Early next month, Coles opens what I am told is their most innovative supermarket yet. At Burwood East, at the revamped K-Mart centre, Coles is opening the latest in their new concept supermarkets. I’d urge newsagent to check it out. I will be.
The Coles transformation is extraordinary.
It begs the question, how are we transforming? This is an unfair questions for small independent retailers. But we should ask it nevertheless. How are we transforming?
Here are my personal thoughts reflected in my shopping centre based businesses as space and other opportunities permit:
- Size. I target no more than 150 sq m. More is not justified.
- Magazines. No more than 900 titles. No magazine specific fixtures.
- Cards. Located at the entrance. Preferably on the left.
- Stationery. No more than $15,000 in stock weight.
- Ink. $8,000 in stock weight.
- Counter. Very limited candy range.
- Fixtures. Every fixture to be moveable.
In the meantime, if you’re in Victoria, get to Coles east Burwood when it opens in early September.
Mark, Interested to know how you get the distributors to comply to no more than 900 titles. I currently have 1,000 pockets and receive 1,600 GG and 800 NDC titles. Many times I’ve tried to delete them, but they simply get resent after 6 months or they send something else. I’m convinced they have a dollar target that they distribute to, as every time I reduce it, it’s back to the same value within 6-8 weeks.
Bill it’s a challenge. I understand that I am lucky because I am loud (here) and have other hats (Tower and newsXpress).
That said, the approach is to advise the distributors of the pocket count and advise what is allocated to them. If they go beyond this then they are dealing with you in a way which I would say is reportable to a local authority (like the small business commissioner in Vic. or the CTTT in NSW) and the ACCC.
I agree that it appears as if distributors supply to a budget. They deny it but heck it’s what I see almost every day in their behaviour.
Mark,
I am interested in the size of store as I am currently attempting to negotiate a rent. I have 152sqm of space and between 2100 and 2400 customers a week. A large proportion are Lottery customers.
Including outgoings I am paying $706sqm. I believe that the shop is to large(and the rent is to high)
Door count at the entrances is about 12500 persons per week. I believe this to be a small suburban shopping centre. I am suggesting to the owners that I need to reduce the area on lease to make a profit. They suggest that the shop has been there for the past 20 years at that size.
What do you think re size. I am interested to know what others are paying for rent. Turnover is about $1.6million per year of which $1.1 is Lotto
Hi Wally
We are going through a market review at the moment.. and targeting a 50%-60% reduction in rent.
Our shop size if 132sqm, and we are paying $500psqm (inclusive of outgoings), which has increased by 347% over the past 5 years, whilst customer counts have remained static. The anchor has a weekly average customer count of 7,500, whilst we are around 2,650 per week.
Our demographic is old, and our centre is more of a convienance than shopping centre… both us and the anchor have a large volume of our customers who are daily repeats, with a very low average basket size. We do about $1m in lotto & scratchies, and have counter sales of app $500K. So based on the figures you have mentioned your countersales are 3 X ours, and yet we have higher customer count.
Analysis of comparable local centres indicates that we are paying between 50% to 60% above what we should be, however when the lease was negotiated last time the landlords had us over a barrel. This time the shoe is on the other foot, and our valuer and the National Retailers Association have suggested that we should provide some lubricant to help ease the pain. After all we have been use to it, and they may not…
We have used the ATO benchamrks to our advantage when presenting our case, and used fact base analysis which no one can deny. Whilst we are still awaiting a response form the landlord, and the silence has been defening, we are more than comfortable proceeding under the dipute clauses contained in the lease if the landlord dose not come back with a suitable offer. This we know is something they would not want as it will materially impact the carrying value of the centre.
Good luck Wally, as now is the time when we retailers do have the upper hand. Go in hard but make sure you are willing to do what you say… Landlords need tenants at the moment, and will be flexible.
Cheers
Peter
Peter
Thankyou for the info. My sales are $500,000 plus $1m for Lotto so very similar to yours. The door count of course includes many accompanying such as children so not necessarily shoppers. I would guess that the local Coles would have a simlar count to your anchor.
What are your thoughts re size of shop. I think reducing size will have little effect on sales.
Would like to talk so if you send me your phone # we could exchange info. email wallydog@iinet.net.au
Again any other info from others particularly in WA would be of benefit
Wally,
There are few factors for you to work on: driving traffic for a broader range of products, leveraging existing traffic into a broader range of products and defining your business beyond lotteries.
If you run a good card, magazine, gift, ink, stationery and newspaper business then you will fill and leverage 150 sq m.
The cost of downsizing beyond this has to be considered.
While every store has its unique and local challenges, these are broad points to consider. I’m happy to talk in more detail privately about this.
Mark Can you please tell me why do you consider 150sqm good size for a newsagent as many in sydney are well under.thank you
David, my 150 sq m comment is about major shopping centre newsagents.
In a high street situation it all comes down to the point of difference of the newsagency. If it is convenience, smaller is okay. If it is stationery range then a bigger footprint would be needed.
Newsagencies need to offer more than the traditional for a healthy future. The flexibility to do this starts with a reasonable footprint.
Hi Mark,
The size of the centre and the daily customer flows also drive both the size and the level of investment in both inventory and space.
Our centre whilst new, has not and is not generating the foottraffic it should. In part this the result of poor design and the seeking of over the top rents for an older and poorer population.
Ultimately whilst we can differntiate ourselves, it is the public perception of the centre as a whole.
Our landlords still beleive in the Kevin Costner movies – Fields of Dreams. Build it and they will come… Not so true in the real world.
Next time you are in QLD just south of the Sunshine Coast I would be more than happy for you to call in and provide some thoughts on what we could do…
Cheers
Peter