With new products being introduced to the market all the time, it’s a constant challenge for retailers to keep a meaningful range within a small shop. We speak to those who have managed to maintain sales and maximise profits by cutting back on the number of lines they stock
If you read the product pages of Convenience Store every fortnight, you’ll know just how many new products are vying for a place on your shelves. Across all categories, manufacturers are looking to increase their market share through innovation, and retailers may be forgiven if they’re finding it difficult to keep up. With pressure to stock everything new that comes along to meet customers’ expectations or to offer a point of difference, retailers’ shelves are in danger of becoming less coherent.
Could it be that less is more when it comes to ranging these days, and that retailers who squeeze in every new line are actually doing more harm than good by overstocking? Rav Garcha, who owns four Nisa stores in the West Midlands, believes retailers should be more discerning about how much they stock and shouldn’t just accept every new product that is rolled out by manufacturers.
No room for slow sellers
While it’s healthy for the body to reduce alcohol, it can also be healthy for your profits. Dennis Williams of Premier Broadway in Edinburgh maintains strict discipline on his booze category to ensure that every inch of shelf space pays its way.
“Category discipline is essential; you need to be looking at your range and seeing where the success stories are and focusing on them,” he says. “Look at your epos data constantly to find the lines that aren’t selling and replace them with ones that will.”
Adam Moody of Moody’s Londis in Embleton, Northumberland, is careful with his alcohol category due to space constraints. At 1,000sq ft space is at a premium so he keeps a close eye on his beer and cider ranges as these can take up a lot of space if not managed properly. “We can’t afford to have products that are not selling so we check the data regularly and if a product isn’t doing as well as it should be, we get rid of it,” he says. “There’s plenty of other products out there ready to take its place.”
The symbol groups are also looking to trim back their lines. Earlier this year Spar undertook a range review to reduce duplication and make space for “new opportunities”. This included reducing the number of wine SKUs from 523 to 375, with a core range of 162 lines that accounts for 90% of category sales. According to Spar UK licensed trading director Chris Lewis, this has created a “tighter and more effective range” for retailers, as well as improving supplier relationships.
“We need to take a leaf out of the multiples’ book - manufacturers chuck every new product at the independents and see how they perform before rolling it out to the multiples,” he says. “We can’t keep over-ranging; it’s dead money at a time when every penny counts.”
That’s not to say Rav is afraid to try new products, however he uses a strict ‘one-in, one-out’ policy when introducing new lines. “There are some brands that will launch NPD quite regularly and it’s tough to keep up with it,” he says. “To combat this, I’ll keep a core range and then rotate the new products that come in with the worst selling. Any new product will always sell better than the worst selling line in the store so they’re worth trying out, but it comes at the expense of something else. It just doesn’t make sense to keep adding products to your range.”
With retailers looking to save money wherever they can, Rav believes that reviewing the stock on your shelves is a good place to start. “If you reduce the range, you reduce your costs,” says Rav. “When we did a range review we found we stocked five sizes and varieties of salad cream, not including the Heritage own label SKU, so we cut it back completely and now we just stock budget and premium, which is enough for most people, and we haven’t had any complaints from customers.”
Dee Sedani, owner of One Stop Matlock in Derbyshire, is one retailer who is not shy of making bold decisions when it comes to retailing. When he switched from Londis to One Stop earlier this year, his range was cut back significantly. Yet instead of seeing a fall in basket spend and turnover, he witnessed just the opposite. Even with his range cut back, his sales have grown £4,000 per week and basket spend is up £2 per person.
He sees the ambient category as an area that retailers can trim without losing sales. “Less is more,” he says. “There’s no point in having half a dozen types of sauces when you can have one or two. That’s all people want.”
He adds: “If you cut back the lines that you don’t need, you find that you have more space in store for the ones you do and the ones that will generate sales for you. Otherwise, it’s just wasted space on your shelves. I have one branded line and one own label line with everything in between cut back.”
Retailers may want to be on the cutting edge of product innovation, so what’s holding them back? In a survey of 100 independent and symbol retailers conducted by HIM for Convenience Store in May this year, 54% of retailers said the main reason for not stocking a new product or promotion was down to having limited space in their stores.
When asked which category they would be giving more space to over the next year, alcohol was the most popular with 41% looking to focus on it more. Next was soft drinks (32%) and then chilled food (13%). Some 11% planned to give more space to confectionery and snacks, while just 6% want to increase fruit and veg.
The squeezed middle
As Tesco has found out to its cost, the picture of grocery retailing in the UK is one of premium and value growing, while the middle is being squeezed. Shoppers are happy to stock up in discounters Aldi and Lidl, while treating themselves in Waitrose and overlooking the likes of Tesco and Morrisons. The same trend is being seen in the lines selling in c-stores, says Andrew Whyte of Prees Village Stores in Shropshire. He believes it’s a hangover from the recession, where finding a bargain and splashing out on accessible treats became seen as a better way for shoppers to spend their money.
“Shoppers don’t care about brands as much anymore and they’re more interested in saving money where they can,” he says. “This means shoppers will buy the value offerings of products where possible and if they want to treat themselves with the money they’ve saved there, they’ll purchase more premium items.”
Andrew has adapted to this by cutting back on the number branded lines he carries and replacing them with own label. “There will always be customers who want to buy the branded option so have the best-selling option and then an own label alternative,” he says. “Own label has improved a lot over the past five years and customers are realising that, in plenty of cases, it’s just the packaging that’s different and they don’t feel the need to pay for a brand name.”
David Lomas of Lomas News in Unsworth, Bury, also advises other store owners to focus on the best-sellers, and take a step back from NPD. “You can go forever and a day trying to keep up with planograms, and if we were to be constantly remerchandising it would cost us hundreds of pounds at a time when cash flow is important,” says David. “You can’t keep up with all the new products and the sheer volume of lines can be confusing. At times you’d be better off just putting two facings out of your better selling lines.”
His view is echoed by Ferrero customer development director Levi Boorer. “Trust in core,” he recommends. “That’s where the success lies for independent retailers and they shouldn’t get too bogged down in NPD and trying to compete with the multiples. They should be stocking the core range with a small amount of new lines that they know suit their store’s audience to make the most of the space they have.”
Own label getting bigger and better
With retailers moving away from the middle of the road towards premium and value offerings, the own label sector is thriving. According to a HIM poll, more shoppers are gravitating towards the sector, with 42% of those surveyed rating the range of own label as ‘excellent’ and 15% choosing an own label because they thought it was better quality than the equivalent brand. This is up from 8% in 2013.
A Canadean Customer Solutions survey found that 81% of consumers are happy to buy own label items, 55% believe that own label products are just as good as branded alternatives, and 46% believe that own label is produced in the same factory as branded items with just the packaging being different. Of those surveyed, 64% believe that any extra cost associated with branded food is down to advertising investment. The survey also revealed that biscuits is the category in which customers are the most likely to buy own label.
Finding the products that suit his unique audience has proved successful for Shetland retailer Scott Preston of Tagon Stores, where he has been cutting back his range in the snacks aisle. “We dumped a lot of the crisps lines that weren’t selling as well and replaced them with Lancashire Crisps, which are very popular with customers,” he says.
“No other store on the island sells them and they’re by far the best-selling line in that category.”
Sid Ali of Nisa Mintlaw and Maud in Aberdeenshire has taken a forensic approach to his snacks range and has reacted to the changing consumer trend towards buying the better value multipacks of crisps and splitting them, rather than buying single packs. As a result, he’s starting to focus on bigger bags, rather than single ones. “Single bags of crisps are a disaster at the moment; it’s become a multipack market and while it’s impossible to do away with single-serve bags completely, we’ve cut back our range and focused more on multipacks as that’s where the growth is.”
Sid says he’s now taking a closer look at what’s going on with all the categories to weed out slow-sellers. “I look at epos sales data every day now in different categories, because our shelves need constant attention to ensure that we’re holding the most profitable lines.”
Rav says that the convenience channel should focus on what it does best, rather than trying to compete with the multiples on range. “What’s the point in stocking various types of the one product? Just stock the best in the market,” he says. “We can never stock the same number of lines that a large supermarket can and we shouldn’t try. We need to focus on the areas that make us special such as quality of service and community engagement rather than overloading our stores with lines that could end up gathering dust.”