are paying ÂŁ3.20 a pint and more. Why? Because of all of the points above coupled with convenience and the fact that we are well looked after â and the real ales are well kept. Adding just a few percentage points to a retailersâ gross margin through intelligent price modelling can drive major change to the business and ironically can then build sales even further because with a little more margin to play with, stores can then add a few more of the niceties â and justify a few more hours for staff to deliver even higher customer care in turn retaining more shoppers. Waitrose shoppers use the chain in the knowledge that they are far from the cheapest because they trust the brand, the Waitrose stores offer a consistent quality of shopping, a tremendous credible fresh food range delivered by well-motivated staff â hardly surprising as they are partners in the John Lewis business, the chainâs owner. They all know that the better the business does financially, the better that they do personally. John Lewis state âthe most tangible advantage of being a Partnership is the annual bonus, where we distribute a proportion of profits to Partners as a percentage of salaryâ â and thatâs a great motivator. So, why all of the price paranoia? Some of the red top newspapers seem to enjoy making out that food retailers are over-charging their customers and insinuations on TV do not help however the reality could not be further from the truth. Financial returns in the retail food sector are far from generous especially when compared with other sectors, even in retail. Independent food retailers especially need to look carefully at their pricing policies â and understand just why shoppers chose them, they will almost certainly discover that price is much lower down the list of reasons why shoppers pick their stores and they need to re-focus and set targets to increase the overall gross profit of their businesses as a New Year resolution and have a financially better future. They need to lose the paranoia that all shoppers want is the lowest price â if proof is needed, not a bad start point is to survey shoppers asking what they have just paid for the items in a basket or trolley, retailers will be shocked to hear that most shoppers do not have not a clue apart from a few key deals. Paranoia, much more in the hearts and minds of retailers than their shoppers and price is not the most important driver of customers to stores.
The time has come to halt the decimation of High Streets by out of town shopping developments
This week I am putting forward some thoughts on the effect on towns throughout the UK by the lack of controls on out of town shopping developments. Governments of all political colour have a wonderful knack of saying what the population want to hear â and then failing to carry out their plans â in some cases possibly due to strong political and financial pressure âwinning the dayâ. The ACS (Association of Convenience Stores) have recently published an excellent and independent report that they commissioned â âRetail Planning Decisions under the NPPFâ produced by Jonathan Baldock, a highly qualified Town Centre and Retail Planning consultant that should cause great concern to everyone who wants to preserve town centres throughout the UK. I recall visiting the USA in the 70âs and witnessed the debilitating effect that the new Shopping Malls were having on the shops and infrastructure of towns that previously had vibrant, living centres. Having travelled extensively in the States in more recent times, the situation has declined to the point that many towns seem to have given up the fight and are in terminal decline. The same fate will tear the hearts out of towns throughout the UK unless there is a big wake-up call and high streets are allowed to once again prosper. The government introduced the NPPF (National Planning Policy Framework) in March 2012 to much applause, with the aim of having the guiding principle of âTown centre firstâ â and so what has been the effect? The ACS report finds that 76% of new retail floor space has been located outside of town centres. Furthermore, in total, 85% of applications for food retail stores were approved and the majority of these were again for out-of town sites. Out of 50 developments reviewed, only 7 were refused planning permission â of which 3 were refused because there was a competing similar proposal in the same town that was preferred. James Lowman the ACS chief executive said âThis report paints a disturbing picture about planning decisions being driven by developers rather than local people, and destroying high streets up and down the country, the NPPF is simply not being applied properly, as under-resourced councils fail to get to grips with making coherent plans and developers fill their bootsâ. We are in a situation where local councils are financially struggling with reduced budgets so when the crunch comes with a developer applying for planning consent, the risk to the council can be financially high as developers with deep pockets will just keep on chipping away by applying, going through the appeal processes in the knowledge that the councils generally cannot take the financial risk of defeat, so they too frequently capitulate. The Chancellor, George Osborne announced a number of relief measures including a cap on business rates of 2% from April 2014, discounts for those taking on empty shops and the welcome opportunity for retailers to pay rates in 12 monthly instalments rather than quarterly. These are all welcomed and as he said in his speech last week he wants âto get the vacant shops that blight too many town centres to open again, I am introducing a new re-occupation relief that will halve the rate for new occupantsâ. So, going back to the ACS report, it paints the picture that the Governmentâs âTown centres firstâ policies are failing and they report that Councils across the country have approved millions of square feet of new out of town retail development. There is however a great âhead of steamâ building and the ACS reports that a strong coalition of organisations have joined them including the Federation of Small Businesses, Campaign to Protect Rural England, British Independent Retail Association, Rural Shops Alliance, Association of Town and City Management, Action for Market Towns and the Town and Country Planning Association and they have collectively written to Eric Pickles MP, the Secretary of State for Communities and Local Government calling for intervention to ensure that applications are blocked when they fail planning tests and a requirement for the Secretary of State to step in and review decisions that put town centres at risk. The lovely market town of Stokesley in North Yorkshire is now the scene of a planning application that will certainly be a real battle royal. Developer Terrace Hill are planning a supermarket development on the outskirts of the town along with a petrol filling station, as well as access infrastructure including a new roundabout junction on the A172. In his recent announcement, Philip Leech, Chief Executive Officer of Terrace Hill, said: "Having completed the development and sale of three substantial foodstores earlier this year, totalling 189,265 sq. ft., the conditional acquisition of this site in Stokesley adds to our pipeline of foodstore developments. The pipeline now comprises two large developments in the planning process which are at Herne Bay and Middlesbrough, totalling approximately 225,000 sq. ft., and a number of others which are under contract or review. We see considerable further opportunities in this specialist sector where we are firmly established as one of the market's leaders." So he seems confidant of success! What will be the local effect? Stokesley is a rare gem with numerous independent shops, butchers, bakers, banks, building societies, jewellers, bistros, cafes, paper shops, a petrol station, takeaways, fish & chips, fashion shops, travel agent, estate agents, betting shop, electrical shop, opticians, a cobbler and key cutter, charity shops, chemist, bike shop, Boyes, hairdressers, Police Station, sandwich shop, churches, dentists, beauty salons, a weekly market, a monthly Farmers Market, two Co-op stores â convenience and supermarket, the list just goes on and on. This town has heart, is vibrant and must not have this beating heart torn out in the quest for yet another out of town development. Duncan McEwan, Head of Retail and Leisure at Terrace Hill, said: âThe proposals for a foodstore at Mill Riggs would not only provide greater convenience for locals, but will represent a significant economic boost to Stokesley and the potential for spin-off trade for other local businesses.â I wholly disagree. The delicate economic balance of Stokesley would be severely damaged if this development goes ahead, the current large Co-op could surely not withstand the onslaught of the new site and the chance of it surviving would be slim. The new food operator would divert more shoppers away from the High Street and the decline would start, as has been witnessed many times over, not just in the UK but as I referred at the start of my blog, in the USA. Maybe the solution would be for the Co-op to sell their large store site to the incomer who aims to occupy the new development on the basis that the Co-op are not as good an operator as the likely incomer, the store sizes are very similar. Whilst this would not please Terrace Hill, it would suit the majority of the residents, help plug the Co-op balance sheet and would solve the problem, preserving the high street and in the longer term not leave a closed site when the Co-op buckles under competitive trading pressures. How many times have we read the ridiculous and fantasy based PR spin words used by the major multiples and Duncan McEwen when he stated âThe project would create around 140 jobs, with more during construction.â The first part of his quote is utter rubbish. The UK supermarket operators are some of the best and most efficient in the world. Yes, the new Stokesley site may create 140 jobs but at what price? The actual effect would be an overall decrease in employed people, there would be shops in the High Street closing, job reductions in others and overall less people will be employed. The new 140 jobs would mean a net decrease in jobs when the losses are taken into account and a high street with its heart ripped out. Let us hope that the efforts and voice of the very substantial and growing number of opponents of the Stokesley development win the battle that is underway, and let their action be a model for the future opposition of other developments that put the fragile infrastructure of towns throughout the country at serious risk. In parallel, let us also hope that the government re-focus on NPPF and really put into action the guiding principle of âTown centre firstâ.
Is it still possible to start a convenience store from scratch and take on the big guys?
This week I am putting forward some thoughts on retail food start-up businesses and can this be achieved. Although Napoleon was credited with saying that âBritain is a nation of shopkeepersâ â you have to go further back in time as this was probably first coined by Adam Smith in his 1776 book - The Wealth of Nations. The UK convenience sector is, as I have stated previously extremely buoyant and there are very many examples of successful retailers operating good businesses making substantial profits. How easy is it for a new entrant? The first point that needs to be made that no food retailer was ever successful by having the wrong location, by being average or not working hard. It is critical that the new entrant has an understanding of the retail food sector, a solid business plan and sufficient capital or financial backing to develop the business. An under-capitalised business is likely to hit a credit glass ceiling that is extremely difficult to break through and this can stall growth. Virtually every business needs capital and this is one area that is all too often overlooked in the scramble to open a site. More of this later. The old maxim â âlocation, location, locationâ is paramount and time must be spent finding the right site. Is this to be freehold or leasehold? With a start-up business, the likelihood will be leasehold as this cuts the immediate cash outlay costs but on leasehold premises many retailers do not understand that signing a lease commits to paying rent for the duration of the lease or at least until a break point. Will the site to be a start-up from scratch in an empty shell or is this to be achieved through buying an existing business? With the former, this can be best way to build asset value providing that the right location is chosen. There are very many variables that must be taken into consideration, is the size of the store capable of delivering the sales that are required to bring in the gross profit needed? It is not much more difficult to run a 2,200 sq. ft. store than a 1,000 sq. ft. site â it could in some cases even be easier to run the larger site. What competition does the store have and are there other stores nearby that another operator could open as a c-store and take away the customer base of the fledgling business? Is there categorically a demand for a store at the location that is being considered? The symbol groups have varying processes to assess sites â having studied most groupsâ output reports, in my opinion not all are credible nor do some really show a potential retailer the real picture and some purely desk top ones can leave too much information that can be wide open to interpretation for the new retailer to decide. Which symbol should the retailer join? Stick with the big ones that are showing real growth and that are the best. Look at the groups that have really successful businesses within their membership. Talk to the staff from the symbols to ensure that these are individuals that the prospective retailer would be comfortable working and will give the support that is needed. Talk to retailers in the symbol groups and ask are they happy with the packages, the cost of goods, promotional programme, back-up support, rewards and the overall profitability that the groups deliver. When it has been determined which symbol the retailer is planning to partner with and the financials have been shared and providing that the capital base and business plan is sufficient to establish a line of credit that will allow sufficient stock to flex purchasing as sales grow, the show is getting closer to being âon the roadâ. Refitting a store is critically important to the overall success of a store and the layout must maximise the potential sales and profitability. Most good symbols should be happy to provide three quotes from differing approved and accredited shopfitters all working to an identical specification that has been agreed with the retailer by the symbol group team. Costs can vary purely due competitive pressures and the amount of work that the shopfitters have on at the time and so be prepared to do some horse trading to get the best price. Staff, it is critical to select the best and never just the first people that come for an interview because they are a pair of hands, it is vital to have staff who are trained or want to be, intend to be with the business for the long term, are âpeople focusedâ and are scrupulously honest. References must be checked with great care. Marketing the store prior to opening is crucially important to ensure that potential customers are aware of the opening â and when they come in they are not disappointed, every customer must be looked after to ensure that they not only come back again and again but they also tell their friends about the store. Quality merchandising and ranging that matches the location demographic is very important and the symbol group should be able to provide skilled teams to work with store staff to deliver perfection in these areas. On opening the store must be âpacket perfectâ â and this should be the case at the start of every day of the week ongoing. Prior to opening day, extensively test that all of the systems are working properly and that every product in the store will successfully scan through the tills, there is nothing worse than a new store with big queues of unhappy customers waiting to pay and being blocked by a poor checkout service. So, in conclusion the answer is yes, it really is possible to do a start-up and be successful in the face of major multiple competition and there are many examples nationwide that prove this well. But, this is a long and hard journey, a good owner operator with passion, drive and customer focus will invariably outperform the bland and faceless multiples â and the end financial results are most certainly well worth the effort.
Duty fraud â My plea to the government to take sufficient action to halt this criminal activity
This week I am putting forward my thoughts on Duty fraud, the lack of action to resolve it and a plea to the government to take effective action to end this abuse by the criminal fraternity. One huge issue that no government has really managed to resolve is the massive problem of duty fraud that seems to be running almost out of control. My comments are not intended to make any criticism of HMRC â successive governments have cut budgets and headcount and allowed duty fraud to prosper and if the government is determined to crack this issue, it needs to give the authorities the manpower, processes and funding to stop it. Duty fraud manifests itself in many ways, from alcohol, tobacco and cigarettes that are legitimately manufactured but then illegally stripped of duty through theoretical export scams and then sold on the UK market with neither duty nor VAT being applied, through to fake products that not only hit the streets without duty but can be a very serious danger to life. When counterfeit stock, often produced in temporarily rented factory units has been impounded, bottles have been found to contain lethal levels of methanol, the favoured ingredient of the organised gangs from Eastern Europe running networks of bootleg distilleries across Britain. Methanol is a highly toxic and volatile form of alcohol. Drinking just two teaspoons can render you blind. Exceed that amount, and death is rarely far away. At election times, each potential incoming government promises to get tough on these issues and then they do little to stem the flow and therefore the criminals are allowed to prosper. Why is this such a difficult problem to solve? Between July and September, HMRC and the Border Force seized 1,799,790 litres of alcohol, of which 1,277,448 was beer, with a revenue value of ÂŁ4.6m. This is purely the miniscule tip of an enormous iceberg. It is very pleasing to read that in Scotland as reported by the FWD (Federation of Wholesale Distributors), a joint HMRC, Trading Standards and Police taskforce has raided more than 300 alcohol retailers across the country and duty-avoided or counterfeit stock was discovered in nearly half of them. Almost 100,000 litres of alcohol have been seized by the authorities through this action. FWD Chief Executive James Bielby said âThis enforcement action demonstrates that retailers can pay a very high price for stocking illicit alcohol, even if they bought it in good faithâ. I am not saying that the authorities south of the border are not engaging to resolve these issues â they are but are woefully short of manpower to bring an end to this miserable trade. The Tobacco Retailers Alliance also say that the illicit trade in smuggled tobacco is very damaging to legitimate businesses. They cite that it causes a loss to the Government of ÂŁ8.5 million every single day â that is money which would otherwise be spent on schools, hospitals and public services. It deprives legitimate businesses of customers, as shops cannot compete with street price tobacco. Criminals who sell smuggled and counterfeit tobacco are more likely to sell tobacco to under-18s. The extent of the black market and the widespread availability of cheap tobacco product undermines the Government policy of applying high taxation to reduce smoking prevalence. My personal view is that retailers engaging in these activities know exactly what they are doing and the risks that they take â if they buy from the back of a white van without a legitimate invoice, they have no excuse. If the price that this stock is being touted at is too good to be true â then it almost certainly will be. Retailers dealing in illicit goods must be stopped and tough enforcement action must be taken. They deserve the full weight of the law to come down on them hard with both personal and premises licences being revoked, stock seized and heavy sentencing applied. There has to be a real deterrent to stop this dirty trade dead in its tracks. A rap on the knuckles will do nothing to stem the tide of illicit stock being sold. The punishments must be sufficient to ensure that the risks of engaging in these activities are not worth consideration. Law abiding retailers who only sell legitimate stock need to be protected from these villains. Business is tough enough for legitimate retailers who pay duty because they buy from legitimate sources, apply VAT and pay staff legitimately through proper payroll systems, not âcash in handâ and then pay the authorities the taxes and duty that the laws of the country demand and the UK economy requires to balance the books of UK Plc. Let us be very clear, this activity is not just a few chancers smuggling goods in from abroad on their return from holiday, this is serious organised crime and the criminals must be stopped in their tracks. This can only be achieved by a concerted effort by the incumbent government through taking a very firm line on criminality. This is my plea to the government. Effective control will not be a cost to taxpayers, the additional cost of the manpower required will be recovered many times over through the taxation system. So, let us all support the good, honest retailers and wholesalers who play a straight bat and only deal in legitimate stock. If you as a shopper have a gut feel that a product offer is âtoo good to be trueâ, then walk away and do not buy the product â you really do not know what you may be buying. Retailers, lobby your local MP to support you and the vast majority of the decent, hard-working and legitimate retailers in the UK by helping to halt duty fraud activities by putting pressure on the government to take duty fraud much more seriously and support the law abiding retailers.
Online â What will the impact of âonlineâ be on independent c-stores?
This week I am putting forward some of my thoughts on the impact on independent c-stores from âonline retailingâ The UK multiples continued march for domination of the food market continues unabated. Tesco are developing purpose built e-stores to handle the ever increasing volume of this sector of their business. With online sales annual growth of 13% and having recently opened the sixth dotcom only store at Erith and with nearly 200 stores now offering Click and Collect drive through collection points â they are clearly in the lead. Morrisons have their work cut out and are playing catch up in terms of not just developing their convenience store numbers but especially their online plans. They recently reported that sales were continuing to suffer because they do not yet offer online deliveries. This is all due to change following to their new romance with Occado, the online retailer who has yet to make a profit despite burning through large sums of shareholdersâ funds to date when they jointly launch their online service. This is planned for January with the start of food deliveries in Warwickshire, before rolling out the service to other parts of the country and they hope to cover 50% of UK households by the end 2014 and 70% in a couple of years. It seems to me that Occado needs Morrisons as much as Morrisons need Occado. Sainsburys, Waitrose and Asda are all running fast to try to catch the horse leading the charge â Tesco, while the sleeping giant, the Co-op, only delivers shoppersâ bags that they have bought and paid for in store in a small number of locations. Not exactly high tech. What is the impact to the UK c-store market? Maybe the real question should be âdoes the online activity of the multiples draw from their own core sales or is this taking away sales from the convenience sectorâ? The answer I believe lies with the operators of the stores in the convenience sector. If they offer consumers a good service, fair pricing, great availability in excellent stores that are staffed by well-trained teams, then the convenience operators do not need to have undue concern. Shoppers will support good local stores â and will continue to shun the average and poor, other than for absolute distress purchasing, and deservedly so. Yes, online does chip away at the overall market but I believe that the largest damage is done to the major multiples in terms of taking away sales. Will the independents emulate the multiples home shopping offer? Thatâs highly unlikely on many counts. Home shopping demands near perfect stock availability of an extensive range as consumers become more demanding. Tesco claim that they have 20,000 fresh, grocery and household products available for delivery in 2 hour slots. The independents could scarcely guarantee this on 10% of that depth of range so an immediate flaw could open up in the independentsâ offer as a small range would cause credibility issues and shoppers would be more inclined to stay with the operators with the broadest ranges. The infrastructure costs to the independent are also disproportionate to the potential financial returns and makes this a high risk strategy that few if any will really take the risk on. For anyone really contemplating entering this market â just read up on Occado and that will be enough to persuade you otherwise. So, my view is that the good independents need to stick to doing what they do best, operating great convenience stores and leave the multiples to do what they do. When you look into Tescoâs trading profit as declared in the interim trading results for the 26 weeks to 24th August 2013, in the UK alone, profits of ÂŁ1.131Bn were made, this equates to ÂŁ43.5m a week or ÂŁ6.214m every day. Put the Tesco profit (not turnover) into context, this is substantially larger than the turnover of most of the leading symbols in the UK and therein lies the issue â with such massive profitability, Tesco are untouchable. They have deep pockets and are an unstoppable force who will continue to dominate the marketplace, just as they have the general retailing and online shopping markets - what will be next? The impact of online to the convenience sector â minimal to the good operators in the medium term. Shoppers will continue the drift more to supporting the good convenience operators with the independents still having the largest share of this market.

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Shoplifting â Time for action?
This week Iâll be sharing some thoughts on shoplifting â what drives it, who does it, what the future looks like and how this could or should be changed One constant in the retail food sector that has for many years been a major issue to retailers small and large is the quaintly named âShopliftingâ. What a misnomer. This is plain and simple theft and the perpetrators are thieves. This week there has been much coverage on TV, radio and in the press on the impact of shoplifting â and according to the latest âGlobal Theft Barometerâ produced by Euromonitor and funded by Checkpoint Systems who claim to be âa global leader in shrink managementâ, this costs ÂŁ3.4Bn in the UK or ÂŁ124.60 per household. Interestingly the latest report refers to âmiddle Englandâ joining into the active group participating in theft, so maybe this is a case of âwhatâs good for the goose..â? In reality this is nothing new and shoplifting spans all demographics. Furthermore and interestingly, Professor Joshua Bamfield, director of the Centre for Retail Research says that âmore people are stealing and they are stealing moreâ. In the food sector bacon, meat, cheese and coffee have always featured high on the shopping lists of thieves with high value items such as spirits being a popular choice if they can manage to get their hands on these items that are frequently security protected. The uninformed may make assumptions that shoplifting is rife in locations servicing lower socio-demographic groupings, this is not necessarily the case and there are many tremendous examples of communities who are highly supportive of their locally owned and staffed stores and this can have a very positive effect. There is also evidence that with the right engagement between retailers and the local community policing teams can pay dividends and also that it is becoming frowned upon by communities if people are seen shoplifting and then trying to peddle their ill-gotten gains in the local pubs. The role of the community must not be underplayed. Much theft is drug related â a person âneeding a fixâ and not having the money to acquire this are safe in the knowledge that they can go into a food store, help themselves to stock and then sell this on, turning it into cash in a local pub for a small percentage of its actual value. The Police know full well which pubs these transactions take place but either donât have the resource or the will to act to stop these acts. I lay the blame very firmly at the door of the judiciary. Shoplifting is still seen by those who have little real knowledge as the little old lady pocketing a tin of salmon. The reality is far from this â there is a huge industry out there of people who shoplift as a job â in the knowledge that even if they are caught, they will receive a number of cautions before they are taken to court and even then stand the chance of just getting âa wrap on the knucklesâ. I am aware that some will say that the judiciary have many other more important issues to handle and I do not underestimate these however to turn a blind eye is akin to condoning. The judiciary I believe, must work to impose substantially higher sentencing for theft in all of its forms â shoplifters are more likely to be deterred if they actually have a much higher percentage chance of being caught, prosecuted, fined and even jailed for persistent transgressions. I welcome views as to the potential effect of taking a very hard line on shoplifting and I believe that this can only have potentially positive outcomes â and I do not mean just applying higher fines but using prison as a real deterrent â as fines could just lead to more shoplifting to cover the cost of the fines. Short, sharp shock treatment by a spell in prison would make thieves think again before plying their trade. The time has come for the UK to take a stand and say that enough is enough. Why should these thieves get away with theft and why should the staff in stores throughout the country who are going about their lawful employment be subjected to this unsavoury practice, at times being subjected to violence and aggravation and also having to spend a disproportionate amount of time trying to counteract these crimes? I suspect that this will not change unless the UK population acts through their local MPâs to raise their concerns and for the politicians to do what is right and bring in increased legislation to minimise these crimes. There is of course another good financial reason to halt shoplifting â retailers would increase sales, be more profitable and pay higher amounts of various taxes and in the case of items that are subject to VAT, this is currently a loss to the treasury. Of course the other view could be that if shoplifting could be just halved, then if this saving was passed on to shoppers this would give, on the basis of Euromonitorâs calculations, each household an annual saving of ÂŁ62.30.
NPD in a new market environment: is it time for some collaboration?
The symbol convenience sector is buoyant and deservedly so. Good retailers with strong customer focus will always punch above their weight and prosper in the face of multiple competition but complacency must not be allowed to creep in. At this weekâs Quality Food Awards 2013 held at The Grosvenor in London on Thursday with the great and the good of the industry in attendance, what really showed up was just how the multiples and indeed the discounters such as Aldi and Lidl are really raising their games with strong innovation in food New Product Development (NPD). Exciting products, stunning concepts, great packaging with many small manufacturers working in niche areas providing real excellence. Products such as Tesco Finest Cornish Spatchcock Lamb Leg with Cranberry and Balsamic glaze from St. Merryn Foods or Sainsburyâs Taste the Difference Apple and Sultana Strudel from Country Style Foods were both category winning innovative lines that just would not be seen in the symbols. In order that the UK symbols are not left in the wake of the multiples, action needs to be taken and therein lies the issue. None of the symbols independently can really develop super new ranges of innovative food due to both the high development cost and the initial lack of volume in the early stages of launch - manufacturers need volume to justify production runs that's are financially viable and the symbols operate a 'pull system' where products are ordered by the stores whilst the multiples through ownership of their sites operate a 'push system' that allocates NPD to their store base. Has the time come for the symbols to join forces on NPD to counteract the ongoing power of the multiples? The co-operation of long-time competitors represents a significant barrier to making this happen but maybe the symbols should work collectively to deliver what their consumers want whilst driving increased sales and profitability into the sector by delivering to shoppers products that are generally absent from the symbols. There are great examples of collaboration between competing companies, for example the group of tech giants known as the Rockstar Consortium that is jointly owned by Apple, Microsoft, Blackberry, Ericsson and Sony is targeting manufacturers of phones that run the rival Google Android operating system and is suing Google, Samsung, HTC and others over alleged mobile phone patent infringements.