>>THE ISSUES THAT MATTER, FROM THE PEOPLE INVOLVED
Last year it was the independent convenience store, this year it’s the turn of the specialist off-licence. After years of haemorrhaging sales to the multiple grocers, the inevitable wave of consolidation and rationalisation has hit the sector hard.
From Wine Cellar offloading stores to Oddbins to Winemark buying another The Grocer Top 50 chain, Philip Russell, there is a frenzy of mergers and acquisition activity washing over the specialist sector (see pp4/28). And there is not much time for any purchasers to get their acquisitions in order, what with the vital Christmas trading period just around the corner.
Indeed, experts are already saying this Christmas will be one of the most competitive ever, with not only multiples hammering down prices as per usual but also specialists themselves pulling out all the stops in a bid to match the supermarkets’ pricing strategies.
But can heavy discounting save a sector that has been in decline for at least 10 years? After all, Tesco and Asda sure do have deeper pockets than Oddbins and Thresher. And, while there are signs that consumers are trading up and looking for more interesting ranges - just look at the growth of speciality beers - the offer in supermarkets continues to be compelling for the layman buyer.
To give them their due, some chains have tried to tap into consumer trends, with bulk-buying in the 1990s and a move into convenience food more recently.
But such strategies have failed dismally, with only Wine Cellar continuing to support convenience store retailing, and Majestic head and shoulders above everyone else thanks to its completely different cost structure and business model.
Yet it would be wrong to write off the specialists. The more cynical may well point to a sector in its death throes - in our feature on page 28 one commentator puts its survival down to the fact that the property formats are so small supermarkets wouldn’t consider buying them! But there are signs, however small, that there is light at the end of the tunnel. A re-focus on the core offer plus more intelligent customer segmentation strategies appear to be paying off - and in some categories specialists are beating market sales growth. And as for price - well I know I can get a great deal at my local Thresher.
But does everyone else?
Don’t write them off yet