In January we highlighted 12 key issues to monitor in 2008. Dave Visick checks on how they're doing

ECONOMY




We said: "With rising costs of food, commodities and fuel, it doesn't look good for 2008."

As the British public wakes with a hangover after years of binge borrowing and surveys the wreckage - inflation forecast to top 4%, house prices falling and repossessions rising - how does it react? Well initially, it carries on spending. But if your turnover still looks healthy, check the bottom line; don't let those creeping costs take a bite out of your margin.
When belts do finally get tightened, we may see demand grow at the two extremes - value lines will prosper, but at the same time consumers will give up the expensive night out and settle for a good ready meal and a premium bottle of wine. Smaller, more frequent trips may replace the weekly 'big shop'. Not everyone will thrive in hard times, but it can be done, so buckle up and thank God you don't own a restaurant.

COMPETITION




We said: "The outlook for the Competition Commission's report is not exactly promising."

The problem with the whole David versus Goliath story is this:
Goliath gave David a free hit. The Competition Commission was never going to give small stores that luxury, and the giants we are fighting have been given licence to grow even bigger.
Tesco got a tap on the wrist and launched an appeal; independents took a sock on the jaw and shook it off. So let's leave that argument behind. Giants are powerful but they're slow. C-stores can adapt to their customers' needs, they can react to trends, and they can offer standards of service and a shopping experience which the supermarkets can only envy.
Don't fight on the supermarkets' home ground; don't let customers compare you to them. Counter the faceless megasheds by being a committed community retailer. Then there's really no competition at all.

COMMUNITY




We said: "Consumers are increasingly appreciative of the personal service and individual offer smaller shops provide."

'Are we falling out of love with Tesco?' mused The Guardian last month. Well, they're asking the wrong people here, but perhaps consumers are finally realising that big business takes money out of the community, where small stores recycle it. At last, they don't believe the hypermarkets.
Last month National Independents' Week reminded the public what small shops can do. Knowing a customer's name, knowing their favourite magazine, knowing their child is under 18; and just finding time for a natter; these things matter.
In the past, economic hardship has resulted in communities pulling together, sharing resources and supporting each other. Rising fuel costs will see more of us working from home, and walking to the shops. The challenge is for stores at the heart of their neighbourhood to be at the centre of this cultural shift.

LEGISLATION




We said: "The year 2007 will be remembered as unprecedented in legislative restrictions."

Six months in and 2008 is doing its best to challenge our statement. Proposals to put tobacco products under the counter and restrict off-trade alcohol sales to over 21s would dwarf the effect of last year's smoking ban. However, demonising the legitimate, responsible supply chain will not stop young people smoking or drinking; it will simply fuel the black market, leaving the government with even worse health and social issues and none of the
revenue.
We've already had the two-strikes-and-you're-out ruling on test purchases and the threat of some form of tobacco licensing still hangs over the trade. Intense lobbying and some uncharacteristically clear-headed thinking in Westminster will be needed to stem this tide of knee-jerk legislation, and let responsible retailers sell legal products.


FOOD TO GO




We said: "The take-home side of food-to-go is starting to take off."

This is the definitive growth area of the early part of 2008 and one which could ride out the economic slowdown. Following the established model in the Republic of Ireland, the British are catching on to the idea of the c-store as a one-stop all-day take away.
Key to the continuing success will be the quality of the offer, and turnover and replenishment throughout the day - bacon rolls in the morning, freshly-prepared baguettes for lunch, pizza made to order after work. Expect to see the evening take-home market benefit from the tightening of purse strings. Sandwich chain Subway launched its first franchise inside a c-store earlier in the year, and proper coffee is shaping up to be the next frontier; think of those lovely aromas, and lovely margins.
We're even seeing seating areas appearing in stores - sell customers a coffee and a roll, give them time, and they'll leave with a bagful of other items.


CRIME




We said: "Ensuring that the punishment fits the crime will be a key issue for retailers."

Even if detection rates rise and more prosecutions are forced through the reluctant justice system, retailers will still be subject to loss and injury if crimes against them are not appropriately punished. The government's dilemma is that fines are unenforceable and imprisonment is impractical, while from behind the counter it still looks like the law protects the villain more than the victim.
You don't prevent crime and anti-social behaviour by forcing community retailers out of business. Better to engage them in the struggle by enforcing prosecution of proxy purchasers, making it an offence to offer a fake ID card, and giving shop staff protection with a credible deterrent for violent criminals. After six more months of assaults, threats and robberies, we're no nearer to a solution.


ENVIRONMENT




we said: "Reducing energy consumption will both save money and improve your Environmental credentials."

Remember plastic bags? Whatever happened to them? Government and media saw a quick, easy, unnecessarily punitive and microscopically-significant way to be seen to be green. Raising the price of air travel or restricting vehicle use might have had a tangible impact, but those don't win you votes. Stand by for a similar blitz on packaging.
Spar boss Jerry Marwood recently said that environmentally-responsible retailing was now a mainstream consumer requirement. If you're into saving the future of humankind, fine; if not, cut your consumption to save yourself money. The effect is the same. Utility prices are going nowhere but up. Give yourself an energy audit, and if that means investing now in order to save in the long term, remember how good your concern for their environmental welfare will look in the eyes of your customers.


PROVENANCE




We said: "A significant number of people will pay more for locally-sourced products."

Days after Hugh Fearnley-Whittingstall passionately exposed the high cost of low-price chickens, Tesco responded with a £1.99 chook and the public voted with its wallet. However much chatter there is about food miles and ethical shopping, consumers have always known a good deal when they see one, and the economic downturn won't change this. It will be interesting to see if consumers' concern for ethical sourcing and fair trade survive in tougher times. Do we only think of the poor when we're feeling rich?
Plenty of regional suppliers produce excellent food and, for the moment, customers will pay a premium to eat it. Putting the two together in a cost-efficient way is the puzzle, but for retailers who make the connection there's still plenty of promise here.


TECHNOLOGY




We said: "When all our technology grinds to a halt, the local c-store will still be trading."

Moore's Law tells us that computer processing capacity doubles every 18 months; that means that before one technological advance is established, it's replaced by something better.
Moore obviously wasn't a convenience retailer. Half of c-stores don't even have epos, which makes it harder to maintain margins in this period of price inflation. Clever ideas like near-field product information screens, personalised loyalty cards and even electronic checkouts are out of most people's comfort zone and price bracket.
This year we've seen the mobile phone step forward as a formidable tool, with electronic discount vouchers and Bluetooth-ed promotional texts, with pay-by-phone soon to follow.
Then there's contactless credit and debit cards. We're promised five million of them in circulation by the end of the year, and 20,000 terminals. Have you seen one yet?


TRAINING




we said: "A lack of training contributes to the problem of staff retention."

A recent survey discovered that 40% of graduates would not choose a career in retail because they had experienced working in stores and hadn't enjoyed it. The thought of a lifetime stacking shelves doesn't capture the imagination, and the sector needs to demonstrate the real rewards of community retailing.
Skillsmart Retail says that tempting as it is to cut back on the training budget in tough times, it's a false economy unless you want to be doing 16-hour days when you're 70; it recommends looking into apprenticeships. These schemes are a low-cost option which bring structure to an employee's development and give support to the retailers of the future. They also keep them hands-on on the shop floor, contributing to your business.


SUPPLY CHAIN




We said: "With increasing demand for fresh, chilled and local products, the distribution equations are getting more complex."

More complex, and more expensive. Fuel prices are spiralling and the wholesalers, while doing their best to make their service more efficient and their fleets more economical, aren't going to absorb all the rises.
In a downturn, cash is king and carrying too much stock can drag a business under. Lean operation and a fluent command of demand are essential, and that means not only recording electronic sales data, but sharing it with the supply chain.
In the last month we've heard pleas from retailers for suppliers and wholesalers to keep them better informed about promotions. Forget flyers, give us texts and downloads, they say.
Newspaper and magazine distribution is a law unto itself, and the exploitation of newsagents is starting to look like abuse; stand by for some major changes in this category, and don't bank on things getting better.


HEALTHY EATING




We said: "Healthy eating is a key political issue and headline generator."

Earlier this month a report revealed that schoolchildren were
shunning school meals and heading for the local shops where they pick up a less healthy lunch. So is it only a matter of time before you're forced to sell doughnuts from under the counter? Look at it this way: at least the kids are getting some exercise on the walk to the shops.
Research company Datamonitor estimates that one in three 5-13- year-olds are overweight or obese - that's 2.1 million kids, and the figure is rising. If tobacco and alcohol are considered damaging enough to our health to need legal restrictions on their sale, similar measures for salt, sugar and saturated fats can't be far behind.
The challenge now is to keep health on the agenda by offering better-for-you alternatives on your shelves, and by supporting initiatives to promote healthy eating to consumers.

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