Lure of symbol groups grows in market turmoil

Family Shopper retailer

The massive wave of recent industry consolidation no doubt leaves many retailers considering their options going forward in a market that’s set to become more competitive than ever – particularly for unaffiliated retailers lacking the weight of a big brand behind them.

The face of the local retailing industry in Scotland has changed almost beyond recognition in the last year with the likes of Tesco-Booker and the Co-op gaining an ever-stronger grip on the convenience sector. The collapse of Palmer and Harvey has also helped trigger a fresh wave of jostling for position with wholesalers across the UK battling to take advantage of P&H’s demise.

Bigger groups mean bigger buying power at the end of the day and the gap between the haves and the have-nots is set to increase to new levels. The retailers left most exposed as a result are unaffiliated independents who will find it harder and harder to provide a competitive offer without the might of a major symbol or fascia behind them.

For many independent local retailers in Scotland these days, then, the choice is less whether to join a fascia group or franchise and more about which one to join. And even for those currently with a symbol group, the recent spate of acquisitions and mergers has unquestionably left some retailers wondering whether it’s time for a change.

The continually rising minimum wage, huge increases in rates and ballooning compliance costs across the board mean that for many the only option is to gain the support that comes from being part of a buying group of some shape or form.

The stats bear this argument out: according to the 2016 Local Shop Report, the UK’s 15,100 symbol group stores generated £14.2bn in sales in 2016. The 19,100 non-affiliated independent convenience stores managed less than half of this figure, generating £6.3bn in sales over the same period.

Symbol groups have grown their share of the convenience-store market from 22% in 2002 to almost 40% in 2012. According to IGD data, this could rise to 50% by 2020.

Average annual investment per store type
  • Independents –  £7,632
  • Symbol Groups – £10,716

Whether you are considering joining one of these groups for the first time, or are thinking about moving from one to another, this guide will provide you with the key data you need to make a fully informed decision as to which fascia is right for you.

The great news is that the range of choices available has never been greater. Each has its own particular strengths, but one thing that they all offer is buying power, a household name above the door and a comprehensive support network covering everything a retailer needs to remain competitive in today’s retail environment.

Choosing a symbol group can seem an intimidating task. It is a big commitment, especially if you are already tied into a contract or faced with joining fees – whether this is in the form of an admin charge, buying shares or paying for signage or delivery. But there is no doubt it can pay huge dividends.

How to decide which symbol group is right for you will ultimately depend on your shoppers and what they want you to offer them. It might come down to the kind of store standards you are prepared to meet and the ways of working. If, for example, you are simply looking for a way of running promotions effectively then you might want to consider joining a cash & carry-based symbol group where you would normally go into depot and pick up the goods yourself.

The pros for retailers considering joining or switching symbol groups are numerous, not least because of the support a fascia can offer a retailer in every aspect of running your convenience store, from exclusive discounts and buying power to staff training, running a social media page and availability of new technologies.

Top reasons for joining a symbol group
  • Wide range of products
  • Promotional activity
  • Regular communication
  • Marketing in trade press
  • Recognised brand above the door
  • IT and HR support
  • Dedicated trade website
  • Buying Power

Being part of a symbol group gives you the backing and the knowledge, from promotions to posters and displays, along with the merchandising system and product knowledge to help make your business a success.

Groups will send several reps and provide supplier contacts. They can offer an in-depth analysis of what you should stock, where you should stock it and how much you should be making.

The support and advice that is given regarding store development should soothe shop owners who are nervous of change, and groups may introduce their own recommended shopfitter to assist with project planning and store layout. Many also have their own consultants who can do detailed reports on potential or increased turnover.

These can be simple or very detailed, taking into account the demographic area around the shop and local competition. Sometimes there will be a fee, but it may be worth the cost as often it gives additional industry-specific information that will support any application. This information, when backed by a symbol brand, can add an influential supporting voice to any finance application.

Retailers should ask themselves whether remaining unaffiliated is detrimental to their potential as a business. Whatever level you decide to go in at, it is best to do your research before determining which symbol group is right for you.

Things to consider when choosing a symbol group
  • Are there any initial costs?
  • What ongoing fees are there?
  • Are there delivery charges?
  • Is there a minimum spend?
  • Is there a minimum percentage of buying through them?
  • Is there a minimum length contract?
  • Will I have to purchase any new equipment, such as EPoS?
  • Do they allocate stock and are certain lines sent out automatically each month?
  • How frequent are the deliveries?
  • How quick are the lead times for deliveries?
  • What are their wholesale prices like compared to your existing suppliers?
  • How extensive is the product range?
  • Do they provide development support and in what form?
  • Do they provide a chilled & frozen range?
  • Do they offer advertising support – either nationally or locally?
  • What kind of consumer offers do they run?
  • How will they help me to stand out against the competition in the area?
  • Is there an own label offer?
  • Do they have a loyalty scheme?
  • Will they invest in my store and in what way?
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