Amber alert for sales growth

With competition in the cash and carry sector increasing all the time many of the major players have set up their own symbol groups and retailer clubs in a bid to retain their best customers and attract new ones.

Bestway’s involvement in this trend was to set up Best-one, and in the six years since its formation it has grown to a nationwide membership of 534 stores. James Hall, business development controller for Best-one, says that when the membership of Bestway and Batley’s retailer clubs are taken into account the company can claim to be one of the biggest symbol operators in the UK.

Hall says there are three main sources for the growth in Best-one membership. “About one third of new members are joining from other symbol groups, another third are our cash and carry customers wanting to join a symbol group, and the other third are new build stores.”

While some of the “new build” stores are new buildings, he says retailers are also finding many other types of existing buildings that can be converted into stores. Recent examples include a converted classic car showroom and a gym in Bournemouth and a hairdresser in Plymouth.

Attractions for retailers joining Best-one are not only a recognised fascia and having their stock delivered, but also guidance in space planning and ongoing marketing support, and this is where participation from suppliers begins to kick-in.

Suppliers have worked with Bestway to develop core ranges for a number of categories and where stores joining the group are refitted these feed into the space allocations and into the merchandising within the categories. Bestway already had a close relationship with Gallaher before the formation of Best-one, with the tobacco company merchandising the tobacco rooms in its cash and carries, and Hall says this relationship carried over when Best-one was looking for a partner.

When it comes to tobacco, Hall says that most new members, even if they are joining from another symbol group, will have a new gantry fitted. He says, when a new gantry is planned the first thing Best-one does is decide how big it needs to be based on the size of the store and the expected footfall. “We then send that recommendation to Gallaher and they review the request based on criteria relating to the local market and the size of gantry required, and then proceed with the appropriate installation.”

Hall says Best-one is sensitive to the financial commitment that stocking a tobacco gantry represents to a retailer, and is careful to tailor the size to the expected turnover, so a retailer does not have to spend too much to keep it stocked up.

Oliver Michalski, Gallaher’s retail development executive with responsibility for Best-one, says once the size of gantry has been agreed with the retailer a planogram is developed taking into account the core range, and local market. Michalski says Gallaher’s research shows that there are wide regional variations in the top selling tobacco lines so recommendations for two similar size stores may differ significantly because of where they are located in the country.

The demographics of an area can also have an effect on sales of cigarettes, so stores in a cosmopolitan area or where there are many tourists, and hence passing trade, are likely to need a wider range. Good retailers, of course, know their customers well, and Gallaher’s representative will seek to reflect their input in the finished planogram.

Once the refitted store is up and running this is only the beginning of Gallaher’s involvement with the retailer. Representatives from Gallaher’s 200-strong field force make regular visits to Best-one stores to keep retailers up-to-date with all the latest developments in the tobacco category and to help them ensure availability. They can advise on compliance with any legislative changes, and also agree changes to the retailer’s planogram depending on market trends and when new products are launched. If the sales teams from Gallaher find that any products are out of stock they have a facility to put in an order direct to Bestway centrally, via fax or email, and this ensures the stock will arrive with the retailer’s next delivery. Hall says: “This makes Gallaher’s field force much more productive, because they are not just saying “you are out of stock’, but they can say ‘between Best-one and ourselves we can do something about it’. It is particularly useful with price-marked stock because when there is a changeover in price that is when some retailers can run out.”

In addition to the work Gallaher does directly with Best-one retailers, Michalski also works closely with Hall and Sikander Abbas, the tobacco buyer for Best-one, on a range of initiatives designed to boost sales. Best-one shares sales data with Gallaher on a regular basis so that the group, or even individual retailers can be bench-marked against national sales data to identify whether any trends or sales opportunities are not being maximised.

The most recent activity was an exclusive offer on Amber Leaf rolling tobacco for Best-one members. It was designed to encourage the retailers to tap into a recent insight from Gallaher that consumers are tending to trade up to larger 25g and 50g packs.

Many retailers only stock the 12.5g packs, and are therefore missing out on this growth area, so price-marked activity for the 25g and 50g packs was introduced. The 12.5g pack was price-marked pound;2.65, giving a profit of 17.1%, the 25g pack was price-marked pound;5.25, giving a profit of 22.6% and the 50g packs were price-marked pound;9.49, giving retailers a profit of 29.4%. Hall says: “This is giving retailers a very good deal and take-up has been phenomenal. It has given the retailer a better than normal margin to encourage him to sell it through, and then once it has gone they will go back to the standard price and that will continue.”

Best-one also organises seminars for its members and Gallaher will be involved next year. Michalski says: “We’ll give the retailers market information and we’ll be telling them about any changes to legislation in the tobacco market. That’s an important way we can work with the retailers.” Gallaher also helps to keep retailers up to date with the fast changing legislation through articles in the group’s Best Talk magazine.

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