Retail Franchises Try to Survive these Struggles?

Local retail franchises like Spar and Budgens are currently under heavy pressure to reduce operational costs in reaction to these big issues...
Reading Time: 4 minutes
Convenience Stores

It has never been a more uncertain time to be a manager or owner of a convenience store in the UK. With political uncertainty growing all the time, new technologies supplanting old techniques, and larger brands in the industry slowly moving towards an oligopoly, it is essential that smaller or medium-sized retailers take every measure they can to save costs without sacrificing quality. Here are a few struggles the industry is currently facing, and how to potentially deal with them:

1. Beware The Aldi Effect

One major battle that UK convenience retailers have been struggling against in recent times is what has been dubbed the ‘Aldi effect’. Until recently, the German supermarket giant struggled to maintain a 2% market share in the UK, but around 2010, their popularity among British shoppers grew higher and higher, to the point where Aldi are now the fifth-largest retailer in the British Isles.

Even large chains like Tesco are feeling the pressure posed by Aldi’s low-cost, high-volume service, and without a doubt, smaller franchises like Budgens are under significant threat of losing business. So what can smaller convenience stores do to counter this growing encroachment on revenue? Lowering prices of their own goods is possible, but not the most attractive solution, as it does not guarantee increased footfall. 

However, one advantage that these ‘corner shops’ or smaller brands have over their bigger competitors is the ‘local’ angle. Many are family-owned, or are well-known faces in the communities they establish their business in. Getting involved in local events builds a rapport with their customers and can be a reliable source of revenue by building loyalty through trust.

2. Rising Wage Costs

Recently, a combination of rising labour costs and fears over Brexit have led to retailers in the UK to reduce the number of staff working each shift. For smaller retailers, this is unsustainable, as while an increase in labour costs is usually logically prompted by a reduction in staff, it is not the right action to take. While it may ‘solve’ a problem short-term, those staff laid off represent a loss of invested time and money. How much have you spent onboarding and training new staff? Valuable employees can be let go and could result in a greater net loss for the business than retaining them. Skill shortages are a major issue as well, as if fewer staff keep the entire store running, swapping between tasks like cleaning and register duty, etc., what happens when one of those employees chooses to leave? Your business may be at risk of running suboptimally until a suitable replacement can be hired and trained in due time.

3. …And On a Larger Scale, Unpredictable Labour Costs

Above all, your business needs control on what’s happening at all times, monitoring operational expenses and optimising labour costs. As we have established with rising wages, this is becoming increasingly difficult to manage. Consider a people management system that successfully provides the right amount of transparency for your business and gives you real-time information for your business.

Bizimply simplifies workforce management for multisite hospitality and retail companies, optimising the entire people journey, with an all-in-one cloud-based solution. Employees can see their shifts and hours worked on their smartphones. Managers save hours creating and communicating schedules with simple drag-and-drop. Monitoring attendance is fool proof with photo capture and Bizimply automatically generates all staff timesheets for direct transfer to payroll systems. Bizimply gives managers full visibility over operational metrics such as sales per labour-hour and enables 100% compliance with labour law. Last but not least, the entire system is customisable, and the Bizimply team is always available to provide support.

4. Picking an Unsuitable Location

Larger convenience stores often have the luxury of picking and choosing their sites. These decisions are incredibly strategic, chosen based on predicted ease of access, footfall, and countless other factors. This is why competitors will often be found close to each other – perhaps one chain has proven that the area is lucrative for attracting customers.

What about smaller franchises or independently-owned convenience stores who cannot afford this privilege? How can they make the most of their ‘spot?’ The solution is just about the same as the above; get involved with the local community and engage with both employees and customers. Smaller businesses may not be able to pick exactly where they set up, but delighting a customer is cheap at their size – you never know, the lifetime return of investment may be immensely valuable.


5. Self-Checkouts

The use of technology in the retail industry has always been met with some resistance – and no example is more prevalent than self-checkout. Did you know that self-checkout terminals were only introduced in Germany in 2018

Again, introducing self-checkout to smaller convenience stores can spell trouble for the business; wasted wages spent on training employees that are let go can be detrimental to a business’s operations. The cost of acquisition, however, can be a heavier sink, as these machines can be a huge investment. Even worse, one may not see any returns for a long time, as they are designed for high-volume supermarkets processing lots of customers, and thus a self-checkout’s price point would reflect its expected usage in an optimal environment. It is more cost-effective, and perhaps simply more sensible, to keep a personal dimension to the till.

Overall, we have demonstrated that there are countless ways of improving on unnecessary costs in your business without sacrificing on quality. Know of any other cost-saving measures that led to success for your business? Let us know on social media at Facebook, Twitter or Linkedin!

Top Posts

Try Bizimply's All In One

Workforce Management Platform

Scroll to Top

Why are thousands of businesses switching to Bizimply?

From large chains to independent operators, Bizimply is the #1 WFM solution.

Camile Thai Logo