Harris International Marketing’s (HIM) annual Cash Carry Programme has quickly established itself as the leading study into the business of independent retailers who use cash and carries as their supply source.
The objective of HIM’s C C study is to gain an understanding of retailer customer opinions, attitudes and behaviour to help cash and carry operators and suppliers identify sales and profit improvement opportunities.
The 2004 study interviewed some 3,500 retailer customers at branches of Bestway, Booker, Batleys and five Landmark members and found that convenience retailers are still the biggest group of C C retailer customers with 46% saying they operate c-stores. CTNs are next at 19% followed by off licences at 15% and those who call themselves grocers at 12%.
Fifteen percent (the same as in 2003) belong to a symbol or fascia group, so despite the push by multiples into the neighbourhood sector and warnings that the independents’ best chance of survival lies in symbol group membership, recruitment to symbol fascias had not risen markedly. Only 6% of unaffiliated independent convenience retailers say they plan to join a symbol group in the next 12 months.
Retailers’ average weekly turnovers range from under £5,000 (23%) to £20,000-plus (3%) with the majority of stores (35%) falling into the £5,000 – £10,000 band. As a comparison, the majority of managed c-stores would expect £20,000 sales per week at least – so these businesses have plenty of room for growth, providing they start to develop their fresh offer better .
In HIM’s inaugural C C study in 2003, more than 50% of those surveyed said their weekly turnover was £5,000 or less so C Cs are now attracting customers with bigger businesses but are losing smaller ones as the latter go out of business.
Tom Fender, managing director of HIM, comments: “Key sector suppliers should be heartened by the news that 80% of those in cash and carries are store owners. Obviously this has positive implications on POS and in-depot marketing (as they will be communicating to the decision makers) but it also gives rise to the following idea which would be constructive for all parties concerned.
“Suppliers struggle to deliver insight and ideas to retailers on a consistent basis. Why don’t suppliers and C C operators team up to deliver regular monthly Business Builder forums where retailers can gain market and category insight from operators and suppliers, and also exchange best practice tips between each other in open session?”
When it comes to the products retailers stock, they all sell the core products such as crisps, snacks, confectionery, soft drinks and cigarettes. These categories are reasonably easy to manage.
But the average C C retailer customer sells only 11 out of 16 key categories. Fender says this demonstrates how C C customers are missing out on major opportunities.
Products which would be considered core to any serious convenience retailer are sometimes lacking in independent stores – 17% don’t sell milk or dairy products, 22% don’t sell bread or bakery products, a third don’t sell chilled lines.
The common factor in all the products mentioned above is that retailers don’t appreciate the importance of these categories. When asked which categories are most important to them, or to their shoppers, fresh and short-life foods are at the bottom of their list… probably because they are considered hard to manage.
Other categories where C C customers are losing sales due to not listing the products are chilled/milk/dairy. As Fender points out: “This is where the growth is (70%–plus of a Tesco Express/Sainsbury’s Local sales are in short-life lines) but again it is also where retailers are most concerned about wastage, product handling and staffing. Such fears make it easy to shy away from these categories but they are absolutely key to satisfying the needs of the 21st century customer and offer huge growth opportunities.”