More and more retailers are realising the advantages of joining a retail club. Gaelle Walker examines how to get the benefits of a group but still keep your independence.
There are times in all our lives when a little bit of extra support is needed, and those operating in the convenience store sector are no different. For them, the help could lie in membership of a retail club.
As the need to offer greater value and professionalism grows, so to does membership of the UK’s major retail clubs. According to Booker, which operates the Shop Locally and Shop Local 2 Go retail club for smaller stores, membership of retail clubs is growing by up to 10% year on year.
In fact, all of the UK’s major retail clubs have reported growth in the past year, with many seeing double-digit take-up in the past 12 months alone.
And there’s certainly no slow-down expected in 2013, as John Kinney, retail director of the Today’s Group - which saw a 20% jump in its Today’s Retail Club (TRC) membership to 1,500 last year - explains.
“Retailers recognise that in the current market place it is proving very difficult to survive as a totally independent unaffiliated retailer,” says Kinney.
“The multiples are seeing the convenience sector as a growth opportunity, the market is being squeezed, and it has never been as competitive as it is now. While the consumer does not necessarily expect to find the cheapest products in a convenience store, they do expect good value for money, and the products they recognise and require.”
And that’s where the support of a good retail club comes in. Like convenience stores themselves, retail clubs have evolved dramatically in recent years. Gone are the simple promotional clubs in come groups which offer a much wider range of support and expert advice for those independent retailers not keen on, or suited to, the costs and commitments of full-blown symbol membership.
“Retail clubs in the independent sector have been evolving over recent years - they have had to,” Kinney adds. “With the challenge of the multiples, and the value and range requirements from the consumer, this sector cannot afford to stand still. Retailers themselves are constantly looking to ensure they are getting the best deal and this also applies to the wholesaler they use, and the retail club they are part of. Therefore, the competitive nature of our sector means that all retail club activity is evolving and improving the support they offer to retailers,” he adds.
In line with shopper demands, retail clubs are placing a much greater emphasis on promoting products from within the fresh and chilled categories. The quantity and quality of merchandising and category advice has also improved.
Members of the TRC, for example, now have access to a dedicated business development manager (BDM), while members of Bestway’s Xtra Local and Best-in retail clubs receive a free copy of Impact magazine each month.
“The magazine has become a great support and source of full information to help inspire our members to make progressive changes in their business and encourage them to take a look at all the essential things in the business, such as the way they lay out their store and review product ranges,” retail club manager Mark Bottomley says.
“It also helps them with their day-to-day trading decisions, and because the information is endorsed by their wholesaler, our members are more inclined to trust and rely on it.”
This spring Bestway will be introducing a voucher scheme centred around driving core range, with five suppliers supporting the initiative each period.
“Being part of a retail club gives you a fantastic feeling of belonging, and the knowledge that you are not alone, which can be a great comfort,” Best In retail club retailer Bal Cheema of Avenue Food and Wine in Sheerness, Kent, says. Experienced retailer Bal, who describes the retail club relationship as a “happy balance”, joined Bestway’s retail club when she bought her second store in 2010.
“Our first store was totally unaffiliated and it took years to really get it off the ground, which is why we opted to go straight into a retail club for the opening of our second. While our experience was valuable, there’s no doubt that being in a retail club helped us reap rewards so much sooner and has played a huge part in making the second store so successful, so quickly,” she said.
Most retail clubs offer their members eye-catching and, most importantly, professional-looking POS material, and stores can also benefit from attention-grabbing consumer leaflets.
All of the above help the unaffiliated store to not only trade more efficiently, but also appear more professional, winning shoppers’ trust in the process.
Bal adds: “Being a member of a retail club allows us to build that trust because the store looks fresh and more professional. You need that in retail these days if you want to fend off the competition.”
The 1,504 members of Sugro’s Sweet Break retail club, for example, are given free leaflets that are printed and personalised to the individual retailer with the store name and address featured prominently, “not just over-stickered, as with some clubs,” says managing director Philip Jenkins.
Sugro operates a two-tiered retail club offer, including Sweet Break promotions members and Sweet Break Plus members. Members of this second tier must agree to follow the Sugro planogram, but are rewarded for their loyalty with an end-of-year bonus.
Promotions, however, remain at the heart of the retail club offer. Just ask Kevin Broughton, owner of K Broughton’s in Cleethorpes, Lincolnshire, whose sales saw double-digit growth after he joined TRC. “Offering shoppers value for money is going to get more, not less, important, and having access to retail club promotions will enable me to do that in a structured and attention-grabbing way,” he says.
Retail club membership grants retailers access to a wide range of tailored promotions which are not available to other unaffiliated stores.
Suppliers and wholesalers invest both time and money designing retail club promotions, picking the products that research tells them shoppers want, and pricing them at points that they know will drive impulse sales.
“We know what customers want to buy and spend a great deal of time researching this,” Bottomley adds. “Totally unaffiliated retailers are very good at buying product on promotion, but they are not always buying the right products. As a member of a retail club you get that information and can be sure the goods on offer will sell,” he adds.
Retail club promotions also run to a clearly defined timetable, helping those stores which buy into them trade more efficiently and look more professional.
Steve Fox, sales director for retail at Booker, believes promotions will take on an even bigger role as the year progresses. “Shoppers want value for money and promotions have never been more important to bring new footfall to store, drive loyalty and build incremental sales,” he asserts.
Fox expects promotions to become “even more deep cut” in the months ahead.
Promotional mechanics are also likely to evolve, with more ‘2 for’ offers likely, Sugro’s Jenkins predicts.
As well as promotions, Landmark Wholesale members are offered retail club benefits under the Lifestyle Express brand (also a symbol group operated by Landmark). These include the Cash Back initiative, which offers retailers more than £1,000-worth of vouchers each year in return for stocking core range best-sellers and occasionally supporting promotional initiatives such as Big Night In displays.
Nothing in this world is ever truly free, though. Certain conditions must be met in order to access the privileges of a retail club. While membership criteria deviates from club to club, most simply ask that members buy in to most, or all, of the selected promotions. Others ask that retailers also agree to a certain minimum spend, or follow certain category planograms.
Most retailers claim that adhering to these conditions is more than worth it when you consider the benefits, which can often involve sales increases of about 20%, according to Booker.
Your independence, assures Bal, is not in doubt, and the wholesalers wouldn’t want it to be.
“We are passionate about maintaining the independence of our retailers. We are not looking for company-managed shops, but for good quality independent retailers who are passionate about retail,” adds Kinney.
And as Bal attests, retail club membership is not just helping her business to succeed in hard times, it’s also benefitting the wider community. “Takings in the chip shop next door have increased by £1,000 a week since we opened up under the Xtra Local banner,” Bal explains.
“The store that was here before was totally unaffiliated and was really struggling, but with the combination of our experience and the retail club support, we’ve turned it around. We are not only driving footfall into our store but also into other local businesses, which is a great achievement and something which local people love us even more for.”•