When a Tesco Express threatened to ruin Mark Canniford’s business overnight, he quickly devised new ways of making money. Sarah Britton reports
Like a determined bloodhound, Tesco seems to possess the ability to sniff out a successful independent from miles away, and before you know it, there’s an Express opening up on your doorstep.
That was exactly Mark Canniford’s situation in 2009, when a Tesco Express opened up 800 yards away from his Spar in Weston-Super-Mare and took 10% of its turnover. “We lost £4,500-worth of business when Tesco opened,” he says. It was a big hit, but Mark wasn’t prepared to give up without a fight. In fact, he actually increased the store’s gross profit by 2.5% in the same year, and has since taken the business from strength to strength. “Spar encouraged me to look at how to make the same money with less turnover,” he says. “They said: ‘It’s not the end of the world - we just have to do it in a different way’. It’s not about selling lots of produce, it’s about maximising profits.”
In addition to running Spar’s recommended three-weekly promotions, Mark runs his own deals. “If I get a good promotion from Spar, after three weeks of selling it at their recommended price - eg a £5.99 bottle of wine for £3.99 - I’ll buy in enough stock at the discounted price that I can then put the product on offer for another three weeks at £4.99 a bottle.” This means a much healthier profit for Mark, while still offering a good deal for his customers, who continue to purchase at the new price.
Learn from Mark
● Concentrate on your margins, rather than just your turnover
● Be sure to offer plenty of promotions in order to create a perception of value
● Ensure you have products that your rival doesn’t stock and make sure your customers know about it
● Consider introducing a loyalty scheme
● Don’t be afraid to talk to your symbol group, and listen to their advice
He has also increased his margins on products that the multiple can’t compete on. “The things we know Tesco doesn’t do, such as hot food, we’ve improved our margins on,” he says. But he still offers plenty of deals to ensure customers perceive the shop to be good value. Enticing promotions saw hot food sales hit £1,500 a week last summer.
“In terms of promotions, bogofs are fairly old hat,” he says. “The headline price is what people want, and round pricepoints are doing well.” Mark has bags of donuts on offer for £1, and has just launched a wave of new meal deals unique to his store to keep customers spending over the colder months. “We’re offering four donuts and a coffee for £2 hot dogs and energy drinks for £2 coffee and a bacon sizzler for £2. Sales of the sizzler have been excellent. It’s about generating promotions - that’s what people want.” Deals are supported by wholesaler Appleby Westward which helps Mark design sales material exclusively for his store.
He has also given the store a strong point of difference with a new range of Italian-style bread pockets called Tascas. “It’s a heat-to-eat range where people can pick up chilled Tascas filled with a variety of flavours, and then heat them in a griddle either in-store or at home. The average price point is £2.59 and initial sales are encouraging.” He plans to distribute 25% discount leaflets to encourage trial.
Another initiative Mark is using to lure customers away from Tesco is loyalty cards. “We offer a loyalty system with coffee, whereby you buy five cups and get the sixth free.” And while this is very successful he is keen for Spar to introduce a scheme on a larger scale. “Spar needs to develop a loyalty card. We desperately need a scheme on certain categories, such as hot food.”
What also makes Mark’s store stand out is customer service. “We’re pretty hands-on and teach staff through example. It’s very much a family environment,” says Mark. “If staff are happy, they’ll treat the customers well.” Staff actively help customers around the store and deliver to the elderly free of charge in bad weather. “Personal service makes a difference,” he says. “The mults are charging into self-service, which a lot of customers don’t like. Supermarkets are doing it for economic reasons and forgetting the contact they need with customers.”
And while Tesco has opted for a less personal approach, Mark has nurtured strong links with the community, both through his role as a retailer and also in his capacity as a town and district councillor. “People know me and the shop is a direct line of contact for them. It’s nice for residents to know where to go to talk to someone,” he says. “When I’m in the shop I spend most of my time on the shopfloor making it look good, and on the tills serving and talking to customers. I spend 40-50 hours a week in and around the store.”
By continually developing the business, and ensuring that he meets the needs of his price-conscious customers, Mark has continued to keep profits healthy. So healthy that many competitor symbols have been courting the store. “In the past 12 months I’ve had Nisa, Mace, and Costcutter come to see me,” says Mark. But for the time being, he’s happy to stick with Spar. “Yes, Spar costs more to buy from than other wholesalers, but they give you back-up. Not just in terms of promotions, but in getting value in the right products.”
With the support of a good symbol group, and a can-do attitude, Mark is convinced that the future is bright, for his store and for independents everywhere. “Tesco is a big, cumbersome machine that struggles to manoeuvre,” he says. “It’s a testing environment, but it’s not impossible. We’ll win through.” ■