Analysis by Sheila Eggleston Independent retailers know all about the value of making their customers act on impulse ­ whether through fridges well stocked with cold beers, or the use of eye catching confectionery fixtures by the till. That's been an industry mantra for years. But for the really professional small store operator, it's no longer enough. They have spotted that to really prosper in today's competitive climate, they must identify new areas of revenue and profit. And the best areas are those that tap into the impulsive nature of the shopper. Children's collectables, such as Pokémon cards and inexpensive toys under a £1, greeting cards and flowers, are proving to be winners because they offer impulse value and instant gratification for consumers. But undoubtedly, the biggest success story is mobile phone top-up cards which are now firmly at the top of the must-have list for retailers. Forty million people now own a handset, and more than five million mobile phones were given as Christmas presents this year, which means a massive uptake of top ups, and a double incentive to stock them. Handsets have also become a fashion accessory, enhanced by the value added extras of e-mail and text messaging. Spar estimates that top up card sales alone will generate £90m this year and over the next two years the market will double. One network estimates their total value at £2bn last year and expects this figure to double in 2001. There are differing card values, but the biggest network, Vodafone, says a £5 card is the right level to promote its pay as you talk because youngsters can afford it and the price comes within pocket money range. However, everyone is eagerly awaiting the arrival of mobile phone electronic top-ups which will have a huge impact, and not only on these extra five million mobile phone owners. Spar's head of retail Steve Blackmore says: "Mobile top-ups is a massively growing market. Our overall share has probably reached a peak because of what the multiples are doing, but it's the ultimate convenience product, and we see it as a big plus for us." Most of the additional profit in this market will be incremental to retailers. The downside, he says, is that there has been a fall off on the confectionery side as youngsters spend their pocket money on top-up cards instead. However Blackmore says that the electronic side has so far been a disappointment and was slow to start. "We were expecting to have up to 60%-70% of transactions through e-top-ups. By now all four networks ­ Vodafone, Orange, One2One and BT Cellnet ­ should have had a system running," he says. The only network available so far is Vodafone. From an initial roll out in East Anglia, Vodafone has begun to go national. Partners in its scheme include companies such as E-Pay, Omega and PayPoint. Another network, Orange, is almost ready to go live. Spar's retail services executive Chris Davies believes that by September there should be three networks up and running ­ Vodafone, Orange and One2One, so any retailer without a terminal should get one now. "More than 400 Spar sites are electronic, and by September almost all its 2,700 stores will have them," says Davies. Although going late into these cards has been a bugbear, the networks move to e-top-up will be a big plus for retailers and a massive relief as far as security is concerned. Only the margins for retailers appear to be a sore point. The networks seem to be pushing low margins on to retailers to offset the lower call rates they want to charge to consumers. These rates have been between 5% and 8% but the networks hope to drive margins down in the region of 5%. Retailers are very much aware that networks are pushing for the cut. Blackmore says: "It isn't that we haven't wanted to push the issue of margins, just that there hasn't been anything there to push." Another area that appears high on the agenda for many retailers ­ and Spar in particular ­ is the potentially lucrative food to go market. Not everybody agrees, of course. But there is evidence that in an environment where consumers have little time to spare, and want something to eat on the move, even the simplest food and hot beverage offering can generate significant levels of incremental impulse sales for retailers brave enough to take the plunge. Blackmore says Spar is pushing ahead with its food to go plans. Already a strong part of its operation, this year it will concentrate on a package tailored to individual needs. "We want to make it easier for the store and what it requires, and not give it everything on offer," says Blackmore. More information for retailers will be available on Spar's new website which kicks off in April. John Thurley, managing director of the Betterton Consultancy, says we are a nation of snackers, with five peak selling times a day between early morning and the drive home from work. His pioneering food to go concept is now being trialled by independents. Called Café Convenience, it is a combination of newspapers and sandwiches with major branded products such as Coca-Cola, Nescafé, and Crosse & Blackwell in a unit complete with a microwave and is being trialled at five sites ­ two in Spar stores owned by the Tates group, two in Jacksons and one in Mace in Scotland. At Tates' owned Spar store in Chelmsford, Café Convenience has achieved about £14,000 incremental sales for the store over 12 months ­ far more than estimated. Thurley says: "Originally we launched it in one four-metre format with one range of suppliers. Now we have four different formats for stores in different locations, and we can adjust the product mix to meet local trading needs. The smallest unit you can have is two metres long costing £2,700 and the largest, four metres, costing £6,000." Thurley says Mace has three sites it believes suitable for the unit. "We also have an extended consortium of manufacturers, one of the latest being muffin specialist, the Fabulous Bakin' Boys," he adds. Thurley's goal for 2001 is between 50 and 100 Café Convenience. Costcutter is less convinced about the value of food to go and instead, like many retail groups, is promoting instore bakery as the way forward for retailers wanting to boost sales. Trading and marketing director Angela Barber says: "We aren't going down a food to go route like Spar. But what is working well is bake off with companies such as Cuisine de France." Whether it's freshly baked bread, flowers for the missus or something for the kids, there are plenty of new opportunities for retailers to exploit. {{FOCUS SPECIALS }}

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