Bay Bashir, one of our seven expert retailer columnists, reveals how you can make sure you are making the right investments
We are told our industry is thriving, that it will be worth £40bn by this time next year. But how does this tally with the struggles and collapses of several large industry players we’ve all read about recently?
Several of these have had historic difficulties, but Conviviality was different. It was spending on advertising, opening new stores and focusing on expansion nearly right up to the end. Only its falling goods margins would have indicated what would be to come.
It is a warning that even in a growing market, investment without clear strategy and management can harm a business, and I say this as a firm believer in putting as much profit as possible back into my business and the communities they operate in.
An example is food to go. I find the area exciting and a huge opportunity for many independent retailers. I read about it, I talk about it and until very recently I was planning a major refurbishment that would have made the category a major focus. Looking back, perhaps I got a little caught up in
the market, and not my own business.
The store in question has many cafes nearby. It is in a relatively deprived area and lunch missions are not a common reason for a shopper visit.
Before committing to the major refit, I asked myself, will this investment make the store more focused on its target demographic? Will it be competitive with what is already available in the community? Will it bring additional choice to the local area? And could this money be spent more effectively elsewhere?
The answers weren’t what I was hoping for, but it did ensure that the funds delivered ROI elsewhere. I installed a Tango Ice Blast slush machine while snow fell outside, and before it had cleared a week later I’d sold 500 cups with an exceptional margin, taking weekly store sales from £12,000 to £16,000. I used the rest of the diverted refurbishment funds to open a targeted 200sq ft store that now turns over £10,000 a week with minuscule overheads.
My question to other retailers, to wholesalers and to suppliers looking use investment as growth tool is this. Can you explain how it is going to future proof your business?