By Sarah Britton 2022-06-15T10:58:00+01:00
When we last caught up with the Singhs in July 2021, Mandeep and his twin brothers Baljeet and Vrinder were four months into a new shopper zone concept at their Teynham Road site in Sheffield, following a £400,000 investment.
Sales had already rocketed from £35,000 to £56,000 and now, a year on, the figures have continued to rise with turnover averaging £65,000. The store’s margin has risen to 28%, while in-store basket spend stands at £9.85.
So which elements have performed well and what has changed? Mandeep and Booker sales director Martyn Parkinson talk us through the latest developments
At the back of the store neon lights signpost the jewel in the crown - the beer cave. A day and a half into opening the store post-refit, Mandeep made the decision to call back the builders and double the size of the new beer cave to 200sq ft as staff simply couldn’t keep up with demand. This brought the total cost of the beer cave to £30,000, but Mandeep hasn’t looked back.
Automatic doors ensure the area is kept cool and LED ceiling panels showing pictures of the sky create a light and spacious feel. The area houses a vast array of wines, RTDs, ciders and beers, with plenty of room for larger pack formats including a wealth of multipacks and popular PD (perfect draft) kegs. “We sell six pallets a week,” says Mandeep. “If you look at the price - £30-40 and you’re making 70%, that’s 70% of a big number.”
The store was already strong on alcohol sales prior to the refit, so the idea was to enhance the offer and develop a real point of difference from competitors, explains Parkinson. “We know the multiples and the discounters are never going to chill beers, wines and spirits because they can’t afford to because the margins are too tight,” he says. “What we’ve got here is if you’re having a party tonight or tomorrow, where are you going to go for your alcohol? The Beer cave.”
He quashes any critics’ concerns about energy costs. “It’s about 30% cheaper to chill than the refrigeration, so everyone is thinking it’s so expensive, but in terms of efficiency, this is more efficient. The big expense is the front - the [automatic doors] are heavy duty equipment, but the running costs are cheaper than a normal chiller.”
With some retailers questioning the reliability and seasonality of drinks machines, the Singhs’ decision to dedicate a large area at the store’s entrance to them was undoubtedly a bit of a gamble, with both Mandeep and Martyn admitting that they wouldn’t be prepared to spend £4.50 on an iced drink. The Refresh area houses a selection of eight drinks machines, including Tango Ice Blast, Fanta Frozen, Jolly Rancher slush, Hersheys freeze, F’real and hot and cold coffee offers.
Despite taking up a fair amount of space, Mandeep claims that all the machines can justify their space. “When the sun’s out it can hit £800-£1000 a day, but if you’re doing £4-500 a day and you look at your margins - 60% - where else are you going to do that?” he says.
He has also introduced an AU-branded slush machine located further inside the store near the checkout. A small cup costs £3.99, while a large will set customers back £6.99.
The store’s coffee loyalty scheme, which offers a standard £1.50 coffee for £1 if you have a fob, has amassed 600 customers. “In essence it’s like buy two get one free - we explain to the customer that every time you bring it you save 49p,” says Mandeep. “When a customer comes for a coffee the staff are trained to ask them if they have a loyalty card [and if not then offer them one]. We’re gaining customers every day. The aim is to get it on to their keyring so that every time they come in they have it with them. It’s making it easy for the customer.”
Even at a reduced price, he still makes a decent profit. “At £1 you’re making 68p. The net cost is 32p so you’re doubling profit at a £1,” Mandeep explains.
But the key with the loyalty scheme is that it encourages customers to keep coming back. “We’ve seen that customers who were just passing were going to pay £1.49 for a coffee, but because we’ve given them the loyalty offer, we’re seeing them every morning, faces we wouldn’t have seen before. Whether they come for a coffee or if there’s any add-ons, it’s all a bonus for us.”
The refit saw Mandeep almost triple his chilled space to 10m and the range has continued to develop in recent months. Fresh meat is now a strong seller, with the store stocking whole chickens, rump steaks and gammon joints and in the last three months, the store has introduced chilled fish.
“One of the biggest challenges we had was trying to convince Mandeep that we could fill this refrigeration,” explains Parkinson. “What we’ve got in Premier is about 305 longlife chilled lines with a minimum of 22 days.
“In the last 12 months we’ve added another 200 lines through BRP [the delivered model], so the majority of this is all new. Weekly sales of the chilled have gone from £800 to nearly £6,000 a week. This is where we’re seeing most of the growth. This is what’s dragging customers in.
“With the cash & carry range because it comes from our distribution centre, we really struggled to put the short life through a cash & carry so with the BRP you can have all the chilled meats because you have next day delivery.”
Mandeep admits that he took some convincing. “We weren’t sure about the BRP,” he says. “We weren’t sure if our customers were going to buy into that, but it’s been amazing. Fresh and chilled wasn’t our strength, but it is now.”
The store is adapting its balance of pack formats in light of the cost of living crisis. “In the past six months we’ve seen people moving into bulk packs for value,” says Parkinson.
Many of the top shelves around the store have a ‘Bigger packs, better value’ message with deals on bulk packs, such as £7.99 for a 4l bottle of Lenor.
In key areas, the store is making way for more multipacks. “So what you’ll see now is that space for multipacks is going to double and we’re going to start to reduce our singles,” says Parkinson. “That not only helps the basket spend, it also helps the labour. If you look at all the singles, it’s highly intensive to fill up, so we’ve got to try and simplify it for the retailer.”
The frozen zone, which was expanded to 10m in the refit, is one such area. Parkinson says “we introduced another 16 lines of multipack ice creams because we’ve seen customers move from singles that are typically expensive to multipacks for the same reason as what they’re doing on soft drinks.”
Down the snacking aisle the focus on bigger packs continues in crisps and confectionery is set to follow suit shortly. “We’ve moved away from anything below a pound [in crisps] as we try to increase the basket spend,” says Parkinson. “But we’ve also seen the shift in confectionery. The multipacks at four bars for a pound, compared to the singles for 85p, so in the next six weeks we’re going to have to revisit this space.”
The performance of American confectionery and snacking range has been “incredible”. As a result, the shop has doubled the size of its display. “We started with four shelves, we went to a metre and we’re now on two metres,” says Parkinson.
Last year, vape sales were topping £2,000 thanks to three dedicated bays. They have since soared to £5,000 a week, and make a healthy margin of 40-45%. Over 50 lines are sourced from Booker, with the rest coming from three or four suppliers. The display allows customers to browse on the shop floor, while the ease of parking makes it easy for people to drop by. Mandeep notes how the category has evolved in the past 12 months. “A year ago the liquids were two bays, and now people have switched. There’s been a big move because it’s all going into disposables. This side [liquids] is starting to die out and we’re going to add a whole other bay of disposables. The bars are growing and I think they’ll be here for a while. But there’s more range in bars, so there’ll be two whole bays of bars and we’ll still have an option of liquids as well at the bottom.”
Flagging up promotions clearly in this category is vital, he adds. “It’s about making it clear to the customer that [promotional products are] £2.50 or five for a tenner; or £5.99, two for a tenner. When you’ve got them [vapes] sat behind the counter, you cannot do these kinds of promotions - it’s how you execute your sales.”
The store’s rapid delivery business is flourishing and the Singh’s never miss an opportunity to promote the service on store POS and staff uniforms. The brothers entice consumers with exclusive deals for delivery customers. “We do 13p or 26p or whatever,” says Mandeep. “It’s just to show the customer that we’re promoting heavier than everywhere else and our promotions aren’t boring, they’re different and exciting - chocolates, fresh strawberries at cost price, but they can only buy one and they have to build an order up.”
This tactic his clearly working. The service launched in 2020 and had amassed average weekly sales of £15,000 by 2021, increasing to £20,000 in 2022.
The average basket spend of a delivery customer currently stands at £24, more than double that of the in-store basket spend.
The goal now is to grow sales by a further £5,000 in order to hit a weekly turnover of £70,000. “I said I’d get Mandeep to £10,000 a day,” says Parkinson. “The important bit for retailers is with the rising costs, we’ve got to get the margin. It would be really easy to get the sales. We’ve gone from 22 to 28% and I said we’d get him to 30%, so we’ve still got a bit of work to do.”
The extra £5,000 is expected to come via growing delivery sales and Mandeep has begun trialling a 24hour delivery service.
Mandeep has no regrets about the £400,000 investment in the store, which it is claimed has paid for itself in 12 months. “If you asked us if there is something we regret or could improve, there’s nothing really,” he says. “A lot of retailers are still hesitant on investing and putting the newness in, but it’s a no-brainer,” he says. “You’ve always got to be thinking outside the box - what’s new, what are we going to be doing? Retail’s exciting, you can make really good money, which we were before, but it’s on a different level now.”
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