In the small market town of Newcastle Emlyn in West Wales, a war is currently raging. News that a prime site on its tiny, character-full high street is being offered to one of the big supermarket chains has not gone down well with local retailers, who are now fighting back with feisty campaigns and a flurry of press coverage.
Similar battles take place in towns across the UK every year. Yet, far from being exhausted by their uphill struggle against the might of the multiples, independent retailers are drawing deep and giving the fight everything they’ve got. Often, they have public sympathy on their side, thanks to fears of additional traffic congestion and the perceived risk to the town’s ‘soul’.
But the one weapon they have lacked until now (other than the quite obscene financial resources available to the big multiples) is strategic information—information that would enable them to make better choices and capture customers’ loyalty to protect their businesses against rival attacks on their market share.
In the back offices of Tesco, Sainsbury’s and Asda, there are managers crunching numbers— looking at stock movement, and making comparisons between the performance of their own store against that of other branches. Having access to some truly powerful software, they can slice and dice this data any way they like, ensuring that they never miss an opportunity to boost sales by targeting a special promotion, extending a range, or introducing attractive new lines which are selling well in other stores.
Independent retailers, by contrast, have traditionally lacked such powerful insights, relying passively on suppliers to pitch them with new products and provide them with external trend data. As a result, their experimentation in-store has relied heavily on incoming promotions, instinct, and their own ad-hoc research. But what if they could somehow access the comparative data that has long been the preserve of the big multiples?
Levelling the battleground
Part of the reason this hasn’t been possible, traditionally, is down to the fragmented nature of the supply chain, and the relative paucity of data transparency along that chain. Realising this, and with re-ignited passion to play the multiples at their own game, suppliers, wholesalers and independent retailers are beginning to form stronger bonds so that they are able to fight back with sufficient power.
Wholesalers, for example, are now beginning to reassess the potential for them to strike closer bonds with their suppliers and retail customers, to better leverage their product ranges and raise the bar in their battle against the big multiples.
Forging closer ties and being more willing to share sales information is a key part of this strategy. Leaving aside their scales of economy, and huge wallets, one of the main advantages the major supermarket chains are able to wield over their independent rivals is their holistic view of the market. Through joined-up systems and clever loyalty schemes which transcend individual stores, they have been able to amass huge swathes of data, which they can interrogate very cleverly to make timely stock procurement and quantify the potential return on marketing decisions.
By beginning to look at their own sales figures, from across the supply chain down to individual retail stores, wholesalers are now seeking efficient, effective ways to collate and share similar data with suppliers and retailers, so that they can hone their stock management and promotions, while simultaneously improving the offering to the consumer.
In an ideal world, independent retailers would be able to see, at a glance, how their own purchasing figures for the last week, month or quarter compare to those of other similar stores. A useful comparison could be with other stores in the same symbol group, similar-sized stores or stores serving people in the same town.
If, in doing this, the retailer was able to spot a missed opportunity—e.g. a best-selling product which their store is not currently carrying—they would be in a better position to act quickly, adding the line to their next order.
Having visibility of comparative, up-to-date purchasing trend data would enable independent retailers to make smarter decisions, plugging otherwise unidentified gaps in their product portfolios, or adjusting the sizes or brands of the products they stock, to maximise sales, according to the performance of variations of those items in other stores.
Purchasing optimisation = 12-15% sales uplift
Early examples of such data sharing have shown a potential 12-15% uplift in sales as a result of stocking more optimum product ranges—simply as a result of being able to compare the products being stocked by one retailer against broader retail purchasing trends. That’s because this puts them in a better position to select the right brands, in the right sizes.
Suppliers should be able to harness this information as well, allowing them to work with wholesalers to extend personalised offers to individual retailers, with greater cost efficiencies and success rates than large-scale media and advertising campaigns.
Making this data available and using it in this way would bind the supplier, wholesaler and retailer in a closer, more mutually beneficial relationship which would, in turn, begin to strengthen their relative positions against the major multiples. Crucially, consumers would win too, because their local retailers would now hopefully be stocking more of the products they want to buy—and with pertinent special offers.
Sharing costs nothing
Best of all, since the required data exists in the wholesalers’ systems—albeit probably not yet in a form that is readily accessible or immediately actionable—sharing it should cost very little, certainly to the retailer.
Provided retailers are buying from forward-thinking, information-savvy wholesalers, they should stand to benefit from the comparative purchasing trend data without the need for any investment on their part. If they were able to access this, say, via the Web, using secure passwords, they wouldn’t even need any special equipment.
Information, presented meaningfully, is knowledge, and knowledge is power. Closer supply chain ties, and a preparedness to share sales information, then, potentially offers a huge advance, enabling independent retailers to claw back the high street, boost sales while driving down costs, and regain customer loyalty.
As the recession presses on, and competition on the high street continues to intensify, independent retailers need to draw on every weapon in their armoury to protect and grow their hard-won market share. Stronger supply chain relationships level the battleground. Once retailers begin to act as ‘virtual multiples’, they have their best chance yet of forcing their way collectively into the top four grocers list.