Each year Asian Trader extols the virtues and advantages of retail clubs for independent-minded traders who prefer not to sign a binding contract with a fascia or symbol group.
We understand that independents are independent for a reason and like to retain decision-making power over as many aspects of their businesses as possible.
The comedian Groucho Marx famously said that he would never belong to any club that would accept somebody like him as a member – but what about a club where you could drop in and hang out, so to speak, without having to wear a funny hat or attend meetings?
There are many attractions and benefits of belonging to a symbol-group family, but it is only natural that full membership comes with some strings attached – for the benefit of all, and without which the group cannot be effective. Conditions of membership in symbol groups vary (see the upcoming Symbol, Fascia and Franchise survey in our 17 February issue) but will normally include a minimum spend requirement, and perhaps an obligation to partake in a set number of promotions, use a particular POS, and so on. For the true independent, an “opt-out” version of the symbol universe, where more freedom is granted in exchange for fewer rules, might be just the ticket.
A survey by Retail Attack revealed that there was an even split among retail club users who joined because they did not want to sign a contract with a symbol group and who wanted to retain the freedom to use whatever cash and carry they wanted. That sounds about right.
In the what now?
Retail clubs were originally set up by wholesalers who often also run their own symbol or fascia groups, and they have been around for quite some time now as an outgrowth of the original fascia concept.
One of the first in the UK for retailers (similar “clubs” such as Costco exist further downstream for consumers) was Sugro with its Sweet Break club, which started up in 1990 and is still going strong (it has over 2000 members); Parfetts launched Go Local in 2012.
Retail clubs were always a good idea for many reasons, not least because they benefited both the supplier and the retailer.
To begin with, they obviously helped the wholesaler move more product, and generated extra regular orders in addition to those from their symbol group members, allowing better bulk deals to be struck with suppliers.
Importantly, clubs trained the shy shopkeeper in dealing with the wholesaler on a subcontractual level, readying them for the big leap to symbol status, and many symbols and fascia groups contain former club members who “came in from the cold”.
For some independents, a retail club indeed remains a staging post on the way to full membership of a symbol group. For others, it can be a pleasant place to linger indefinitely. It would certainly be interesting to discover how many, if any, members of retail clubs are former symbol members!
Retail clubs also help independents to weather commercial storms. Tesco Metro opened its first site in 1992 and Tesco Express started a couple of years later, while Sainsbury Local opened its original branch – in Hammersmith – in 1998, and these were a direct threat to standalone stores because of their massive local footprint and their relatively low prices. When the multiples began their neighbourhood invasion, retail clubs were able to give independents a little bit of ammunition to fight back with.
Storeowners who preferred to use cash and carries as they wished rather than sign up to a symbol contract found that retail clubs carried fewer conditions that formal agreements (although they didn’t get some of the benefits, like financial help with shop refits and so on), but still gave them great and regular promotions, POS materials, margin and EPoS, among many other perks, while belonging to a looser confederation.
Now more than ever?
The UK – like the rest of the world – is embroiled in the steepest inflation for decades, combined with a contracting credit environment (meaning higher interest rates), an unprecedented and expensive energy disruption and an ongoing cost-of-living crisis.
This affects how much consumers can spend and also how much it costs simply for retailers to conduct their business. Needless to say, any help can be a great benefit under such conditions, and with access to deals and promotions, retail clubs can shine.
They were recommended in these pages during lockdown not only for value but availability, and the use-cases for retail clubs, despite the passing of the pandemic, have surely only grown.
Over time the benefits of retail clubs have become more sophisticated than just cut-price outers and shop posters. They now offer support, advice and even fascias – still without having to sign up to symbol status, and no joining fees or monthly fees. Indies can have access to promo skus with no, or minimum, compulsory spend, and – again – the promotions, which are regular and sophisticated to tie in with calendar events and other consumer spending highlights, can make a big difference to a retailer’s bottom line, not least by increasing impulse footfall and then getting customers to buy more once they are in-store, adding to average basket spend.
Nothing goes in a straight line, and the onward march of symbol and fascia is still slowed down by storeowners whose outlook is resolutely independent and maybe for this reason retail clubs are thriving as an adjunct to symbols and fascias. If you can resign from the club at any time (like Netflix) then it still feels like freedom rather than marriage.
The buying group Confex’s retail club, for example, says it is there “to help keep Members and their retail customers competitive within an ever-changing marketplace.” It points out that the multiples are continuing to grow their indie store numbers and the fascia groups are recruiting new stores in growing numbers. “But what about the Independent Retailers who are serviced by the Independent Wholesalers,” and “who want to retain their point of difference and don't want to be told what to stock, where, when and how to buy?”
That, in essence, is the USP of a retail club – and it appeals to the buccaneering, entrepreneurial spirit of many indies who still bridle at the thought of belonging full-time to a fascia.
Typical benefits on offer, in Confex’s example, are free membership, no joining fee, competitive pricing and enhanced promotions – all levelling the playing field a good deal in favour of the independent trader by Confex acting as a bridge between indie wholesalers and retailers.
Unitas runs Today’s Retail Club, that is available for adoption by its wholesaler members for their customers, and their “Plan For Profit” literature that regularly provides detailed and free category guides. It supplies widely used promotional materials and the facility for storeowners to print their own POS using club templates. It also features a profit-on-return calculator.
“We know it’s a tough environment out there and you’re under pressure to deliver cheap deals to rival the supermarkets and the discounters,” says the Today’s Retail Club, which now has 2,700 members. “This is why it provides retailers with a great range of bestselling products at competitive prices – to keep your customers coming back for more.
“Our promotions run every three weeks and are packed full of leading grocery, impulse, licensed and non-food brands, all offering great margins. We’ll provide you with attention-grabbing point of sale materials, including window posters and personalised leaflets for your customers, designed to drive footfall and grow your sales.”
Looking around
Local retail clubs such as those run by DeeBee wholesale (Hull and Grimsby), Khanjra (Blackburn) and United Wholesale Grocers Limited’s (whose Shop Local retail club is available to stores of any turnover or size, and offering a free fascia) are examples of Unitas members partaking of the parent organisation facilities.
Parfetts runs its Go Local retail club and says that with two formats to choose from, it provides a promotional solution for every format of independent convenience store. It also promises promotions of hard hitting, key lines to drive footfall and sales to your store: “Go Local Plus promotions are ideal for retailers who wish to compete in today’s demanding convenience market, but are restricted by store size,” says Parfetts.
“Go Local is an entry-level retail promotion, highlighting core range, everyday products at competitive prices. Go Local is available to all convenience retailers, providing promotional prices to entice customers and drive footfall. With over 900 Stores, across the North and Midlands, Go Local delivers great prices to the consumer, whilst giving local Independent Retailers the opportunity to compete (and often beat) supermarket prices!”
Each promotion is at least four weeks long and is extended at key times of the year to enable local and Parfetts reports that sales have grown every year since the club began in 2001, and now exceed £20 million per year.
Go Local is supported by a dedicated team of Retail Development Advisors, who can advise on all aspects of convenience retailing, from merchandising and category management to licencing and planning.
Booker has a stable of symbol groups in Londis, Premier, Budgens and Family Shopper. But it also has a retail club, Shop Locally (motto: “Great value, local service”), which promises not just deals that change every four weeks but also Every Day Low Prices (EDLPs) locked down for three promotion periods, as well as a range of materials such as shelf-edge and stack cards, promo-pricing at POS and window posters.
So if you don’t feel like committing to a long-term symbol(ic) relationship, and haven’t given them a try yet, retail clubs might just give you an extra edge that could turn into greater profits without any upfront costs.
The Retail attack survey, not recent but the most recent pone around, suggested that what Retail Club members would like more of is, in order, bigger rewards and rebates (35per cent), more promotions (29 per cent), more PMPs (also 29 per cent) and then more own brand lines (just seven per cent – although the trend for own label is hot right now).
As the inflation of 2023 continues, it looks like retail clubs will be more of an attraction to even the most gun-shy independent!
Brian McLister
