In today’s Britain is there a place for the Independent Food Retailer?
So, the stats. First the bad news. We are spending as a nation less of our income on food and currently spend less than Norway, Australia, France, Belgium, Italy, Croatia, Denmark, New Zealand, Israel, Austria, Canada, Spain, Holland, Germany, Portugal , Ireland, and many more. However the grocery sector in the UK is worth £177.5 billion or 51.3p in every £1 of retail sales. And by 2020 it is set to grow by 13% in total to £200.6bn. Of this there are no surprises as to who sees the vast majority of transactions. 40% is in Hypermarkets and superstores , 20% in small supermarkets, 21% convenience stores with less than 3000 sq. ft., 13% discounters, 5% on line, including on line sales through the supermarkets (or £9bn) and 6% on others…independents, farm shops etc. In total, the independent trade see about £19bn in sales, or 10%, although if we are looking at the speciality sector, this is more like £4bn. So our massive grocery story is for the speciality sector a rather small 2%.
Various population trends and projections can be identified that affect spend and influence purchase. It is clear from data available that the UK will not only have a larger population, but a demographically different one too. An increase in older and single person households can affect the desire to cook proper meals but produces opportunities for those that sell ready meals. There is a slight dichotomy that suggests that old and single folk would prefer to order everything on line for convenience. However it can also be argued that this is at odds with the personal touch – for some living alone, regular food shopping might be a principal connection with other people- and is better provided by small, local independent traders.
The UK will also continue to become more ethnically diverse, offering opportunities for those that sell imported products with broader tastes. The Food market is competitive, affected by the economy, demographics, rationality, habit and convenience. Shopping habits in the course of recent years have changed however it is to the disadvantage of the local community and the local retailer. Comfort has assumed control, with individuals avoiding excursions to the shops.
However there are opportunities and in varying food retail sectors. Morrison’s own goal with Hugh Fearnley and the parsnips has nothing but “buy local and support farmers” written all over it, the horse meat scandal demonstrated the impact of the constant energy put into making food cheap, with dire consequences.
The number of independent retailers across the UK has soared year on year, rising by 110% in the past five years according to new sector analysis. The annual High Street Tracker report from Simply Business analysed over 69,000 independent retail outlets across the UK and it identified a consistent rise in local, small businesses. The biggest increase has taken place in the North West.
Overall, the biggest surge was seen in 2012 (46%), following the publication of the Portas Review by the Department of Communities and Local Government and the Department for Business Innovation & Skills.
In 2014, coffee shops emerged as the most popular independent store to open, with more cafes established than any other retailer and rising by 31% over twelve months. Together with independent food stores – the most popular in 2013 – the number of these independents has risen by 100% between 2010 and 2014. FARMA, The National Farmers’ Retail and Markets Association, which represents about 300 farm shops, says that many members have reported a 5-10% increase in turnover this year.
After 2008 many consumers started shopping at cheaper supermarkets, such as Aldi and Lidl. Customers also started buying in bulk online. However, in contrast to previous downturns this time people continue to buy basic products at the cheapest price, and spend the money they save on products that are better quality. “Promiscuous shopping”, as the analysts call it, is replacing the traditional once-a-week trip to an out-of-town hypermarket. Those retailers are therefore being squeezed by Aldi and Lidl undercutting them and the farm shops taking business away at the top end, albeit still on a modest scale. Small producers are doing very nicely.
Independent businesses in the UK are also capitalising on the nation’s growing ‘foodie’ obsession, resulting in a surge of small food retailers. In a welcome break from High Street doom and gloom, a study by insurance firm Simply Business has shown there are now a quarter more independent food stores than there were a year ago, with bakeries and fishmongers the most popular new enterprises. Analysts believe that the figures are partly down to shoppers voting with their stomachs in the wake of the ‘Horsegate’ scandal, which resulted in a backlash against supermarket chains. While we can see a national increase of small businesses making the most of the “foodie” revolution, it’s clear that London has seen the more concentrated side of this growth spurt as they positively emerge from our economy’s downturn faster than other regions.
Consumers have grown up watching Delia, Nigella and Jamie slicing, dicing and occasionally mincing away. Supper has become a conversation – where it is sourced, how it was cooked and what is it matched with. Customers are becoming inquisitive and interested about what they put in their bodies, not only from a health perspective but also from an ethical one.
A major challenge is marketing and the power of the big player. Now for some time I worked for a large farm shop driving demand using the major selling points of the independent rural based food retailer – local, seasonal, artisan, homemade, baked on site and real people – farmers, shepherds, pig farmers and locations – orchards, fields, gardens, – and you name it, the supermarkets have systematically taken these words and messages to their own uses. An east London pop-up market would not usually be associated with a discount supermarket but this concept formed the setting of a company’s £20m ad campaign. The TV advert showed people visiting a specially constructed farmers’ market and are wowed by the low prices of the goods considering the quality of the food, and the crunch comes when they are handed the produce in a Lidl-branded bag.
The stunt is a way of convincing people the discounter’s food is just as high quality as that sold at farmers’ markets. The Co-op has vowed to double its number of local suppliers to 1,200 by the end of 2017 to quote “foster closer relationships” with small businesses. Retail chief executive Steve Murrells said the initiative, which comes as part of the Co-op’s strategy to back British produce, which would give local food “pride of place on our shelves”.
“We know our customers care about the provenance of their food and are keen to champion British products wherever they can,” Food minister George Eustice gave his backing to the scheme. “From family-owned microbreweries to local vegetable suppliers, small businesses are the heart of our food and drink industry,” he said. “It is great to see a major retailer like the Co-op supporting local suppliers and producers, bringing a real boost to communities around the country.” Now, I am not just going to bang the drum for local. I am equally passionate about the foods of the world and whilst that may not be the flavour for some, I do believe that commercially with the scope of the feasibility of independent retailing, it can’t be ignored.
High profile delicatessens – often originally set up to cater for the growing international community – French, Italian, Spanish, and Polish. – I have spent many hours and too much cash in Garcia on Portobello Road sampling Iberico ham, manchego, olives, tortilla, beans and those great salty crispy corn kernels. And as we have as a nation travelled and tasted, so our appreciation, and dare I say appetite for the foods of the world, have made us seek out these special places.
Demand has also increased for organic, locally sourced, additive free, allergen free, Fairtrade – and these outlets have been in a good place to respond.
Overall food and drink spend has risen by 2% since 2006. In general price affects purchase in three ways..trading down i.e. finding a cheaper version of the same product, buying less, i.e. smaller amounts of the same product, or spending more i.e. accepting the price increase – same amount – same product.
However decision making behind purchasing is more complex than a simple calculation – there is need, as in how important is it, and desire – there are some products – treats for example – such as chocolate and confectionery that experience increased sales despite price rises. Then add nutrition, health, cultural and religious practices, food availability – seasonality, food preferences, social considerations, environmental considerations, the power of advertising and special occasions and of course cost.
Low price is one of the most important weapons supermarkets have. Although shoppers can buy a full basket of fruit and vegetables from their local market for less, in the main, the supermarkets are consistently cheaper than independent shops. They do this by being big, and being able to negotiate harder with their suppliers.
But the independent has much to offer.
If regular customers get to know their independent trader they should be able to recommend products. For example, if they have a particular dietary requirement they can be great at telling shoppers all about products you may wish to buy.
Local bakers throw in extra rolls for regulars; grocers give informal 10% discounts; and market stall holders are prepared to negotiate on prices. Independent retailers can use their discretion to reward regular custom, and it can mean customers getting – now for the big shock- discounts on the items they actually want to buy, rather than being tempted by multi-buy offers in the big chains.
And another issue – many independent shops cannot compete because they cannot offer free parking, an important element in a convenient shopping experience. One of the recommendations of the retail guru Mary Portas’s review into high streets, commissioned by the Government, is that shops would thrive if the council waived parking fees for much of the day. Hardly any council has acted on this advice.
Major retailers have the advantage of economies of scale and can afford to slash prices and offer reduced costs. However, it’s easy to waste money on products shoppers end up not actually liking. You can hardly crack open a bottle of fizz in a supermarket aisle and do a quick taste test, or check if an apple is crunchy by taking a big bite. Neither can you do this online. At independent retailers, however, it’s easier to ask to sample a product. Many independent off-licences throw regular wine tasting events, while farm shops, bakeries and delis hand out tasters as a matter of course.
Farm retail is probably the most exciting part of food retailing at present. There are 4,000 (estimated) farm shops in the UK, and Defra has assessed that half of farms in the UK engage in some kind of diversified activity with farm shops being the most regularly profitable.
Some 30% of consumers visit a farm shop at least once a year, and 12% shop at a farm shop at least once a month. Farm shops are seen by consumers as supporting the local economy and ‘local’ has far outpaced ‘organic’ in recent years.
Customers are increasingly seeking out specialist food producers and Farm shops are opening at a faster rate than ever. The customer demand is based on a desire to understand and know the provenance of food, and for the food to be merchandised and sold in an authentic environment, coupled with personal service. There is also evidence of a genuine interest and pride in supporting local producers. People have never been so interested in quality local food and how it is produced, in freshness and in traceability. Customers are seeking out specialist producers and for some; there is a desire to reduce food miles.
Farm shops come in all shapes and sizes, the most sustainable at the moment are those offering what is known as a full basket shop – all the ingredients for a good wholesome meal, thereby making the journey for customers worthwhile, and then added to the experience is the opportunity for secondary spend either in a café or children’s play area. Above all the Farm shop is not seeking to replicate the supermarket.
High street and town centre Delis are evident throughout the country, and we all know our favourites. However for me, as a former owner, now advisor and sometime awards judge, success or failure cannot be put down purely to juggernaut supermarkets and the economic climate. Unlike supermarkets, these are not about familiarity and standard brands. In fact if anything, the independent’s mantra should be to do what the supermarkets cannot do. React swiftly, be flexible, give the highest level of customer service with that special touch, stock small production foods, homemade foods, champion the serve over counter with cheese cut to order, whole carcass butchery, fresh fish, local and seasonal fruit and veg.
Those entering this commercial environment need to be on their toes, with no illusions. When I visit delis and farm shops I expect innovation, research, a bit of risk. If I see the same old brands from the catalogues of the same old wholesalers, I am disappointed.
The old location bit is hugely important – access, visibility, footfall, demographics to meet your offer.
Retail Theatre is probably a little over used in our world – and a bit ambitious, in particular if you don’t get that a customer just wants to buy a loaf of bread and leave. But actually some entertainment is a possibility, some excitement, a surprise, a treat, a sensory experience – so yes, perhaps theatre. It’s not easy, and we British shoppers are a tough nut. Suspicious, cynical, reactionary to the American shop assistants style. We can smell the genuine from the fake. Know your product, and you will win loyalty. Harness the passion, and close the deal. An attractive display is a wonderful way for a food shop to tempt its customers to make a purchase.
Establishments that offer examples of how to create alluring displays with food, whether it’s with baskets of fresh fruit, piles of meringues or a great display of chocolate truffles.
An unobtrusive level of knowledgeable expertise makes shopping a pleasure
Just as in a restaurant, bad service can cloud enjoyment of a meal, however good the food was, the same applies to shops.
Supply chain needs consideration. Maintaining well stocked shelves with in date produce at all times is a challenge. Out of stock suppliers, erratic delivery times, damaged goods, short dated stock, an abundance of orders to process and invoices to pay.
So, stock that is kept in good condition. Spanking fresh produce that makes you want to buy it when you look at it, an array of cheeses that have been well looked after or an inviting display of fruit and vegetables are all sights that gladden my heart.
Know your customers. It doesn’t matter if cappuccino popcorn is in if they prefer salt ‘n’ vinegar crisps.
Marketing is a broad subject and even the local food retailer needs to have a plan, whether it’s about local PR, internal and external signage, events, promotions, social media, newsletters and announcements – loyalty programmes, seeking awards, it all needs attention.
The rise of independent food and drink retailers may demonstrate a consumer backlash against national supermarkets and an increased desire to buy local produce.
With a number of recent high-profile food scares, consumer confidence in the quality of supermarket produce has dipped. We’re glad to see the positive impact of this for small businesses, with shoppers turning to more local, independent food merchants for produce and essentials.
The surge in independent food shops exemplifies the nimble nature of small businesses as their success is often determined by smartly tapping into growing trends at the right time.
I hope these independent food and drink stores will profit from consumers moving from established supermarket chains in favour of their local providers who breathe new life into community high streets. Independent businesses are vital to the ongoing growth of the UK economy.
To assume that the supermarkets have it all is incorrect. But the independents have to fight back. Champion the small producer, give customers a treat, entertain them, build their loyalty not just with cards and points, but with a genuine reason to return.
By Edward Berry, The Flying Fork