Convenience retail is highly competitive the world over. The channel is dominated by big players, national and multi national businesses with deep pockets, lucrative supplier relationships and the competitive advantage of centralised, efficient decision making.
A single locally owned convenience business has an uphill battle. It is not impossible, but it is tough.
The prime proposition of any convenience is convenience, location.
The secondary proposition is value, price.
While there are other propositions, they fall a long way behind, in my view, location and price.
A convenience focussed newsagency with a national brand convenience store nearby and / or fuel based convenience offerings nearby will always struggle. The brand awareness of the national brands counts for plenty as shoppers know what to expect.
While an indie retailer may pitch on price to compete with a national c-store, they will not have the capacity to negotiate the same buying price points nor will they have the resources to subsidise price. On top of this, they will rarely have the ability to market in the same way a national c-store will, especially in-store with price messaging.
So, to me, operating a convenience business feels like a tough battle.
I see more value in pursuing other retail segments, where differentiation is easier, shopper passion is higher and return business more certain. In such a business the margin dollars per purchase are higher, competition is less and people are more likely to travel by choice to shop with you.
An Aussie newsagency in any location can specialise in higher margin product categories. It takes research to understand the opportunities and maybe time to negotiate product access. However, the result can be a business that is more easily run, relying on less foot traffic, needing less of a perfect location.
This approach to me feels more strategic, long term and valuable in terms of overall business value. It is a business that is more easily marketed externally and harder to compete with.
Further, niche specialty retail is less likely to attract a national or multi-national retailer as competition. The competition is more likely to be online and while, for sure, this is a tough thing, you can look and understand an online competitor more.
Kudos to newsagency operators doing we’ll out of a convenience model. More power to you.
Mark. What you state is correct, but let me explain in another view.
Jeff Bezos, CEO of Amazon, stated 3 years ago,
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I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time.
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For a high street newsagent, we focus on the change, but also need to focus on something “no change” and that can be a foundation of change. Otherwise, our business will collapse before we successfully make the change.
C-store model, has been something “no change” for many decades, and will be foundations for transformation for many high street shops.
Let’s go back to Amazon’s strategy to change. They steal the traffic from traditional bookshop customers, those 80% customer who traditional bookshops don’t care, and represent high volume /low margin operation. Traditional bookshops take care of 20% best customers, and hopeless to see 80% customers lost to Amazon. In the end, traditional bookshops have to fight to keep the last 20% customers.
Should a high street shop, let national chains of c-stores take away customers without a fight?
Or just give out the customers to c-stores, and try new products and new categories, in other words, try to take customers away from other market sectors?
If we determine to take more market shares in new market sectors, should we take the top 20% customers with best service and industry knowledge, or take 80% customers with high volume/ low margin?
Either way, you need deep pocket.
For some high street newsagents, c-store model provide something “no change”, and secure something “change” in future.