The news that a multiple retailer is due to open in your area is a fear that keeps even the pluckiest of independents awake at night. So imagine how Jinx Hundal felt when, one by one, each of his six Budgens stores came under threat from a supermarket.
Of course, Jinx wasn’t naïve to the risks of running an independent store. Having worked at Musgrave HQ in Ireland as operations manager for the retail and food services division, he was more than aware of the bigger picture. Unperturbed, when Budgens sold its corporate stores he took the plunge and bought one in Sheringham, Norfolk, in 2006. This was followed up by another three Budgens stores in Cromer, Brundall and Norwich, Norfolk, then a store in York, and one in Woodhall Spa, Lincolnshire.
Jinx and his brother Sunny now have 153 employees across the six stores, and the two are working hard to ensure that they all remain in business however fierce the competition.
Experience has taught them the best route to surviving an onslaught of supermarket competition, and here they share their wisdom.
Built: Opened as new in January 2009
Customer profile: A transient demographic with lots of office workers, as well as a large proportion of elderly people
Threat: In the past 12 months a Tesco Express opened up just 200 yards away
Action taken: “Lunchtime trade is big with the office workers. Tesco started a £2 meal deal, so we made sure we introduced a similar offer. In addition, we focused heavily on how we could be different to the norm with our lunchtime offering. We introduced a full carvery, freshly made sandwiches with a choice of 16 different types of fillings, and a salad bar. “We also offered the elderly a 10% discount when the Tesco Express opened to maintain their loyalty.”
Purchased: December 2008
Customer profile: A village store, with mainly older shoppers and families. Everyone is local there is no passing trade
Threat: Tesco is in the process of securing a site in the village
Action taken: “Because Brundall is village store no outsiders shop here, which means we’re especially reliant on starting a customer forum to get local people interested in the store. “For the first three meetings in Brundall, we encouraged people to make a shopping list, carry out a shop, and then report back on the store’s performance in terms of customer service which products were available on what date and so on. In return for their feedback, we’d give them their money back. “We had 52 people turn up to the last meeting at our Brundall store. They like it because it gives them a voice. There’s an older demographic in this area and they want an input into what goes into their store. “We have also ensured that we work with younger members of the community to make certain that families know we care about the area. At Brundall we raised £5,000 for an outdoor learning environment for the local school.”
Purchased: May 2006
Customer profile: Elderly customers
Threat: Within the past 12 months, a Sainsbury’s Local opened up just four doors away and Tesco has just had a planning application accepted after 14 years of trying
Action taken: “We marketed our home delivery service heavily. Unlike many of the multiples’ it isn’t internet-based, because lots of our elderly customers don’t like the internet, or don’t know how to use it.” Sheringham is the only one of the brothers’ outlets where they haven’t invested heavily in the look and feel of the store a refit was due last October, but there was a problem with refrigeration which held it back. With Sainsbury’s so close by and a new Tesco on the cards, Jinx is considering selling the store. Smooth operator
First things first: getting basic operations under control is critical. Jinx advises retailers to walk their stores on a regular basis to ensure they are up to scratch.
His top five operational priorities are:
People and customer service
Fresh means fresh
Any competitor will inevitably steal a percentage of your customer base. The best way to minimise the number of shoppers you lose is to nurture loyalty within your customers by bonding with them, claims Jinx.
“In all our stores we run a customer forum every quarter,” he explains. “I’ve had a right earful of abuse in the past, but it’s vital to listen to your customers, particularly if they have a complaint or concern they want to raise.”
He encourages customers to bring along to the forum family and friends who don’t shop at Budgens. “That way they can come and get a feel for the store, and you can increase your customer base.”
It’s also vital to show that you are acting on customer feedback, so Jinx always opens the forums by discussing what he has done about the previous meeting’s issues. As well as making customers feel important, acting on their demands can also lead to an improved store.
“At one store the need for gluten-free products was raised. We didn’t just buy in a few products, we actually made space for a dedicated section and we now sell £600-worth a month.”
Another way to get locals onside is by showing them you care, and getting involved in the community. “We do community work in all our stores,” says Jinx. Sponsoring a local football team is a good start, but doing something more personal can really help your store to stand out from the mults. This year we’ll be raising money for the Help the Heroes charity,” says Jinx. “I’m going to get in touch with the charity and find someone from the Norfolk regiment who needs help and raise funds for them. It’s great to help a person from the local area, plus it gives the campaign a face.”
“Investment is absolutely critical if you are to take on the multiples,” states Jinx. He has either recently refitted or has refits planned for all of his stores.
But in order to ensure you have the maximum possible funds to invest, you need to review your spending and ensure that money isn’t being wasted. “Look at every penny,” he insists.
“We kicked off a big cost-saving scheme 18 months ago,” says Jinx. “It took 12 months to analyse the finances of all six stores thoroughly. Anyone who says they can’t save money is either lying, or kidding themselves.
“Retailers might think they have their finances under control, but it’s not until you scrutinise every single invoice that you really are operating efficiently.” Jinx ensures that every company invoice goes to his in-tray so that he can pick up on unnecessary costs instantly. “As an example, in Cromer I cut down the store’s phone lines from 14 to six.”
It’s not always a case of straightforward cuts; sometimes you have to look at more efficient ways of managing a situation. Says Jinx: “One example is where I was paying to have the store floor mats cleaned every month, which was costing £30. It might not seem like a huge amount, but when you think you can buy a new mat for £12, then there’s an obvious cost-saving to be made.”
In his bid to cut costs, Jinx has become a hard negotiator. “Attrition really sharpens the pencil,” he says. “Every time any contract comes up for renewal I won’t just sign a form I’ll keep looking for the best deal. I re-negotiated electricity deals through a broker. Our bill can be up to £90,000, so I thought if I can reduce it by 10% then that’s a saving of £9,000!”
Another essential weapon in the fight against the mults is a strong support network. “It’s a tough industry and you’ve got to be part of a buying group or a symbol group in order to compete,” says Jinx. “When we found out that the competition was coming, Budgens gave us an attrition support package to help advise us on margins, finances, and wastage allowance. They have case studies of similar situations and they estimated the impact the new stores would have on our sales.”
Retailers can work together to help one other, too. Jinx finds speaking to peers in a similar position a real lifeline. “I regularly speak with other c-store owners and we bounce ideas off each other,” says Jinx. “Jonathan James, who owns two Spar stores in Cambridgeshire and three Budgens stores in Norfolk, is a good friend. It was he who suggested running the customer forums.”
Building a good relationship with local suppliers is another clever tactic. It can offer a store a point of difference, and can also mean that they will stick with you even if the mults beckon. “We have a local farmer who supplies Sheringham, Cromer and Brundall with fresh strawberries. It gives us a real point of difference as the fruit is picked and sold in store on the same morning,” says Jinx. “The supplier is happy as he makes more money because there’s no middleman, and customers get value for money and ultra-fresh produce.”
No matter how hard you battle, there will always be some business lost. But it is important to look at any mistakes made and learn from them. Even though Jinx has been particularly pro-active in strengthening his stores, there are still areas for improvement. “All my stores are making profit bar Sheringham, which has lost 37% turnover since Sainsbury’s opened.”
He believes that a major factor in the Sheringham store’s losses is the decision not to invest in a refit because of uncertainty over Tesco’s repeated applications. “It’s difficult to decide whether to refit a store before or after Tesco arrives. We decided to wait, and I now realise that it was a big mistake it’s been a key learning curve.”
Another reason Jinx believes that some of his customers were drawn to the bigger shops was because of the loyalty schemes they run. “Budgens really needs to invest in a loyalty scheme. It encourages people not only to come to the store, but also to spend more when they’re there,” he says. “I’m hoping that Budgens will drive this, but otherwise we will go ahead with our own scheme.”
He has already put the wheels in motion for his own loyalty system. “So far, our epos provider has written the software to do a very basic scheme in our stores. We’ll be looking to put this into action if Budgens doesn’t make a move.”
Looking ahead, Jinx acknowledges that 2011 won’t make life much easier. “It’s very tough and financially the future is very challenging,” he states.
But he urges indies to remain positive. “You can’t be negative this would only make things worse as it would project negativity onto the staff.”
Whatever the mults throw at c-stores, Jinx is adamant that with guts and determination, they can pull through. “My dad has instilled a can-do attitude into me and my brother since we were kids. The one thing you need to survive is 100% commitment.”