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THE WEEK IN RETAIL ISSUE 26
EDITOR’S COMMENT
NEW RETAIL MODELS A CHANGED FUTURE
This week’s cover features a Costcutter companyowned store in North Devon that has just been transitioned into a Co-op as part of the the group’s ‘retail-franchise model’. It’s an interesting development and only the latest in a series of fresh takes on the traditional symbol group model. Many large wholesalers walk the tricky line of both owning and operating stores themselves while also supplying independent retailers.
That effectively puts them in direct competition with their customers, depending upon how you choose to view it, but it’s a model that most retailers have grown accustomed to. The symbol group is not the only model, of course, with One Stop being an obvious alternative. Companies like MFG also operate a ‘commission’ model where MFG owns the sites but self-employed independent retailers run them.
The benefits of these models are obvious. It’s notoriously difficult to manage and motivate a huge team of staff across hundreds of companyowned stores. Like it or not, employees often just don’t have the same drive and commitment that store owners do. I’m not staying for one minute that this is true of every store - there are some fantastic managers in company-owned stores and there are some mediocre retailers who own their own stores - but as a general rule, it’s not to far from the reality.
Which is potentially why AF Blakemore has recently dipped its toe into a commission-retailer model and why Costcutter is pursuing its strategy of transitioning some of its company-owned stores into what are effectively Co-op franchises. The sales pitch has it that “the Co-op franchise opportunity through Costcutter offers retailers and investors across the UK the opportunity to open, own and operate a Co-op store, with the combined support of both Costcutter and the Co-op through every step of the journey”.
It’s likely to be an appealing option for many independent retailers (and investors) and the model appears to deliver. Costcutter says its former company-owned stores that have become Co-op franchises have increased turnover by a minimum of 50%. The model is no longer wholesaler and customer. Franchising in this way brings both sides of the agreement onto the same team. Or, as Martin Rogers, Head of New Channels at Coop, puts it: “Our latest franchise store is a great example of how we are growing our brand to generate mutual value with a likeminded partner.”
Time will tell if it really is a win-win, or whether it ends up being slightly more one-sided than that.
