2017 ended on a relative high at Woodlands Local with another set of encouraging results in various areas of the store but the best news of all is that the team at the store is finally back to something resembling full strength.
by Antony Begley
Looking back on it now, 2017 was a difficult year at Woodlands Local but one with a few encouraging highlights that the team can use draw on to give us hope, enthusiasm and energy for the year ahead.
Like every other store in Scotland we’ve had to come to terms with seemingly ever-increasing costs. Principal among them is the National Living Wage, of course, which puts incredible stress on the business, requiring us to increase sales by many thousands of pounds every year just to be able to meet the wage bill every month and stand still.
Then there’s all the other costs like rates, waste collection, energy, maintenance and so on that inexorably rise. And that’s before we even get to the increasing pressure on the margins on the products and services we have to sell to make money in the first place.
Promotions
The vital importance of the monthly promotional programme is something of a double-edged sword on that front. Yes, it unquestionably drives sales. By volume, we sell more wine on promotion than not on promotion in a year, for example. And we can hardly keep litre bottles of Lucozade on the shelf when they’re selling at half price at £1. So that’s all great and welcome, but the other side of that coin is the fact that the margins on promotional lines are naturally reduced. So we work harder, do more orders, buy more stock, spend more time replenishing the shelves and more money creating promotional POS – but for reduced margins.
There’s many the day when I’ve wondered what would happen to our cash profit figures if we simply ran without any promotions for a month or two as a trial. Would the drop in volume be compensated by the increase in margin as customers are forced to buy full price product?
I suspect I know the answer to that, which is why we haven’t done it yet, but it might be an interesting project at some point this year when we’re feeling braver.
PMPs
The other issue at play here is price marking. Having recently reviewed the pricing right across the store I was struck by just how many lines we sell that are price marked. Virtually every hanging bag, more or less every large format bag of crisps, a big percentage of the soft drinks range. I could go on. The issue here, obviously, is that when reviewing our prices (upwards) we simply can’t do that on price marked lines. Yet a very quick scan of our Epos system showed that while the price marks on the vast majority of these lines hasn’t moved in the last 12 months, the buy price of almost all of them have. The result? Reduced margins for the store.
Yes, some manufacturers are ‘shrinkflating’ with smaller size packs which helps to some extent, but the customers soon get wise to the fact their multipacks of chocolate bars don’t contain the normal bars they were expecting. It’s hardly a sustainable strategy.
Then there’s a combination of the two: we’ve been selling 6 packs of Golden Wonder for £1 for months now, which helps sales as we struggled to sell multipacks in any volume before. But I have asked myself if we are costing ourselves sales of single bags of crisps which offer a comparable margin but for a lot less effort and shelf space. We might also be losing out on footfall too.
Enough of the problems all retailers face. I’m preaching to the converted here, I know.
Positive look
If I’m to take a positive look at last year, what I can be pleased with is a number of ‘record’ results towards the very back end of the year. Highest footfall figures in 2017 achieved in November, highest weekly basket spend in 2017 achieved in November, record weekly alcohol sales recorded in October, record chilled and fresh sales in December and record tobacco sales in December (driven partly by the Budget increase in prices, of course.)
So, while it has been another tough year, there are some positive signs there to latch on to.
The best news of all however, is that we are now back to something resembling full strength in terms of staffing for the first time in probably six months. A series of failed new recruits made that a tortuous process but we now have a strong team that understands what we’re trying to do and is working hard and smart to deliver it for us.
The bigger picture
This also frees us up to spend much more time on the strategic, bigger picture view of the shop that we need to take in order to grow and develop properly. So 2018 will be all about making the best use we can of our time and our resources to develop a number of areas of the business that we see as being key to growing sales and profits. Principally, these include:
- Hot food: it’s the heart of the business but we can do it much better with a broader range of products and a better presented offering.
- Chilled food to go: another cornerstone of the business but one where we can broaden the range and improve presentation.
- Fresh: an area where we hit highs or lows. We need to build a consistent range that is always in stock and looks great on fixture. That way we can hopefully level out the peaks and troughs and convert them into consistently high levels of sales.
- New lines: we are looking at introducing a raft of new lines including greetings cards, non-food and flowers to give our shoppers more reasons to visit and more reasons to spend more money when they do.
Let’s hope 2018 is a great year for us all.
