The Independent Retailer Owners Forum (IROF) met in Dublin in February to discuss, debate and review our successes and learning from the past two years of business and livelihood disruption.
The overall position for independent food retailing across Ireland is positive, with the IROF retailers thriving versus simply surviving – albeit this was the universal strategy in 2020 – and investing to hold the 2021 growth and to weather the inflation and cost increases impacting us all.
I sanity-checked my 2021 opinion pieces before the visit to see which forecasts and thinking were correct – and incorrect – and to create a ‘tick sheet’ for our store walks, huddles and the private ‘Meet the Leader’ dinner with the retailing rock star Jonathan James. More about this later.
One retailer’s comment on margin resonated with me as it totally supports controlling our own retail destinies with proprietary fresh food for today as the lead shopper mission, and technology investment to reduce costs. “We need to increase our gross profit by 1.8% simply to stand still.” Many of us don’t have a forensic knowledge of our gross profit and cost centres as our core grocery cost of goods can vary weekly and accurate food production costs can be hard to nail down.
From our visit to Ireland and my tour of Northern Ireland with four IROF members the week after, there were five big findings every store should be considering this year. Scott Annan is the founder of The Independent Retailer Owners Forum, a closed group of top store owners who visit the best food businesses on the planet and exchange insight and ideas.
1. Customer value proposition
A clear focus on the customers’ needs. These needs vary by store location and are significantly not built on price and national brands; more on ‘feed me now’ and ‘fulfil my shopping needs – don’t be an inconvenience store’. An excellent example of customer focus is the three Ennis Retail Spar stores along Merrion Row and Baggott Street, Dublin. Within one kilometre, the shopper profile moves from office dominated to high-end residential, so the fresh food for today, core grocery and services are significantly different in each store.
Shoppers are returning to stores and the level of home delivery and click & collect orders is decreasing. The UK and Ireland governments have ended C-restrictions (Scotland is one month behind) and most of us are out and about and getting on with our normal lives. Real shopping, experiencing foodservice and fun are big parts of this.
2. Proprietary fresh food
We all eat and drink three times each day: that’s 1,000 sales opportunities every year. I am at risk of over-repeating myself here, however, increasing gross profit by 1.8% will not happen by increasing the price of core grocery. Three of our national grocer friends – Supervalu, Sainsbury’s and Tesco – are price-matching Aldi on a range of lines that, together with Aldi and Lidl, means over half the UK and Ireland market has price as one of their lead strategies.
Independent retail can’t compete on price and remain in business. Why do this if it means simply surviving rather than thriving? Ireland is famous for its fresh food. With “the population of Greater Manchester” (credit to David Bagnall of BWG Foods) it joins, in my opinion, Germany, Japan and New York City in showing us what can be done with proprietary fresh food. Ireland is a one-hour flight for most of us, so get there, look, learn and even copy what you see. What excuse is there not to do this?
3. Value not price
On an IROF visit to Hamburg, Germany, last November, we visited an excellent independent Bäckerei, selling packs of four slices of their speciality breads. Now on a whole loaf calculation this is €15 a loaf. The reality, at €3, was the price of ‘a cup of coffee’, which most of us don’t hesitate to pay. A similar example in Mulkern’s Eurospar, Newry, is a pack of cut chips at £2.49. Expensive potatoes or a cup of coffee?
The key lessons here are targeting shoppers that want timesaving convenience and, in the case of the speciality breads, allowing single and two-person households to afford the products while potentially reducing wastage. Excellent and different thinking.
Scan, Pay & Go on our mobiles and electronic shelfedge labels (ESL) are appearing in more Irish stores. Recent opinion pieces have covered the benefits and ROI of both in detail, so I won’t repeat these here.
As Just Walk Out technology is trialled by Amazon and national retailers, the benefits of reduced labour costs and doing away with the need for self-service tills become more apparent.
Two retailers measured a 0.5% reduction in labour and a 25% reduction in wastage from using ESLs. Three stated they were to offer Scan, Pay & Go as an additional customer convenience and way to reduce operating costs and capital investment.
The Ubamarket Scan, Pay, Go app is used by Nisa, Henderson’s Retail Spar and Central England Co-op stores. A focused use of established technology helps towards the gross profit increases required to thrive.
5. Be prepared
Jonathan James was our ‘Meet the Leader’ dinner guest in Dublin and spoke on the need for independent – and corporate – retailers to “prepare for the unexpected”. The unprecedented damage to business inflicted by our governments these past two years forced us to be creative and flexible in managing our businesses. Most of us made a success of this. Many of our foodservice friends were not so lucky.
Jonathan encouraged us to shine a torch in all corners of our business, from contracts through to leases and services to ensure that we are fully in control when the next unpleasant surprise comes along. As it will.
This is sage advice.
The Independent Retailer Owners Forum thrives through the sharing of insight and knowledge among the 20 members, and the external challenge from our supporters at Delice de France, TOMRA (deposit return schemes) and Newtrade Media.
Read more of our expert opinion on the independent retail sector