Navigating your store through the recession
Experts tell RN how convenience stores can withstand Britain's deepest recession on record.
Convenience and local service will give independent retailers the best possibility to withstand the impact of Britain’s deepest recession, according to experts.
This month, it was announced that the pandemic had caused Britain to enter its deepest recession since records began. According to the Office For National Statistics, UK employment fell by 730,000 jobs between March and August. RN heard from retailers and industry veterans with experience of working through previous recessions about how to face this current crisis.
Although retailers warned that decreased sales during the recession cannot be avoided, they added that customers are more likely to shop at their nearest convenience store. Ken Singh, of Mill Hill Stores in Pontefract, told RN: “The government’s furlough scheme helped, but that’s coming to an end and customers are realising things will get harder. Customers have been more reluctant to do one big weekly shop at a supermarket during times of recession. They’ll shop more frequently throughout the week at convenience stores.
“Ensure you’ve got fresh stock and the store is presentable. People will be watching what they spend and they’ll go to a supermarket if they’re given a bad experience.”
Retail expert David Gilroy added: “Convenience stores do fine during recessions. Poor customer cash flow means little-and-often shopping. There’s already a return to value and a return to own label. Think of it as a retreat to grocery – frozen and canned goods will become more important.”
The multiples are already seeing an opportunity in value-driven shopping during the recession. RN has uncovered plans by Co-op to launch a value own-label range (p5), while Tesco is in the midst of a price war with the discounters. Price promotions will be key for retailers in competing with the multiples, but Mike Nichols, of Costcutter Dringhouses in York, warned about the dangers of overpromoting.
He told RN: “It’s a catch-22. You need to be competitive, but having too many promotions can work against you and hit your margins. I’ve fallen into that trap during the previous recession and ended up worse off.”
To offset decreased sales, Sam Coldbeck, of Wharfedale Premier in Hull, advised retailers to take advantage of the increase in seasonal staycations. “People are staying at home more because they’re following government guidelines or are nervous to go abroad, but they still want the holiday experience. We’re seeing an uptake in speciality products such as Kelly’s Cornish Ice Cream, which never used to be as popular,” she said.
Costcutter marketing director Sean Russell added: “What shouldn’t be ignored is the fact that even during a recession, shoppers are looking for treats. That includes meal solutions as shoppers will be looking to have big nights in, especially as eating-out restrictions and concerns continue.”
Additional services such as ATMs will also become vital during the recession, according to Coldbeck. She explained: “Nobody wants a recession, but the service offered by retailers gives them the best possibility of dealing with this difficult trading period.
“In Hull, there have been many redundancies and people are more cautious with money now. Free access to cash is vital. Customers will be struggling with bank loans and credit cards, and access to cash will allow them to balance their cash much more easily. They might draw £140 and spend £20 each day.”
During the initial stages of the Covid-19 pandemic, wholesalers experienced availability shortages due to panic buying. Although this initial panic has now declined, the Environment, Food and Rural Affairs Committee has advised the government to update its food resilience plans to prevent any future crisis disrupting the supply chain.
Coldbeck said that wholesalers had limited credit extensions during previous recessions. “We’re in a situation where it’s tough. They’re trying to ensure customers have as much access to stock as possible without running into debt.”
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