2015 will be a year of change for the convenience sector. We speak to four Champions about how they plan to rise to the challenges
Sid Ali, Nisa Aberdeenshire
After doubling his store state to four outlets in 2014, Sid will be making sure the focus remains on value in the coming months
Atul Sodha, Londis Harefield, Uxbridge, Middlesex
Atul aims to balance margins better in 2015, and will be giving his grocery range an overhaul
Sunder Sandher, One Stop, Leamington Spa
Sunder hopes to replicate the success he experienced in 2014 and continue to push the benefits of using social media
Satminder Deo, Costcutter Yorkshire
Building on a successful 2014, Satminder has one eye on further growth with more meal solutions and more frozen food
How was business in 2014?
Sid: 2014 was one of the toughest years we’ve had in the business. After a couple of great years, the recession forced consumers to visit the discounters and they liked what they saw. This, plus the supermarkets looking to offer value as much as possible, also attracted customers so the convenience channel has had to get involved in a value battle.
Atul: It was a steady year, nothing to write home about. I was level on most categories compared with the previous year, but in some areas where I put in a bit of extra work I saw some solid growth in sales.
Sunder: It was one of the best years I’ve had. Christmas especially was the best the store has seen in 21 years and we sold out of all our seasonal stock. Over the course of the year most categories were up.
Satminder: Business was good. Tobacco sales were down over the year, but every other category made up for it, so overall we were up on the previous year.
What was your biggest success of 2014?
Sid: We opened our third store six months ago and managed to triple turnover in that period. We hadn’t planned to buy a third store, but a site opened up between our Maud and Mintlaw stores, so rather than letting a competitor go in there and take business away, we picked it up. It has taken a little bit from both of the existing stores, but it’s all within the business plan. Just before Christmas we opened a fourth store so doubling our estate has been unexpected, but great success for us.
Atul: I worked with some brands on certain categories to see if I was getting the most out of them. I worked with Greene King for beers, Coca-Cola in soft drinks and KP for my snacks. It was something I set out to do at the start of the year and it’s reaped some great rewards for me. It’s helped create some discipline among the staff as they’ve been shown the logic behind what gets placed where.
Sunder: Switching from Londis to One Stop last May after 21 years has been a great success for me. It’s been the best thing I’ve ever done and haven’t looked back since.
Satminder: Opening our third store in Doncaster in July. I wanted another challenge and the opportunity came up so I went for it.
What do you think the trading environment will be like in 2015?
Sid: I think it’ll be value driven over the next 12 months and retailers will be forced to look outside of their wholesaler for the best value possible. We’ve already had to do this in order to keep up with the competition. The multiples will continue to move into the convenience sector so that’ll be something else retailers will have to consider.
Atul: It’s all a bit discount happy at the moment and customers are being driven by value perception. I think it’ll continue to go that way over the next 12 months and retailers who can show value will do well.
Sunder: There’s a lot of talk of doom and gloom about the next 12 months, but I’m staying positive. If a retailer does things correctly, has the right range and promotions, they’ll do well in 2015.
Satminder: It’ll be more competitive, but there’s more confidence in the convenience sector. I think there’s a good opportunity for retailers to succeed this year, despite the challenge of the multiples.
Where do you think the biggest challenge lies?
Sid: I can’t see how a consumer who has been overdosed on value can get away from that. They’re like junkies for it now and constantly on the lookout for a value fix. It’s going to be tough to compete with the discounters and the multiples on price, so we’ll have to look at our range and make sure that every product offers value and justifies its place in store.
Atul: Balancing margins is going to be tough. Not everything in a store can be value-based or pricemarked, otherwise the retailer will be crippling themselves. A store needs to have the right promotions and lines that will give them the margins that allow them to offer value elsewhere. It’s a tricky tightrope given the current market, though.
Sunder: The display ban will be a big challenge. We’re quite lucky that larger stores have gone through it already, so consumers are at least aware of what it is. It’ll cause some delays at the counter, especially for new staff, but I do think there is an opportunity in the situation as some retailers will move their gantry and put something else in there.
Satminder: The supermarkets are posing a big challenge to us and are focusing on our sector. They’re going to keep pushing into convenience, but a good independent store will always do well against the multiples.
What are you most looking forward to in 2015?
Sid: Building a sustainable business that will survive this tough patch. I think 2015 will be another tough year, but after that business will pick up again.
Atul: Introducing some new initiatives. We’re going to add a 50p bay which will replace the Smartbuy range. The Smartbuy range will be dispersed across our normal shelves and offer a value alternative there.
Sunder: Embracing social media more! I’ve been pushing One Stop promotions on our Facebook page and it’s been very successful. A lot of retailers struggle to see the benefits of Facebook, but I see it as a great engagement tool that is free. One of my goals for 2015 is to get more retailers involved with Facebook and teach them the benefits of it.
Satminder: Introducing hot food. It’s a big focus for us and has been successful in our other stores, so I want it to be done right.
In what areas do you want to improve in 2015?
Sid: I want to cut costs as much as possible. We’ve started this already by haggling with energy suppliers. We’re currently in the middle of paying back a business loan which, if we stick to, will be done with in a couple of years so I’m happy to tighten our belt this year and have more options in the following years.
Atul: I want to overhaul my ambient grocery category in 2015. Someone, somewhere, must have a common sense approach to the category. It’s just not working for me at the moment, but it’s a necessity given the size of my store.
Sunder: Staff and my own training is something I want to improve on. I offer the opportunity for staff to get NVQs so I’ll see who wants to progress. I’m also considering going for what is basically a degree in retail as it would be a great achievement.
Satminder: I want to make my staff more independent through further training. With three stores I’m going to be moving around a lot so they’ll have to be less reliant on me and my wife. It’ll take up some time to train them, but will be worth it.
Will you be changing your range in 2015?
Sid: We’re constantly reviewing our range and every line is going to have to work hard in 2015. We don’t have the space for products that sell now and again. Every SKU needs to justify its space or be delisted.
Atul: I’ll definitely be looking to sweat the shelves this year. I have a tight range but I want to update it and see how it can work better in some areas as well as try to introduce something different to set us apart from the competition.
Sunder: We’re all guilty of having too many lines in our stores and could do with cutting back. Less is more and we’ll be trying to live by that next year.
Satminder: We want to introduce more meal options to the store as that’s what customers are looking for right now.
What products or categories will you be cutting back?
Sid: Single countlines of confectionery and snacks have been annihilated over the past 12 months. People don’t want to buy one chocolate bar when they can buy three for a few pence more. I’ve already started cutting back on some single units as they’re not justifying their space anymore.
Atul: I don’t have many non-core lines. I find it tricky when new lines are added as I don’t have the flexibility of larger stores. It’s more a case of being discerning about what new lines get added.
Sunder: Our wine range will be trimmed back. I’ve already started doing this. I had three metres of red wine with a lot of lines gathering dust so I halved that without losing sales in the category.
Satminder: Some grocery lines are just taking up space so I’ll be looking at cutting back on them over the coming months.
What product or categories will you be adding to in 2015?
Sid: With sales of single units dropping, multipacks are going to become more popular. It’s obviously not a straight swap in terms of space, but I’ll be adding more multipacks. Unfortunately, multipacks mean your margin is cut but it does help with the value message to customers.
Atul: I’d love to add more food to go to my store. It’s a high-margin category and range extensions I introduced last year were successful. I’m a bit tight on space so I’ll have to look at how this can be done without compromising my core range.
Sunder: When we cut back our wine range we extended our spirits range, which was a much better use of that space so we’ll be looking to see if that can be extended.
Satminder: I’ll be increasing our frozen range. We cut back on it a few years ago and focused more on chilled, but it hasn’t quite worked for us. I prefer the flexibility that frozen offers so I’ll be putting that back. I’ll keep chilled as it is and see if ambient can be cut back on.
A NEW APPROACH
How have you approached the business differently compared with previous years?
Sid: We used to have at least a mini refit every year, but now we look to see if we can get by for a second year without one. It can be the difference between a business surviving and not. There’s no point in having an amazing-looking store if the business is struggling and it may not survive.
Atul: I’ll be looking at the business with a magnifying glass. Previously, the bread and butter lines such as confectionery would manage themselves, but they now need constant management as well. I need to keep on top of the entire store in 2015.
Sunder: This past year has been different for me given the big change I saw, but I’m definitely enjoying it more! I’m focusing on shifting volume and looking at how I can drive engagement through Facebook.
Satminder: I always believed that if you don’t keep looking to grow, you’ll start moving backwards, so I’ll be sticking with that mentality for 2015.
AIMING FOR SUCCESS
What’s the one goal you’re set on achieving in 2015?
Sid: Building a sustainable business that will take us into 2016. We used to have 10% year-on-year growth, but that’s dropped down to 2% last year. Our aim is to build up the growth again as we move through this tough patch.
Atul: Increase my profit margins! If we want to have long-term success, the money has to come from somewhere so I’ll have to review my margins and identify the areas I can increase them.
Sunder: I’ll be hoping to open a second One Stop store over the next 12 months. The One Stop model is easily transferable so I’ll be looking for the right staff and train them up in my existing store to make sure they’re the right fit for my business.
Satminder: Make more money and work less! I’ll be looking to get our third store up to the standard of other two stores and once that’s running at 100% perhaps look at a fourth store.
Each month a selection of C-Store Champions share their experience on a given topic. The C-Store Champions are professional retailers who believe in continual development of their business. If you have a topic you’d like debated, or would like to join the panel, contact email@example.com, or phone 01293 610222