The year of uncertainty

How was 2016 for you?

Chaz: It was another tough year for us. The summer was good, though, because we had a long spell of hot weather which helped with sales all the way to October. Many of the summer products have very good margins – such as ice cream and soft drinks.

Dee: It was a tough year and I expect 2017 to be even tougher. I think we will all feel the pinch with the living wage and Brexit.

Scott: We were about 4% up compared with the previous year, so I’m happy with that. I think last year was challenging, with convenience store retailers no longer able to rest on their laurels. We have to keep looking for new ideas, new products and technology.

Manny: It’s been steady. We’ve had a lot of challenges, but overall we are holding our own.

Are you looking forward to 2017 from a business point of view?

Chaz: Yes. There are a few things in the pipeline. I’ve got a few plans to refresh the Costcutter stores, but I don’t want to say too much as you can never be certain what you will be able to achieve. I’m also looking to continue upskilling the staff and adding to my range, and I’m looking to implement some ideas outside the store. I’d like to get a market stall outside the front of the store on Saturdays and have the local butcher offering a hog roast or get some local bakers to hold cake stalls. This won’t necessarily increase footfall into the store, but it’s a novel idea for customers. I’d also like to do more sampling of local products as this is a good way to improve relationships with customers and improve our work relationships with local suppliers.

Dee: No. The excitement of this business has gone. I’m still passionate about what I do, but the buzz has gone. All I seem to do is deliver bad news to my staff and they have to keep working harder to deliver sales.

Scott: Yes. When you are living in retail, you live off the buzz of it and we are on the go 24/7. I’m sure it will bring its challenges just as every year does. The shopper trends and demands will change and the buzz words will change. At the moment it’s all about food to go. And I’m sure that will continue to evolve.

Manny: No. It’s going to be the year of uncertainty and I think there could be a downturn, to be honest.

In what ways do you expect the trading environment to change this year?

Chaz: Incrementally, we are seeing increased basket spend. We noticed larger packs being offered with added value. We’ve seen a lot of deflation in the past 12 months and one of the outcomes of Brexit could be that we see an inflation of prices.

Dee: I expect it to get even harder than it was this year. There’s going to be a lot of changes in the market and I think symbol groups might drop out due to tightening margins. As profits go down we’ve had to look at how to penny save – or pound save is a more appropriate expression these days. The first thing to look at is labour, as that’s your highest cost. We’ve had to look at rotas and ensure we don’t have any shifts overlapping so we have as few outgoings as possible.

Scott: The tobacco legislation changes could have a large effect on footfall. Where, at the moment, a shopper might come in twice in a week to get their small packs of cigarettes plus picking up top-up items and impulse purchases along the way, they will now have to get a larger pack and this could reduce the number of times they come into store and therefore reduce the number of products they buy. We don’t do very well with the e-cigarettes category and I think that’s partly due to the fact that I find the category such a minefield. Interestingly, though, two empty units in the town have both now got e-cigarette shop posters in the windows so it will be worth seeing if the demand is there for two shops as the town currently has none of these and there’s a population of only 18,000.

Manny: Because of Brexit, no one knows what will happen. A lot of supermarkets are downsizing and going into the convenience sector, which is giving us a run for our money. There are likely to be changes and I don’t know if they will be good or bad, but I am apprehensive.

Do you plan to take a new approach to business this 
year?

Chaz: I think the biggest thing is to make sure the business is working efficiently. We give members of staff responsibility and ownership of different aspects of the business, such as billing, cleaning, holidays, so it’s important to ensure they are all running effectively and efficiently.

Dee: No. I’ve been having to look at week-on-week sales as opposed to month-on-month sales when comparing with last year in order to understand my sales in detail. Compared with last year, at the moment, as an entire business, the margin is down 2%.

Scott: In the first half of last year I concentrated on sourcing new local suppliers. In the second half, I concentrated on improving my social media presence and becoming more digitally savvy. In the first half of this year I plan to work on improving the security of the store. I want to install a new CCTV system and look into getting the new smart tills which weigh the amount of money inside the till. I also want to give staff more responsibility and make them more accountable for different aspects of the business as I need them to work to earn their money as they will be earning more with the new living wage.

Manny: We will have to look at more promotions and offers. But sometimes when you do that, other lines can suffer so it’s a question of striking a balance. With wines, we can’t drop the price because the price of buying is going up and suppliers are going out of business. We’ve had two regular suppliers of wines go out of business recently and they were great at supplying well-known brands at good prices. Shoppers aren’t interested in buying if they are any more expensive.

What are the main challenges you expect to face?

Chaz: Wages are going up again and the biggest cost to business is labour. If it keeps going up at the rate it is, something has to give. We are already running as leanly as possible so cutting costs further will be a challenge.

Dee: The living wage increase will make it tougher to keep making ends meet.

Scott: The new tobacco legislation could affect footfall. Higher wages will mean I have to work harder to keep costs down. I will continue to invest in the store, but I will be looking into the risks and potential profits in much more detail.

Manny: Keeping costs down and keeping buying costs down will be the main challenges for me.

What part of the year are you most looking forward to?

Chaz: I’m not sure. Because everything is full pelt throughout the year, we retailers don’t really get a chance to reflect – we just take it as it comes.

Dee: I used to look forward to Christmas a lot, but now I think we’ve lost the fun spirit of the season. The big supermarkets start selling products for Christmas in October and it’s been so over-commercialised. But people also do a lot of shopping online.

Scott: In the summer, there’s a bit of a buzz around the store generally and sales go up. 

Manny: The summer, when there are more hours of daylight and more hours when people are out and about. That’s when we get the best sales. Ice creams and soft drinks provide good profits. We don’t usually get the benefit of Christmas because people tend to shop in the towns and city centres to do the bulk of their shopping and they come here for small items.

Do you have any big investment plans for 2017?

Chaz: I wouldn’t like to say on record. I don’t like to get ahead of myself.

Dee: I have invested £45,000 in 
the pizza concept (see panel above) and that’s all the risk that I plan to take this year.

Scott: Other than the CCTV and smart tills, the other area I’d like to look into is media screens. We’ve just had one put up which faces out the shop window and shows different promotions relevant at different times of the day. I’d like to get another one or two inside the store.

Manny: I plan to invest in our lighting. We currently have fluorescent strip lighting which looks outdated and is not cost effective. I want to go to LED lighting which will look better and brighter and will be cheaper to run. That should cost £2,000-3,000.