This time last year, Nisa was a company with an uncertain future thanks to Costcutter’s distribution switch. Twelve months on, however, CEO Neil Turton is focusing on an increasingly bright future. Steven Lambert reports.
Speaking to Nisa CEO Neil Turton about the future of symbol retailing carries an extra sense of weight, considering the level of uncertainty surrounding his company’s financial prospects last year.
Following news of a distribution switch by Costcutter to Palmer & Harvey, the company was facing the challenge of trying to fill an estimated £500m sales gap.
Fast forward to this year, however, and it is clear that Nisa is doing all it can to grow sales and profits and support its members – including signing a supply deal with McColl’s, launching a new range of convenience store formats and a TV ad, updating its Heritage own label range and finalising plans to launch its own franchise model by the end of the year.
Much has changed for Nisa over the past 12 months, but then Mr Turton believes this will be essential if the company is to compete effectively against the rise in competition from rival symbols and wholesalers and the supermarkets.
He says: “I’ve formed the view that the symbol market will change dramatically over the next ten years. It will grow, but it will be dominated by the multiple c-stores and franchises.
“That is why we will launch our own franchise model by the end of the year. A franchise isn’t right for all of our members but, if we don’t have one, we’ll risk losing the top-end of Nisa members to something like the One Stop model.”
With a number of high profile convenience retailers signing up to the One Stop franchise over the past few months, and with multiples “driving efficiencies”, Mr Turton says a franchise model is the nearest thing that will be able to compete with these stores – something he feels will provide plenty of food for thought for unaffiliated businesses.
He says: “Independent retailers are going to face a choice of either selling out or creating something that makes them more money.
[pull_quote_right]A franchise isn’t right for all of our members but, if we don’t have one, we’ll risk losing the top-end of Nisa members to something like the One Stop model[/pull_quote_right]
“This can be done in one of two ways – you can either run a highly efficient franchise, copying the multiples and keeping your service, or you can do something totally different. Symbol retail as it stands is a very vulnerable middle ground, and the groups are going to have to adapt quite quickly.”
Part of this viewpoint was formed following a recent trip to Asia, which proved something of an eye-opener for Mr Turton.
“I spent some time in places like Hong Kong and China looking at independent retail models over there. They’re all franchised and they’re so efficient. You can pay for goods with the equivalent of London’s Oyster card, and the technology there means you can offer a lot more in a reduced space.”
When asked how he compares the convenience market overseas to that in the UK, Mr Turton is in no doubt that there is a lot of catching up to do.
“You look at symbol groups here, and I think they are a light touch. They’re only a step evolved from putting a badge on a store to make it loyal to a wholesaler and we’ve got inefficiencies in pricing and stock management and range.
“You’ve got to squeeze as much efficiency out of the system as possible, and the multiples will relentlessly do that. It’s what Tesco is trying to do with One Stop.
“The good thing at the moment is that One Stop is still in an embryonic stage – when they get it right, it will be massively powerful. This will be a test for Nisa and independents as to how truly efficient we can be.”
However, while a franchise format may prove tempting for some retailers, Mr Turton adds that this “will not be for everyone”.
This is one of the reasons why Nisa is currently piloting five concept ‘stores of the future’, with three options – designed to target neighbourhood, forecourt and high street shoppers – already fully operational.
Mr Turton says the move is part of wider plans to help retailers future-proof their businesses: “Over the next three years we will be rolling out our new store formats. I think there will be more use of in-store technology such as electronic shelf labelling and e-commerce, both from retailer to consumer and business to business.
“Technology will also help retailers keep more up to date with their business, enabling them to access important information such as sales figures on their mobile phones or tablets.”
In addition, Mr Turton also predicts the continued rise of small format convenience stores and discounters, something he feels every independent will need to pay close attention to.
“I remember Tim Chalk (CEO of 7-Eleven) giving a talk at the ACS summit last year and he said 2,000sq ft convenience stores were an indulgence. I would tend to agree.
“I believe that customers are turned off by shopping at large supermarkets and supermarkets will therefore try to capture the market of smaller convenience stores; as we have seen them already doing.
“Also, in the future there will be a lot more discounters. These are convenience stores to the consumer – because they are convenient and small.
“Symbol groups must therefore have the right range and price offer, especially in categories where discounters do well, like fresh produce.”
Asked to name the best convenience store he has seen – and one that other retailers can learn from – Mr Turton cites Jempson’s in Peasmarsh, East Sussex as one of his favourites.
[pull_quote_right]The whole symbol sector has less than 5% of the food market so it needs to work better together[/pull_quote_right]
He says: “They are unique in the fact that it is a 30,000sq ft store situated in a village with around 400 people. It has fantastic in-store theatre which makes it a pleasant experience for customers, not like the bland experience you sometimes get in a big shop. Plus, they have a bakery and a local focus so you can always find something unusual.”
In regards to aims for Nisa itself, Mr Turton says the firm is planning to achieve a £2bn turnover in the near future.
“We are becoming more consumer-centric and retail-focused thanks to the driving force of the recently expanded marketing team. We have invested in a new TV advert, the relaunch of Heritage and Nisa’s charity Making A Difference Locally.
“Also, for the first time in Nisa’s history, the business has a strong strategy with online and social media engagement, providing fantastic opportunities to grow members’ businesses through increased brand awareness.”
And while he adds that Nisa is hoping to “win the hearts and minds of even more retailers from other groups” to accomplish an even larger turnover of £3bn, Mr Turton believes a greater collaboration on buying between symbol groups would be ideal: “The whole symbol sector has less than 5% of the food market so it needs to work better together – to the extent the law will allow.”
But there is no doubt in Mr Turton’s mind when asked who will win the symbol group battle over the next 10 years, with the CEO simply saying: “We will.”