Advice for the Independent Food Retailer
Let’s take a step back to give us some perspective on the ‘future’ question. In the late 90’s, when we were all trying to get to grips with ‘this internet lark’, myself and many other far more eminent retail experts, dazzled by such an exciting new channel, were confidently forecasting that “in 10 years time the high street will have disappeared; we will be buying everything online!” During that time the first big online business bubble burst and there was a cautious reappraisal of the role of the internet. It highlighted how difficult it is to change consumer behaviour (witness the challenges of fashion retail, not being able to try on clothes and related despatch problems and costs). The fundamental issue with the retailers of the time (and the same ones prevail today) was with the base assumption that convenience and lowest cost are the key drivers of shopper behaviour.
No doubt they are important factors; but this obsessive focus from the key players has resulted in a nation of both smart and promiscuous shoppers (and a considerable amount of margin erosion for retailers and brand owners). What we call a ‘race to the bottom’. Our repertoires have changed dramatically (gone are the days of the one supermarket, once a week family shops). The same shopper these days might buy their washing powder in Tesco, meat and veg in Waitrose and their parmesan in Lidl…yes Lidl (because it is the same gear but 25% cheaper!). In some recent qualitative shopper research, I was talking to a customer about a piece of point of sale messaging, proudly announcing that a particular loaf of bread was 3p more expensive at their upmarket competitor down the road. The somewhat surprising response from the accompanied shopper was ‘well if it is only 3p more I’d rather shop at…’ – precisely the opposite of the desired response.
We are promiscuous because we like variety and we are teased with endless choices and ideas all the time through the many media channels we are exposed to every day. The youth, millennials and even our ageing silver surfers are exposed and engaged in countless media touch points whether we are instatweetgooglebookchatapping, reading blogs or even old fashioned watching the TV; we are always on. In essence, regardless of our social or economic status we are empowered to cook new and exciting things, eat out everywhere from the latest cutting edge street food hotspot to a surprisingly good value Michelin starred lunchtime special.
So what drives independents? Why, after gazillions of pounds worth of investment over decades, have the major multiples not finished off the entrepreneurial adventurers on the high streets, in our farmers markets, online and elsewhere? Even in the face of ‘impossible to compete with’ pricing strategies and seemingly insurmountable operational challenges, new and exciting alternatives to the norm continue to appear and sometimes thrive.
The answer, I believe, is quite simple. It is because they are different. They are an alternative to the norm and refreshingly so. And they are innovative and that is key. But do not make the mistake of thinking space age, digital, cutting edge is the obvious answer to new and independent. Most of the interesting and successful independents aren’t the ones doing off the charts stuff we have never seen before. They are re-interpreting and representing variations on things that were hugely popular in the dim and distant past (look at post war, cheap meat cuts now on every high end restaurant menu). Or responding to consumer trends (provenance, health, being kinder to the planet). Not in a contrived or forced way, but by ‘doing their bit’. In essence they are solving a problem (often one we didn’t realise we had) by providing an alternative that empowers their customers, guests, drinkers and diners to be part of something new. Something they can rave about, instagram (yes it’s a verb these days!), take their mates to, even go back to and feel like they are part of something new.
But it is hard to do well. Independents want to be successful but must be careful of their ambition. It is very easy to differentiate a formulaic chain in the making from the genuine local independent. Some do it brilliantly – I am in awe of the original, tiny, scruffy, family run sourdough pizza hotspot in Brixton Market – Franco Manca – that now seems to be everywhere, in London at least. And it is still great. A chain that still feels independent.
Beware those who ignore what we call the ‘value equation’; the relationship between price, quality and experience. True value comes from a smart combination of all 3. And remember, in the hospitality game, experience is what has customers coming back.
We are looking at the restaurant landscape in central London with some wariness at the moment. There is going to be some consolidation and it might be brutal. Not because what we have currently isn’t outstanding. But the new model of low price points and astronomic rents requires you to be full all the time with fast turnover. We have an oversupplied restaurant market in uncertain times – so tough times ahead methinks.
So the future of independent retail? Well I think it is bright. We are a nation of shop keepers. And increasingly a nation of empowered entrepreneurs. And it has never been easier to start something up. But it is hard to deliver. Very hard. The cliché of 2% inspiration and 98% perspiration is true. You need a ton of luck too. It takes 4 times as long and costs twice as much as even the most conservative plan. Survival of the fittest. But boy when people come to you instead of the great big tax-dodging multiple around the corner you can feel good about delivering better sourced, higher quality food, in an engaging atmosphere. You might even make a few quid!
Richard Savage is a partner in Flavour Feed – a global food trends resource that helps food and drink professionals innovate smarter. Flavourfeed.com.