There is a deep love for the independent supermarket stores. The innateness of supporting a local business, owned by locals, staffed by locals, supplied by locals. Is it the subconscious tapping into the memory of our DNA, where thriving was dependent on the collective of your entire village?
A lot of people would prefer to shop independent but they hold themselves back, for a variety of reasons. The most prominent being their inconsistency around pricing. A big part of this could be attributed to their internal systems, leading to a disparity between the ticket and scan price. In one example, I have heard a customer experience this on more than three occasions.
At a recent talk on the independents, given by the ASMCA, some of the challenges from their end, included the proximity to Woolworths stores. So when Woolworths performed well, independents were impacted. I think we all know this is a fallible strategy, waiting for Woolworths to fall off a cliff, particularly given their surge of momentum in the last 18 months. Woolworths investment into creating a sustainable competitive infrastructure for the long term, i.e. business systems, customers and brand marketing, is paying off.
A leaf that the independents is taking out of the Woolworths book. They are working on pricing (both in changing perception and taking action on core items), changing their reliance on cigarette sales as a percentage of their total business, focusing on improving the square metre return on their convenience model, providing timely customer intelligence data to their stores, continuing to work on their local collaborations and ‘local’ brand message.
But will this be enough?
The main players have a large gap on the independents and have increased the gap, during the last 10 years where the independents were toying with the distribution and retailer business model. Also pricing is a tough one for the independents to compete on. They know this and realise that they can only play the pricing game on certain items, as they don’t have the economies of the scale or the access to capital investment to reduce operational costs. The total industry has taken their foot off crazy discount pricing, and so this has levitated some of the burden for the independents, but still, it is difficult for them to compete on price.
So what do they have?
I didn’t think a hell of a lot until I started asking some customers. What they do have, what is their loud and proud catch-cry, is they have ‘their independence’. An independence that customers are more than happy to pay more for. An independence that creates more forgiving customers (even if you get the price wrong three times). An independence that creates independent shopping experiences for their customers. An independence that supports the independence of the locals. An independence that supports Australians owning
and running local businesses. An independence that may speak to a customer’s own personal desire for greater independence (a nice contrast if they find themselves captive in a big corporate company feeling like just another number!).
The question is, how much are customers willing to pay for independence? Can the independents find the sweet spot – of convenience, pricing, local community, systems, collaborations, whilst not just keeping above water, but thriving above it?
One thing is certain, a cracking marketing campaign awaits.