By James Taylor, manager, Egremont Group
The rise of the convenience store has been the one bright spot in a fairly dismal retail outlook, just over six months ago new forecasts from IGD predicted that the UK convenience market is set to grow by £6.9bn in the next five years, to reach £48.2bn by 2024. No one could have predicted then, however, exactly how the grocery landscape would change in 2020 and the essential lifeline community retailers would be providing for their local customer base.
The challenge now is two-fold – how these retailers can serve their customers in the current environment, but equally importantly, how they can keep their businesses going.
Keeping the ship afloat
Cashflow is important to keep every business going, most profitable businesses fail due to cashflow issues. Over this period smaller retailers should spend time understanding which bills need to be paid and which ones can be delayed. Ask for payment extensions where suppliers can provide it, it is in their interest for each retailer to stay in business. Minimise discretionary spending where possible this could be marketing, staff time or sponsorships deals.
The Government has been quick to suspend business rates and implement a Coronavirus Business Interruption Loan Scheme. There have also been announcements on Statutory Sick Pay and insurance. Keep on top of the new announcements from the Government here as the government grants will help take the edge off any cashflow situations.
When it comes to excess stock, accept a small loss if it prevents a bigger one further down the line; foot fall in store will decline, so sell off items which are likely to be wasted. On the flip side, spot the gaps that can be filled. Having the products that people want in stock has never been so much of a priority.
As panic buying has created mass shortages in the large supermarkets and many products are in short supply, speak to wholesalers and colleagues about which items are in high demand and adapt accordingly. Large retailers who operate the just in time replenishment model struggle to cope with this surge in demand.
Be agile. Smaller retailers can quickly adjust routines such as opening hours, which days they order or collect from the wholesaler, which products they offer or who they buy from to keep stock levels up. The larger retailers have to deal with everything in bulk, being able to make local connections, find new suppliers and provide for the neighbourhood will make all the difference.
Serving the community
In times of panic and crisis people are reassured by community leaders, a role that local grocery businesses can play. They should think about what they can do to help and utilize localised social media to promote it. As the country edges towards a lockdown phase, it is practical to assume that grocery shopping will become the only reason to leave the house.
Customer buying behaviour is changing fast. Maybe for forever. Shopping locally will become more important and in some cases the only option. By making it clear they are open for business, what the opening hours are and what is on offer, local retailers are sending out a clear message that they can help.
Practical examples for attracting business including changing shop window displays, putting up new signage, using social media to advertise stock and services. As life changes, customers who adopt new habits are likely to continue these habits long term. This is the perfect time to form trusting relationships with a local customer base. Some NISA store managers have already offered to deliver products to vulnerable people in their communities. Is it possible to offer home delivery to vulnerable customers? How about setting up kerb-side delivery or hold back pre-ordered baskets for people who are struggling to reach the store during normal hours? Is it possible to repurpose staff – consider setting up a dedicated phone line to take orders, reach out to the local hospital to take orders from key workers.
Many local communities have been quick to establish centralised volunteering and collection hubs, tap into these. Consider partnering with local cafes, restaurants or food providers to buy their excess stock to replenish your own store, or sell their products through your outlets. There are examples of local corner shops sourcing fresh pasta from struggling Italian restaurants to meet the demand for pasta. If the grocery stores and pharmacies end up being the only outlets open, can they work together to extend hours? Either operating a central ordering point or holding stock for each other’s customers?
Keeping customers for the longer term
This may be the new normal for now, but it won’t last forever. If new customers are coming into store for the first time, think about how to keep them coming back. The simplest things can make the biggest difference, communicating regularly and through a number of different channels about what is available and when can form a longer term link. It is important to consider, what stops customers from going back to the big 4 after this blows over? It may be that they can find everything they need on their doorstep (sometimes literally).