Sugro is covering all bases with its larger Nearbuy and new S Stores fascias, writes Elit Rowland
In an industry in which many wholesalers are expanding into new markets, Sugro is staying focused. Not only did the Cheshire-based company kick-start the year with a flagship store for its Nearbuy fascia, it also announced the launch of a fascia badge for smaller shops: ‘S Stores’.
“We have a large number of retailers, many of which are CTNs and small-store format, which provides us with a USP for many manufacturers because of our distribution reach within the category,” says managing director Philip Jenkins.
“Not many people can reach that far into the smaller independent retail base.”
A significant portion of the group’s sales comes from 16,000 independent retailers across a broad range of categories, making their success vital to the Sugro business.
The S Store fascia is designed to compete with Best-in, Lifestyle Express and Day Today, with the first recruits coming from Sugro’s retail promotional club Sweet Break. The fascia badge will also offer full access to all categories, including chilled, frozen and ambient products, as well as better service terms on credit-card payments and PayPoint. All of this comes together with a ‘competitive promotional proposition’.
But perhaps the most exciting news for the group is the unveiling of a new flagship Nearbuy store in Braunton, Devon, the first large-format model of its kind.
Although Sugro’s strength has previously been in ambient products, it teamed up with Nisa last year to access frozen and chilled products, offering its retailers a more complete package. “Bringing these categories together is really interesting,” says Jenkins. “For the first time ever, we’ll be able to have a full service supply chain into a big-store arena – it’s going to be a very exciting first quarter.”
The flagship store will be the first part of a ‘cluster marketing strategy’ that the group is rolling out, beginning with the south-west, and Jenkins hopes that the strategic design and layout will take shoppers to the ‘next level’ of retail.
“When you go into a shop, you get either an ordinary feel or a ‘special’ feel – it’s about getting all the elements just right. When you go into a shop that’s got it, you know it and this is what we are looking to achieve with the Nearbuy format.”
Sugro has offered retailers free access to educational information for some time, but getting them to act on that information is another matter.
“We’re encouraging our wholesalers to print out the Grow Your Sales section of our website and take it to their meetings with retailers so we can show customers what the best-sellers are and how each category should ideally be ranged and merchandised.”
But with so much corporate marketing going on from suppliers, it’s easy for retailers to get confused. “You can have a different confectionery supplier coming in every day, doing something different. This does nothing for the consumer – it takes off products that sell and puts on products that don’t.”
One of the ways Jenkins hopes to support his retailers in stocking the right products in the right way is IT. The group is looking to recruit 100 retailers for electronic PoS systems to capture data and provide value analysis.
“We are currently doing a survey with our customers to see which retailers are the most suitable.”
Jenkins is also making IT more accessible to smaller wholesale members by making a computer bureau service available for those with five users or less.
“We appreciate that not every wholesaler can afford to spend £30,000 on depot technology, so this bureau service allows them to run their depot using advanced software for a monthly fee.”
The rise of value, particularly the growth in the use of price-marked packs, is negatively affecting the margin structure in retail, according to Jenkins.
“The psychology of a retailer is ‘I have to have value.’ But they must be careful because a low-cost proposition kills cash flow, and will reduce liquidity and profit because many retailers have a general number of customers.
“Unless the number of customers or the overall volume of sales increases by at least 30%, your value proposition will reduce turnover and profit making you a busy fool. We believe that power brands and multi-buy structures are the way forward.”
To help his wholesale members to take a more strategic view of their businesses in the year ahead, Jenkins will be organising a series of training courses for proprietors to improve their knowledge of the marketplace.
“We want to give them the opportunity to review how they currently run their businesses and whether there are benefits to doing things differently.” Looking at the opportunities for 2013, Jenkins says that retailers must improve the way they market their businesses.
“It’s important to market yourself on a local level so that households within half a mile of your shop know who you are – it’s amazing how many people don’t do that.”
Wholesalers have the same opportunity. “When you ask a retailer which wholesaler they use, they are likely to name their cash & carry, rather than their delivered wholesaler – this is the challenge we face.”
But Sugro is doing its bit to help. “As a rule, we don’t have our Sugro logo on any marketing material for our members. It’s the local wholesaler that needs to project into the marketplace, not us.”
Over the next few years, Jenkins plans to continue building the group’s momentum in retail and represent a focused route to market.
“Other groups have broadened their membership base to catering and foodservice customers, but we
will continue to get stronger in retail and represent a complete supply chain into the independent retail sector.”