Birmingham retailer Shelley Goel explains to David Rees why he joined the One Stop franchise programme.
This story will begin in familiar fashion to many. Shelley Goel had been a retailer since 1981, and at the same site on Gospel Lane, Acocks Green, Birmingham, since 1997. But in the past 10 years, multiple and discounter stores had opened up throughout his neighbourhood, including several Tescos.
While his post office was still serving the community successfully, sales in other categories weren’t growing. Added to this, his children had reached university age and he and his wife Anu had the fees to think of. Then the Co-op took over a former pub at the end of his road, becoming his closest multiple competitor yet. In short, Shelley was worried.
He knew he had to do something to increase his sales, so he made appointments with symbol groups. But after four meetings with four different reps, he still didn’t feel he had the answer. He did the sums: in order to afford the fees and the necessary refurbishments, he would have to get a loan. And what if it didn’t work out? What if another store opened up nearby? What if sales didn’t grow? Then, acting on a story he saw in C-Store, he called One Stop. And that started him on a journey to become one of the trailblazers for its new franchise programme.
One Stop Gospel Lane
Store size: 1,200sq ft
Opening hours: 6am-11pm, 7 days a week
Key features: Post Office, the third One Stop franchise store
“At first, I knew nothing about them, they were just another one in the pack. Then I did some research and saw that they were owned by Tesco. So I thought, why not work with them? At least they won’t go bust!”
On closer inspection, he quickly realised that the One Stop franchise package had no particular link with either the Tesco brand or their products. It turned out, however, to be exactly what he was looking for.
Crucially, One Stop offered him funding to refurbish his store which, combined with his savings, meant that he wouldn’t have to take out a loan, after all. His savings could stretch to a new floor and air conditioning, while the One Stop package covered the rest. As well as the One Stop fascia, they added smart new shutters, and painted the side walls. The front window was cleared of clutter and a lot of the fixtures at the front were removed to open the space up; sections of white board were added strategically throughout to create a more shopper-friendly shape. A smart new counter was installed, and out went Shelley’s old double-door chiller, while in came three new dairy decks. He also managed to get funding from the Post Office to revamp that aspect of his store as part of the network’s transformation programme, giving him an in-store office and counter till.
He adds: “We took the plunge. My main aim was just to stay trading. I didn’t want the Co-op or anyone else to knock me out.”
His fears were unfounded, as turnover grew straight away. In fact, the impact on sales has been miraculous, doubling from £10,000 per week to £20,000 since he re-opened at the end of September. Opening hours have been extended to 11pm every day, but it is not just this that has boosted turnover, according to Shelley. Average basket spend has rocketed from £3.84 to nearly £7, and it’s new pack formats that are making the difference. On the day C-Store visits, multi- packs of beer, big packs of Daz and Lenor, and 12-packs of Andrex toilet tissue are all on special deal, and Shelley and his customers can’t get enough. “It’s offers like these that push the basket spend right up. Once you’ve added milk and bread and perhaps a pack of cigarettes that makes the purchase regularly well over £10. Instead of making pennies on small transactions, we are selling lots more stock overall.”
Improved store layout is helping, too. When Shelley was an independent and shopping at Bestway, he was buying its special offers and trying to pass the savings on to customers, but somehow they missed the stickered items on shelf. But there is no chance that any shopper could miss the special offers in his One Stop store. The design of the shop puts them at the front, and modular units advertising the prices and themes are everywhere you look.
One Stop sets the limits for his retail prices. “You can sell below the recommended price, but not above,” he explains. On average, his retail prices are 5% below what they were previously, but overall cash margins are better. “Some of the prices are well below what I would have set myself, but our turnover is up so customers have obviously noticed.”
The One Stop programme works by auto-replenishment, so as long as you use its IT properly (training is given), the system does all the ordering, and will drop the right amount each time. Retailers need to purchase at least 95% of their stock through One Stop, and Shelley gets three ambient deliveries a week and a fresh drop every day if required. “As there is no minimum delivery, the date codes on products are very good,” he explains.
In fact, the new controls revealed a lot more about his business than even he was aware of. “The system showed up very quickly the particular shifts where the takings in the tills were significantly less than they should have been. I started asking questions and a couple of members of staff left straight away. I never saw them again!”
A business development manager visits every four weeks to maintain standards on six key criteria, mainly surrounding cleanliness, appearance and planograms, and the franchisee can earn a quarterly rebate of up to 1% of their purchases (excluding tobacco). One day they visited and Shelley wasn’t in his manager’s suit and tie, so he was marked down and it cost him part of his bonus.
“It was a kick up the backside,” he admits. “I’m much more professional now.” Other black marks are possible for not following the correct procedures of daily jobs in strict order, but Shelley sees the value in this, too. “I’m no longer worried by the thought of Trading Standards visits or customer complaints because the procedures are in place. As long as I follow them, I have the evidence of things like temperature or date checks.”
I ask him whether it still feels like it’s his shop. He laughs. “It’s still my shop. I’m following their procedure, but I’m glad to, because their procedure makes me more money, and that’s the name of the game.”
Auto-replenishment means that the stock room is now tiny, giving him more space to trade from, but also room to expand out further. “Suddenly, I’m making plans for the future!” he beams. “Our turnover has grown from £10k to £20k, but now we’re at £20k, we’re thinking can we get to £30k?”
The irony is, of course, that whereas once Tesco was trying to close him down, now a Tesco subsidiary is making him richer. Shelley doesn’t think in terms of irony, though. He thinks in terms of how his approach to retailing, and to life in general, has changed. “I have more self-confidence now, more energy and I’m more competitive. Anu and I are talking to the customers more than we used to and actively selling more products. One Stop is providing the back-up, while we provide the customer service, and I think it’s a winning combination,” he says.
“The way I see it, I’m part of the club now. As long as I’m spending money with them, they will be encouraging me to increase sales and won’t open nearby. But I’m not bothered who opens anymore: we know we are going to be here, and One Stop will be doing everything they can to keep us in business.”
Working with One Stop
- Five-year contract
- Retailers own the property and employ the staff
- A minimum 95% of stock needs to be ordered through One Stop, with no minimum drop as long as auto-replenishment procedures are followed
- Epos and IT systems, plus full training, are provided
- Retailers benefit from access to the Franchisee Operating Manual, which provides a structured set of guidelines to follow
- Refurbishment funds are available, with One Stop offering a project-managed refit and 13-week transition period
- Bonus scheme allows franchisees to claim up to a 1% rebate on their purchases.