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There is a statistic from Nielsen that says that 35% of sales by supermarkets this year, measured in pounds, was on promotion. This compares with 26% in 2008. The cost of this activity was shared by the big grocers with their suppliers.
Assuming that the buyers for the big stores started out with the best prices and margins, this statistic suggests that their suppliers have had to stump up 34% more money in extra sales support. The impact is likely to be a greater than 34% reduction in the suppliers’ margin.
This seems like good business to many suppliers because they think there is only one game in town, selling to the public through the multiple grocery channel. Selling through independents looks too hard. It looks too difficult to measure.
But that does not mean that the independent channel’s sales are not measured. Figures from wholesale and cash and carry sales to independent shops compiled by Sales Out show that corner shops are doing better than multiples.
The positive message was confirmed by Spar, which has announced like-for-like sales grew by 4.8% in the three months to the end of October. This compares well to the performance of Tesco.
What is important is that Spar is telling the national media about its success. The independent channel needs to communicate its success story more frequently because it needs suppliers to know that there is an alternative to the big grocers and that the alternative is worth investing in.
At a local level, every independent needs to tell shoppers that local shops are doing well because the alternative is that people will just assume that you are going out of business soon.
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