What does 2018 have in store for the local retailing sector?

Predicting 2018

After a challenging and dramatic year, 2018 looks set to be another year of change and evolution. SLR speaks to some leading industry players to find out what they think lies in store for 2018.

Paul Yates

Regional Accounts Manager Scotland, JET

As we move into 2018, current market conditions are creating an environment where ambitious independent forecourt dealers can thrive – as long as they understand the changing needs of the consumer

and deliver on those expectations. The current market also offers great opportunities for those fuel suppliers who are committed to helping their dealers thrive by consistently delivering on the fundamentals: competitive price, fuel quality, service and image.

There is a huge emphasis at the moment on brand partnerships and forecourts becoming convenience destinations – and many are – but our research shows that 70% of consumers simply want to fuel quickly and efficiently. Offering consumers a bright and welcoming image, high-quality pumps and well-maintained forecourt facilities is vital. Being able to consistently offer a first-class consumer experience is also key to developing customer loyalty – regardless of store size.

Dealers understand their consumers and their local market better than anyone else, so we’re likely to see forward-thinkers gravitate towards fuel suppliers who deliver what they want.

Pete Cheema

Chief Executive, Scottish Grocers’ Federation

The last few years have seen an unending stream of legislation on tobacco, e-cigarettes and alcohol. Retailers have shown how resilient they are by adapting to all of this and making things work in-store.

The flow of legislation and regulation is unlikely to ease up in 2018. The Scottish Government will finally implement minimum unit pricing for alcohol and they have also signalled their intention to look at restrictions on the promotion of certain kinds of products.

On a more positive note SGF has secured a £250,000 grant from the Scottish Government to help retailers respond to competition and customer demands through the introduction of Food to Go fixtures. SGF and the government will work together to shape the programme, which is likely to be launched in March 2018.

The private members bill on protecting shopworkers, which we helped shape, and is being put forward for consultation by Daniel Johnson MSP, and could change the face of retailing forever if it goes through. I would urge retailers to respond to the consultation.

Of course, 2018 is SGF’s centenary year and we have a full programme of events to celebrate this landmark.

Craig Brown

Retail Sales Director, JW Filshill

For us, 2018 is set to be the year of capitalising on data to drive profitable growth, greater, more informed decision making to maximise space and range.

Rationalising range to fit consumers’ shopping habits will be key, as will be using the consumer journey in convenience to give customers a range of products that are relevant to their shopping habits and requirements. We also see an extension of the ‘virtual’ range of products and services on offer with solutions like parcel collection advertised to increase footfall and drive new customers into convenience stores.

Food to Go is predicted to overtake tobacco sales by 2022 so it will be crucial for retailers to review their options and have the component parts of Food to Go that fit their profile.

Staying close to legislation will also be vital with so many changes coming in 2018.

It will be crucial to communicate with colleagues and customers accurately and in a timely manner to minimise disruption and stay ahead of the curve. One thing is for sure though: 2018 will bring challenges, but it will also bring opportunities.

Greg Deacon

National Sales Manager, Camelot

2018 is shaping up to be a pivotal year for the industry as we see suppliers shifting their focus to making better connections and relationships across the local retailing sector – benefiting brands and retailers alike. It’s good news for them, and it’s better news for consumers.

Once again, there will be even more investment in digital channels as brands commit to connecting across a range of new, and some not so new, platforms – enabling them to build a contact strategy that suits retailers’ needs and that fits in with their busy lives. All of these traditional and new ways of working will ensure that brands are front of mind throughout the customer journey.

Here at Camelot we’re investing in connecting relationships too as we pledge to commit £20m in retail initiatives designed to boost levels of engagement and improve in-store display, merchandising and game availability – all of which will help retailers to make the very most of having The National Lottery in their stores.

In fact, our sales force is about to double just in time for the launch of these brand-new incentives to get retailers truly engaged with bringing The National Lottery back into growth.

Gerry Hooper,

CEO, Zapper

The local retailing community will face many challenges in 2018, not least hanging on to their loyal customers given the competitive nature of an ever-changing retail market. Adding value based on consumer desire, want and need has not changed so understanding consumers and their desires will be key to keeping them satisfied. It will be about more than just knowing your customer by name however, so embracing technology and not being afraid of change will benefit the forward thinkers.

Creating the best possible environment for the consumer, being innovative, adding loyalty and value alongside technology, and a better, more precise way of communicating with consumers will be powerful, given what the larger groups are doing digitally. Therefore social media should be also be embraced to create ‘own retailer brand’ experiences!

Finally, improving the process and speed at the point of purchase will also need to be explored, given consumers are time precious and constant queues will increase the likelihood of basket drop and losing custom to competitors. Mobile payment and self-scan will help to keep the queues at bay. 2018 will be a year of change, and technology will be at the forefront of these changes.

James Lowman

Chief Executive, Association of Convenience Stores

2018 will see consumer habits continue to change, and the rate of change is accelerating. Many of these changes play to the convenience sector’s strengths: little and often shopping, convenience in terms of location and getting things quickly, smaller households and smaller homes meaning less space and less planned weekly shopping. However, there are threats too. People may be less likely to cook a meal from scratch with ingredients bought from a large out of town store, but they’re more likely to eat out, so stores not offering Food to Go will miss out on this opportunity.

Some of the reasons for these changes are down to rapid technological advances. Online grocery shopping has actually helped some convenience stores because that mode of shopping is complementary to top-up shopping from local stores. But short lead times and small minimum orders from operators like Amazon pose a new threat to convenience stores; for some people, this sort of online service is more convenient than the local shop. There are some great opportunities that technology brings our sector though, in terms of better targeted and more impactful marketing, or more efficient store operations, or just communications with suppliers and other retailers.

We can’t ignore the massive changes taking place in our market. Three multiple retailing groups – Tesco, Co-op and Morrisons – have entered the wholesaling sector in different ways. Will this lead to more and better choice for retailers, or will it lead to the market becoming dominated by a few huge companies?

Steve O’Neill

Group Marketing Director, PayPoint

2018 will be a year of great opportunity for Scotland’s local retailing community. Across the UK, the convenience market is set to increase over the next five years and Scotland is no different, with the population turning their backs on the weekly shopping trip in favour of more frequent top-up shops.

Maximising the value of convenience will be vital for retailers looking to capitalise on this trend and increase footfall and revenue. Over years of serving their local communities, convenience store owners have developed a rich understanding of their customers’ needs and in 2018, they will have the tools to understand the data behind their intuition and make more informed choices about their businesses.

EPoS systems – including our own – will come to market, offering full front and back office functionality, including stock management, ordering, wholesaler links and news management. PayPoint One will continue to provide multiple ways to pay, helping retailers get the basics right and keeping customers happy. Harnessed properly, new technology can deliver a revolution in the local retail experience in Scotland in 2018. Retailers who embrace data stand to make the most of the opportunities out there.

David Lonsdale

Director, Scottish Retail Consortium

“As we look ahead to 2018 it is worth noting there has rarely been a better time to be a shopper. Four years of falling shop prices has coincided with a technology revolution, with customers able to choose how they get their products, at the time and place that suits, at a price in real terms which has seldom been lower.

“However, for Scotland’s retailers much of the data from 2017 – on retail sales, footfall and shop vacancies – has made for sober reading, against a backdrop of further shifts in shopping habits. This has been compounded by further falls in the numbers of shops and retail jobs.

“Our economy lives or dies by what happens to consumer spending. That’s why SRC believes policy makers should be concerned about the formidable challenges for retail in the year ahead. Continuing inflation coupled with likely higher income tax, rising council tax and new minimum pension contributions are likely to put a strain on disposable incomes.

“Retailers themselves will continue to grapple with a hotchpotch of government-imposed cost pressures, with further rises in business rates in the pipeline. Hopefully the implications of Brexit and plans for a deposit return scheme will become clearer.”

Kate Salmon

Executive Director, Scottish Wholesale Association

I can’t remember the last time our industry moved into a new year without some sort of legislation hanging over us – I think everyone just expects it now – and 2018 is no exception.

From the SWA’s perspective there are several issues that we are watching closely. However, it is the Scottish Government’s decision to introduce a deposit return scheme (DRS) that we are particularly concerned about. Michael Gove, the UK Secretary of State for Environment, Food and Rural Affairs, is also considering a similar scheme for England – adding weight to Scotland’s plans.

We are working closely with the SGF and other groups who share our view that a DRS will be impractical and costly for consumers, businesses and local councils. So our priority is to continue to engage with the Scottish Government to try to develop a scheme which minimises the negative impacts on consumers, existing kerbside schemes and businesses. With Zero Waste Scotland currently looking at systems to see what works and what doesn’t, and the intention that ZWS will produce for the Scottish Government a DRS paper for public consultation, there is still time to voice our concerns. A collaborative approach provides us with the best chance to make our concerns heard loud and clear.

Lauren George

Brand and Trade PR Manager – Mars Chocolate UK

The past year has been another strong one for the confectionery category, with Mars Chocolate UK having five out of the top 10 chocolate brands. Across the category, bitesize and sharing formats continue to perform well as consumers are favouring Treat Bags and Pouches, and Mars has been driving this growth with Mars sales up to a 46.1% share of the category. Mars Chocolate UK has seven of the top 10 bitesize lines, including Maltesers, which is proud to be the UK’s number one Bitesize brand.

Additionally, with the festive season in full flow and Easter on the horizon, retailers should ensure they are fully-stocked with treating and gifting chocolate to maximise the sales opportunity this seasonal time of year brings. Sharing blocks have also grown by 2.0% across the category and Galaxy, the number two chocolate brand in the UK, is well equipped to thrive in this area with a strong large block and bitesize portfolio driven by new product development and £218m in sales and growth of +1.3%. Aside from capitalising on the rise of the sharing trend, this year also saw Mars Chocolate UK’s biggest brand launch for 20 years, goodnessKNOWS, which fits in perfectly with people’s busy lifestyles and looks set to drive the category forward in 2018.

Abdul Majid

Nisa Local Bellshill

We seem to say it every year, but I firmly believe 2018 will be another tumultuous year for Scottish retailers. With the Booker-Tesco merger/takeover and the Co-op takeover of Nisa taking place during the year, not to mention the collapse of P&H, we will see a major change in all retailer fortunes.

Booker and Nisa retailers will finally see if their retail dreams have come true – or turned into nightmares.

But it’s important no to forget that these mergers will impact the entire Scottish local retailing trade as the cash and carries and the other wholesalers fight to hold onto their retail business in the face of ever bigger competitors.

In politics, thanks to the work of the SGF and Daniel Johnson MSP, we could see the law changed to protect retail workers. Some sort of protection is long overdue, I think all local retailers would agree. However, the dark cloud that is the Deposit Return Scheme also looms in the background. As the saying goes, change can be scary but you know what’s scarier: allowing fear to stop you from growing, evolving and progressing.

Happy New Year to all of my industry colleagues when it comes.

Antony Begley

Publishing Director, SLR

Well, 2018, I think you’ll find that 2017 was a hard act to follow. In 20 odd years of covering local retailing I’ve never seen a year like the one that’s drawing to a close, leaving us with huge single use bag of imponderables to consider for the year ahead.

What will Tesco-Booker’s new stranglehold on the industry mean for everyone outside the tent, as well as everyone sitting inside it? What will the Co-op do with its new-found place at the top table of independent retailing? Who will mop up the £4bn of sales that P&H won’t be bagging any longer? It will be riveting to watch all of this play out over the next 12 months and there are sure to be a lot of winners – and possibly a lot more losers – along the way.

That aside, I believe that 2018 will be the year when the industry really starts to get to grips with technology and data – and not before time. As the next generation of customers comes through, their expectations from the shopping expereince will be radically different from even a few years ago and we need to be ready to deliver the experience they seek. If we don’t deliver that experience, there are plenty who will be only too happy to step in and do it. But a new year brings a new set of opportunities; the key is to be alert to them and to have the courage to embrace them.