LOUIS DRAKE

THE BIG INTERVIEW: SALES DIRECTOR, AF BLAKEMORE

ON A COMMISSION MISSION

SPAR WHOLESALER AF BLAKEMORE RECENTLY UNVEILED THE FIRST STORE IN ITS ESTATE RUN BYA ‘COMMISSION OPERATOR’ UNDER A BRAND NEW MODEL – AND WHILE IT’S THE FIRST, IT CERTAINLYWON’T BE THE LAST, SAYS SALES DIRECTOR LOUIS DRAKE.

BY ANTONY BEGLEY

The symbol group model has been the pre-eminent model for binding wholesalers and independent convenience retailers together for some time now, but there are signs that a new trend is emerging. A number of retail and wholesale groups, including the interlinked Co-op, Nisa and Costcutter triumvirate, have been trialling new franchise and commission operator models. The latest wholesaler to unveil a new direction is AF Blakemore, who recently launched a commission operator store model in Herefordshire.

The commission operator model isn’t new in itself. It’s commonplace in the forecourt sector with companies like MFG relying on it, but it’s not a model you come across much in traditional convenience retailing.

“It’s a very popular model in the forecourt sector,” says AF Blakemore Sales Director Louis Drake. “It’s something we had been looking it for some time but our new store in Leominster in Herefordshire is the first company-owned store to operate under the new model. It won’t be the last”.

In basic terms, the store is owned by AF Blakemore but is run by independent retailers. In the case of Spar Leominster, the site is now run by MIH Traders which is owned by Dasitha Gamage and Janaka Watowita.

“The store was formerly operated by Blakemore Retail, our company-owned store division,” explains Drake. “But now it’s being run by Dasitha and Janaka but with the full support of AF Blakemore. It opened on the 7th of September and the early indications are that it is very much performing to expectations and we have high hopes for it.”

So what is the thinking behind the new model? “Essentially, our commission operators will be self-employed entrepreneurial retailers who are seeking to operate their own businesses supported by a successful retail partner. AF Blakemore will own the business, with the commission operators responsible for developing sales and profitability within their stores. In practice, that means we’re freeing the retailers up to focus on what really matters: growing the business.”

AF Blakemore currently services 966 Spar stores, including 277 company-owned stores, with Leominster the only store operating under the new model, but Drake says that more commission operator stores are already in the pipeline and will be announced in the very near future.

“The reality is that it’s getting harder and harder for independent entrepreneurs to get in convenience retail in the first place,” says Drake. “The capital required these days can be prohibitive for a lot of entrepreneurs, so this model offers a ready-made model to help these ambitious entrepreneurs onto the ladder. Even at a basic level, we can help secure Lottery, PayPoint and so on without retailers having to fork out thousands in bonds on day one.”

Drake is frank about how he expects these retailers to develop in future and fully expects to see retailers migrate into owning their own stores in the future. He comments: “The commission operator model is a great way to get into this exciting industry in the first place but we fully expect retailers to outgrow the model. If commission operators start to hit £40k or £50k sales a week, for example, we would expect them to migrate on to buying their own stores but we would obviously hope to retain them as customers of AF Blakemore in the longer term. But this is our aim. We absolutely want our operators to be successful and make money and we will provide them with all the support and help they need to achieve that success. The commission operator model can be a stepping stone for ambitious entrepreneurs.”

Commission operators enjoy exactly the same terms as Spar symbol operators including on critical issues like pricing and credit terms.

“It’s a very flexible model,” adds Drake. “We allow the operators flexibility in the range they carry, for instance, and they enjoy a a lot of control over how they run their business – but we do expect good levels of compliance, as we do with all Spar retailers. Discipline is key in maintaining the high standards that shoppers expect when visit any Spar store and that’s vital across issues like promotions, pricing, efficient and consistent use of POS and so on, but that doesn’t mean commission operators don’t enjoy a good degree of autonomy in how they run their stores. We view it as the best of both worlds.”

As for Spar Leominster, Drake says the launch went without a hitch. “I’d say that our team did a fantastic job,” he says. “We’ve been talking to Dasitha and Janaka on a daily basis and I’d say we got 99% of it right from day one. There were obviously some very small unforeseen issues but mostly around little operational and data issues – and those have all been sorted out now, so it’s gone extremely smoothly.”

Drake is guarded on when more commission operator stores will be revealed but does suggest that “one or two more” will be announced in the very near future. “It’s a model we really believe in and we see it as having a big future, so I fully expect us to grow the number of stores operating under this model quite rapidly,” he concludes.