Customers of the UK’s major cash and carries are spending more time shopping around, and going further afield for their supplies to get better deals, to such an extent that Tom Fender, managing director of Harris International Marketing, asks: “Do these retailers spend any time in their stores?”
HIM’s latest C C Customer Tracking Programme revealed that the average distance travelled to cash and carries was 5.6 miles although some 22% of customers travelled more than 10 miles.
In answer to the question “why are you using this cash and carry today?”, more than two thirds (68%) replied “because it is my main cash and carry”, and yet they only bought just over half (55%) of their total purchases there.
So where do cash and carry customers go for the remainder of their weekly needs? The study showed most use several other sources. Nearly three quarters (73%) go to other cash and carries, 55% use delivered wholesalers (which, according to Fender, raises some questions as to the loyalty of symbol group members), 3% buy from their local supermarket and 4% use other unnamed sources.
Why do they use these other sources? Nearly half (44%) said it was because they were taking advantage of the best prices. But Fender believes that for many retailers perception overcomes reality when it comes to price. This means that cash and carries that make the best use of promotional displays and attention-grabbing merchandising attract the most price-conscious customers.
“Cash and carry operators must ask themselves whether they have exhausted all ways of increasing their share of purchases made by customers who consider them their ‘main cash and carry’,” he says.
“And they should do so by gaining a deeper understanding of what is important to the average cash and carry customer.”
Price is not the only thing important to cash and carry customers (given a 9.3/10 importance rating), availability is just as important (9.2/10), followed by product range (8.9/10), speed of service (8.7/10), staff friendliness/helpfulness (8.6/10), promotions (8.3/10), clean/tidy (8.3/10), product pack sizes (7.8/10) and finally fresh foods (6.7/10).
In the 2003 C C study customers gave their local cash and carry an average rating of 7.3 out of 10 on prices. In 2004 this figure has fallen to 6.8/10 which, according to Fender, is a possible indication of general market activity on prices. Price ratings can also be affected by impressions on other areas such as availability (if availability deteriorates, then everything deteriorates, in customers’ words).
A third of customers said they failed to buy an intended item, with 80% of these citing out of stocks as the cause. And only 10% of these bought replacement items for the products they failed to buy.
“I would argue that this has more to do with poor visibility and accessibility of products than products not being available,” says Fender.
“Also, in some cases ranges are too wide. In most retail formats this has lead to range reductions. The need for this kind of action is just as great in the cash and carry channel as in any other grocery channel.”
The average ratings for promotions, product range, pack sizes and general cleanliness and tidiness of depots have all also fallen in 2004.
Fender comments: “Cash and carry operators must ask themselves whether the promotions they are offering are what their customers really want and are they made impactful in the depot? Is the product range too wide and not best suited to the customer base? Are the pack sizes too large and could this be why one in five customers now use supermarkets to buy products for resale? And hygiene factors in depots must never be overlooked.”
When it comes to fresh foods the average depot rating has fallen to 6.6 out of 10, which shows a low appreciation of their importance, according to Fender. “There is only a limited chance of success with belief like this. And this is despite the fact that those cash and carry customers who sell fresh foods admitted that sales in this category had increased by an average of 47% over the last year in their stores.”