Independent stores are aligned to the convenience multiples on base pricing, but deep discount loyalty card promotions are making it increasingly difficult for the indies to compete on price, according to research from the FWD and TWC.
Audits conducted by TWC show that prices have increased by 11% in independents, 13% in Tesco Express and 17% in Tesco Supermarkets in January 2023 vs. November 2021 (based on a list of more than 70 products sold in all 3 outlets). The price differential between the independents and Tesco Express has fallen because prices have risen more at the multiples, and at the time of the audit in January 2023, there was price parity between the two.
However, Tesco are using their ‘Clubcard Prices’ within their convenience format to offer discounts of up to 35%, making it hard for independent convenience stores to compete with the multiples on price.
Independent retailers are said to be competing for their share of local trade and pulling a number of levers to do this. Phone interviews with 150 independent and symbol retailers revealed that 93% were trying to offer superior customer service and 89% were supporting local charities and initiatives. Many are also trying to compete on price, whether that’s by offering a wider range of cheaper products (78%), more Own Label (65%) or price matching vs. the competition (39%).
Tom Fender, development director at TWC said: “We have a hypothesis at TWC that independent retailers believe the PMP is the promoted price. Base pricing in our audit shows that PMPs are working to create a parity on price, however encouraging tactical promotional activity as well could be a big win for the retailers who are not already doing this.”
Elsewhere at TWC, it recently formed a data partnership project with Sugro to launch the Insight Service (SIS) platform.
The new sales reporting platform will give Sugro’s members a competitive advantage by providing data led expertise designed to drive growth for both foodservice and retail customers, as well as identifying opportunities for their suppliers.
Tanya Pepin, managing director at TWC said: “I am delighted that TWC and Sugro will be working together to launch Sugro Insight Service. Many suppliers have asked me whether they could access sales data for Sugro and I am delighted that we can finally say yes! As the market leaders in managing sales data for buying groups, TWC has a proven track record for getting our clients’ data platforms live fast so watch this space for launch announcements.”
The new data service will provide a reliable read on groups sales performance to the Head Office team, its suppliers and members. The Sugro Insight Service platform will enable Central Office staff to gain clarity on sales performance and lead data-led conversations with suppliers about how to develop sales further as well as unlock incremental distribution and gap fill opportunities.
Emma Senior, managing director at Sugro (pictured above), commented: “Our partnership with TWC is excellent news for both our members and suppliers alike. I know there has been a great deal of interest from suppliers and I am very proud that we can now offer a sales data solution. The data platform will enable us to focus on distribution gaps and truly evaluate our performance in the Wholesale market. I am very much looking forward to working with Tanya and the TWC team”.
More detail about the research, conducted on behalf of the FWD, can be found here: https://twcgroup.net/twc-presents-at-fwd-bringing-wholesale-together-webinar/