Following a 2017 which saw consolidation on a huge scale is now the time to change?
HAS the convenience retailing landscape ever evolved as quickly as it did in 2017? A year of mergers and acquisitions, administrations and new agreements promises major changes in the pipeline for almost every symbol you could care to mention. So perhaps now is as good a time as any for retailers to take stock.
The prospect of boosted buying power was no doubt at the heart of much of last year’s wheeling and dealing, and for convenience stores there’s now a raft of options and new realities to consider that might have been unimaginable 12 months ago.
It’s fair to say that when supermarket giant Tesco announced a £3.7bn deal to merge with Booker Group, the UK’s biggest food wholesaler, it took many by surprise.
Questions may have hung over the deal for most of 2017 but, following a ruling by the Competition and Markets Authority in December, it’s go for launch, leading many Scottish retailers into strikingly new territory.
Booker counts Londis, Premier and Family Shopper among its symbol groups and it now remains to be seen how much of an advantage this will give retailers on price now that they’re in cahoots with the nation’s largest supermarket.
There are definitely still questions to be asked of just what it will mean to be a Londis, Premier or Family Shopper under the new regime – but these are arguably all of the good kind.
How will the deal affect access to promotions? What sort of prices can retailers expect to see at Booker in the months ahead? What will the Booker range look like in one year’s time? What about five years? Will Booker symbol retailers continue to enjoy the same level of flexibility and independence as they do today? With the buying power backing of Tesco, just how competitive can Booker symbol retailers get compared to other c-stores?
Booker’s relationship with Tesco will doubtless continue to evolve over the coming months and years. For those looking for a more certain relationship and the accompanying buying power, albeit without the same flexibility in terms of range and merchandising as a symbol store, the Tesco-owned One Stop continues to seek new franchisees in Scotland. A major force in England, One Stop has been making strides north of the border with further expansion on the horizon.
Some open questions are not unusual when making a business decision, but sometimes you just have to make a call and see where it takes you. That seems to have been the attitude of Nisa retailers who voted in favour of a purchase offer from The Co-op in December, marking a watershed moment in the mutual’s history.
With the consolidation of Tesco and Booker promising to create a convenience behemoth in 2018, it probably shouldn’t be too surprising that Nisa retailers opted to expand their circle.
Now – subject to approval from the Competition and Markets Authority – Nisa has scaled up its own buying power while at the same time substantially changing the nature of the business.
As part of the deal, existing Nisa shareholders are in line for an equal initial payment followed by a deferred share payment payable over three years, as well as additional rebates payable over four years.
How shifting position from retailer owned mutual to The Co-op’s member-owned model will affect the symbol isn’t clear yet, but gaining access to The Co-op’s range should help stores to steer offers towards current trends.
Once the deal goes through, Nisa retailers will have access to The Co-op’s range and own-label proposition. The Co-op has said members will still enjoy the independence to operate their stores as they wish.
One consequence of The Co-op’s purchase of Nisa is that it reignites the symbol’s relationship with Costcutter.
Following the collapse of financially-fraught wholesaler Palmer & Harvey, Costcutter and The Co-op announced a new wholesale agreement. The deal will see Co-op become the exclusive wholesale supplier to Costcutter and its symbol brands including Mace and Simply Fresh.
It may have been musical chairs elsewhere but in Glasgow, United Wholesale Grocers (UWG) celebrated stability last year with a 40th anniversary event that was packed with promotions.
Unafraid to move with the times, UWG has been growing its ShopLocal symbol at a rapid rate – at one point rolling out to 40 stores in a four month period. UWG’s flagship symbol group, Lifestyle Express, also continues to perform for the wholesaler and the appointment of MD Amaan Ramzan to the role of vice-chairman of Landmark Wholesale can’t do retailers any harm when it comes time to representing their interests at a UK wide level.
Another wholesaler celebrating a big anniversary in 2017 was United Wholesale (Scotland), which marked the 10th birthday of its Queenslie depot with some fine celebrations at Glasgow’s Crowne Plaza. Celebrations were not in short supply for UWS which also picked up a number of award wins last year including the sought-after Champion of Champions award from the Scottish Wholesale Association.
Expansion of its symbol footprint is still very much on the cards at UWS and its store estate now numbers in excess of 530 stores – a substantial figure considering the company only launched its first fascia, Day-Today, in 2005.
Not content to hang back after picking up the Industry Achievement award at the 2017 Scottish Grocer Awards, JW Filshill boss Simon Hannah saw his firm’s KeyStore symbol take another leap forward with the launch of KeyStore More.
One of the stated aims of Filshill’s KeyStore More is to help businesses that want to grow and those who have signed up so far have enjoyed store refit advice and planning, a new upmarket fascia, competitive terms on a range of products, merchandising advice and support. As an extension of the well-kent KeyStore brand, KeyStore More strikes a balance between the new and familiar.
As familiar fascias go, there’s arguably none more recognisable to consumers than Spar, which celebrated 60 years in the UK last year. It’s fair to say that if you’re in the market for a symbol then Spar wants to talk, as it is in the midst of a major recruitment drive, with sales teams on the road and investment up for grabs. Spar is offering local incentives for those who join up at the moment.
Ian Taylor, retail director at Spar UK, said the symbol is excited to welcome a new wave of convenience retailers to Spar. “We are ready, right now, to move the convenience sector to the next level and bring independent retailers a bright and exciting future,” he said.
Highlighting the major changes that have occurred in the industry over the last 12 months, symbol development director James Hall suggested Bestway may be the ideal option for retailers searching for some stability.
“The current climate in retail makes it imperative that retailers choose a partner with a solid foundation who can meet their business needs and futureproof their growth,” he said.