First Quench Retailing may have gone, but is customers haven't. What should c-stores be doing to take advantage? Graham Holter reports
Before it went bust, First Quench Retailing was frequently (and, it turns out, rightly) portrayed as a failing business. But even in its final accounts the year it famously lost £30m its sales were worth £652m.
That leaves a lot of slack for the rest of the retail trade to take up and independent drinks specialists have been quick to snap up former Threshers, Wine Rack, Haddows and The Local stores since KPMG abandoned the idea of selling the 1,200-strong FQR estate as a single entity.
To date, the biggest deal has been the sale of 34 stores to off-licence chain Rhythm & Booze. Another 14 went to wholesale group Venus, which also acquired the Wine Rack name. Property agent Christie & Co, which is handling the sale of most of the remainder of the estate, reports that enquiries have been made about a third of the stores. "The majority have been about keeping the stores as off-licences," a spokesman says.
But independent c-stores are also well-placed to capitalise perhaps at the expense of the big box multiples.
At the moment, 18% of post-7pm c-store shoppers buy beer and wine, according to retail research agency Him! That figure could be much higher if retailers improve their offers and do more to appeal to the vast majority who are buying drink for immediate consumption.
Most already provide a core part of off-licence offer: 42% of specialist off-licence shoppers are "on a newsagent mission" when they enter the store, according to Him! director Tom Fender. Top of their shopping lists are cigarettes, a category c-stores already have a heavy focus on, but BWS commands the second-biggest chunk of sales at 12.8% versus tobacco's 20% by value and FQR's demise presents an opportunity to increase this further.
C-stores will need to review their ranges if they want to appeal to FQR's former customers, however, say the experts. "It would be wrong to assume shoppers who have been loyal to specialist drinks offers will naturally migrate to convenience offers simply based on location," Fender warns. "This means looking at range sizes, balance of key offers and staff knowledge."
It is crucial they work more closely with wholesalers "to get more detail into their ranging and extend their wine range", adds Elwyn Davies, retail director of Spar wholesaler AF Blakemore, which has just bought eight First Quench stores, two of which it is reformatting as c-stores and six of which it is still considering what to do with.
They also need to invest in chillers, he says, echoing AB InBev UK MD Stuart MacFarlane's point (see over). This is a key area in which they can meet the convenience needs of their shoppers and offer a point of genuine difference from the big box multiples, he argues.
Many independents won't be able to dedicate as much space to drinks as a specialist off-licence would, but that doesn't mean they can't extend current ranges, says Davies. "We've increased our range dramatically over the past few years," he says. "As we speak, work is under way to increase that range and meet that demand that comes from Threshers."
The Scottish Licensing Act makes it tricky for Scottish c-store retailers to extend their sales areas for drinks with "considerable costs and a time delay", says Jamie Buchanan, director of Scottish Spar wholesaler CJ Lang, which has benefited from the closure of nine FQR-owned stores that operated within the immediate vicinity of its stores. But they can and should review their ranges, he agrees. Lang has already done just this in the Spars close to the former FQR stores in order to capitalise on the closures, and has stock in place to capitalise on the increased footfall.
The Bestway Group is also working hard to respond to a growing interest in drinks in the indie c-store sector. "A number of our customers have stepped up their wine and spirits purchases after a local off-licence store has closed," notes Roopinder Toor, controller of beers, wines and spirits. "We have extended promotions for retailers wanting to go, after this new market and provide development managers, too."
Indie c-stores need to make sure they don't neglect the off-licence basics: chilled white wines, well-stocked shelves and stock that is rotated regularly, says Jon Worsley, business sector controller for convenience at Foster's EMEA. Although retailers are getting some things right, they are still making basic mistakes.
"There can be too many wines on a facing, making it difficult for the customer to choose and for shops to maintain a good stock level on shelf," he says. "Some tend to focus on lower-priced wines or deals and forget the consumer looking for a quality wine or something for a specific occasion. These wines are important to capture the former FQR shopper."
The key is to educate staff and get them to engage with customers. "You don't need to know the whole wine industry, but do need to know what you stock and sell and be able to offer advice," Worsley says. "It is important to understand the occasion for the purchase too is it a midweek relaxing drink, or a dinner party?"
When stores do run promotions, they should be clear with their messages and position higher-value offers in wine towers or promotional bays, he adds.
But they don't need to worry unduly about price and about competing with supermarket offers, believes Ross Shelley of IMA, which until recently implemented the FWD's Blueprint drinks merchandising scheme. "I don't think price is all that important. People are prepared to pay slightly more for convenience," he says. "Range, availability and service are much higher priorities than price."
C-stores are also in a great position to capitalise on their inherent convenience and positioning. Their local knowledge means they can adapt their offers to local tastes, sales patterns and events, says Simon Harrison, commercial director for off-trade wholesale at AB InBev UK.
"Independents deal with customers on a first-name basis," adds Shelley. "Communities are built around them and that's something a Tesco or a Threshers can't compete with."
Threshers certainly couldn't. "That's one of the reasons it fell over," says Davies. "A good Spar retailer can deal with local needs much more easily than a massive chain like Threshers. There's a few million pounds here to grab and that business has to go somewhere. Independents can take advantage."
And take advantage is exactly what they are doing now the Thresher chest has been flung well and truly open.