When I heard that Asda was going to redevelop its store in our part of Sheffield I knew that our business would feel the pressure. This has certainly been the case.
Since the extended Asda store opened its doors and went to 24 hour opening, our turnover has been hit. In fact our turnover is down 25% from what is was three years ago.
Need for change
Looking at our sales data and customer numbers, this loss has been across the board. It seems that customers who we used to see on a regular basis have found a reason to go elsewhere. My first reaction to our sales going in to what appeared to be near free-fall was to change our pricing strategy and significantly increase the level of pre-priced products. This certainly helped stop the decline, but had the effect of reducing our gross profit margin.
We needed to come up with a plan to improve our profitability.
Pre-priced products did help to halt the decline, but the squeeze on bottom line has been painful. We looked at the potential of buying a second site and investigated some opportunities. The big snag that I was confronted with is that a second store comes with the demand to find people to run them with my standards. It would also split my focus from the single store I currently have and threaten to eat into my family time.
A big opportunity
The opportunity arrived in the shape of the potential to have access to the unit next to our shop. For many years it was used by an electrician as his office and store. In 2013, he told me that he was going to give up the unit. The landlord is Sheffield Council, so I wrote to them indicating my interest. As the electrician had not told them that he was wishing to end his tenancy they could not enter in to discussion with me.
The electrician eventually walked away from the premises at the beginning of last year without telling the Council. Matters were made more complicated when the council brought in debt collectors.
Time for action
When I approached the Council for the second time there were two other businesses interested.
The council asked me for my proposed lease. I offered a 15 year term with a review at 5 and 10 years at a starting rent of £4,800 per year. I also needed them to allow us to knock the party wall down. They accepted my terms with the proviso that the alterations are undertaken to current building regulation standards and that we replace the wall if we end the tenancy.
In my next article I will reveal why I need a team of experts to help me deliver my new store
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