7 minute read
FEATURE: BUYING GROUPS
Collective power
C&I Magazine explores what a retail buying group is and the benefits these groups can offer small, independent businesses.
AS IS THE case with many industries around Australia, the convenience retail industry has faced a number of changes and challenges over recent years.
From supply chain disruptions and labour shortages to rising business operating costs and changing consumer behaviours, the industry can be an increasingly competitive and complicated landscape for retailers to navigate.
Becoming part of a retail buying group can help independent convenience retailers overcome these challenges, through cost savings, improved margins, access to a wider range of products, shared expertise, and collective marketing.
Combined purchasing power
According to Darren Park, CEO of UCB (United Convenience Buyers), buying groups primarily exist for one simple reason, which is to help independent convenience retailers who are interested in buying similar products, gain leverage through their combined purchasing power.
“That leverage ultimately generates preferable buying prices and contract terms, saving the retailer effort through reducing internal procurement resources and enhances profitability,” Park says.
“Most retailers really want to focus on areas in which they excel which is leading their teams and helping shoppers with satisfying their shopping missions.”
Park adds that buying groups also exist to benefit trade partners and suppliers.
“Trade partners can take advantage of an expanded availability and market share across what might have been once a less organised trade channel, increased access to industry insights and data and enhanced category buyer relationships. Suppliers can also take a strategic approach to how they resource and train their teams that support buying groups.”
Expert marketing support
Bennett’s Petroleum has been part of a buying group for more than 10 years and its CEO Troy Bennett says the organisation has experienced a number of benefits from the buying group membership, including having access to better pricing, improved marketing and advertising strategies as well as educational opportunities for staff.
“We have access to new products at better prices as well as expert marketing advice and exclusive marketing materials,” Bennett says. “Our marketing campaigns are a lot stronger now with exclusive in-store promotions and eye-catching displays which encourage impulse buys from customers.
UCB works to a simple and effective philosophy, which we call UCB’s Three Way Win. Whatever decisions we make must be good for the member first, good for the trade partner second, and good for UCB third.
– Darren Park, CEO, UCB
“There’s also a fantastic loyalty program, where members are rewarded for consistently buying through the group,” Bennett says.
Opportunities to educate staff
Bennett adds that buying group conferences provide a fantastic opportunity for his staff to upskill, acquire new knowledge and network with likeminded people.
“The educational opportunities at these forums can be quite profound in terms of our people meeting and learning from others in the industry who experience similar wins and challenges, learning to identify where we can improve and knowing that we have the support from other retailers around Australia. It keeps staff really engaged with the industry which is great for our business.
“It also provides an added level of security from an employer point of view. I can trust that my staff are making sure our stores are compliant with promotional requirements and that we are merchandising correctly. You’d be surprised how many people don’t know how to merchandise – they simply fill up shelf space because the space is there which is the last thing you want to do. You want to make sure that the product has an impact on customers when they walk through the door. If it’s too cluttered then you risk missing the mark.”
Bennett’s Petroleum recently won the Overall Store of the Year Award at the 2023 Australian Association of Convenience Stores (AACS) Awards for its Mood Food Kempton site.
“Winning the award is obviously a highlight of the year so far. Mood Food Kempton is a magnificent site that we built on the highway between Hobart and Launceston,” says Bennett.
“The site has indoor and outdoor seating for up to 70 people, it has a football ground, netball and basketball courts and a dog run, and of course an incredible fresh food offering. We planned the retail store layout using our buying group’s planogram, so special attention is paid to specific product placement and displays, as well as point-of-sale locations, leading to the best of both worlds in that store.”
UCB’s Three Way Win
Along with product and promotional benefits, Park says UCB members enjoy supply chain and technical support as well as instore layout and design ideas.
“UCB works to a simple and effective philosophy, which we call UCB’s Three Way Win. Whatever decisions we make must be good for the member first, good for the trade partner second, and good for UCB third,” says Park.
We have access to new products at better prices as well as expert marketing advice and exclusive marketing materials.
– Troy Bennett, CEO, Bennett’s Petroleum
“If we make decisions in a different order, the model doesn’t work. When all parties feel that their interests are respected and addressed, they are more likely to engage in long-term collaborations. This promotes trust, loyalty, and continued cooperation which fosters ongoing partnerships.
“The biggest changes for many retailers in the last 12 months, have been the major challenges we’ve confronted across supply chain, cost inflation and labour access, which are all to a degree related. Whilst we haven’t solved all these issues, as an industry we’ve had to talk openly and frankly about the root causes and bring solutions to the table. I’d like to think that many suppliers have been surprised and delighted by the range of solutions, we have created together.”
Park explained that while the environment is challenging, he is proud that the UCB team has, with very few exceptions, continued to grow.
“We’ll keep focusing on improving our support of independent retailers, through promotions that cut through and drive conversion, more member education and insights on navigating through tough times and giving trade partners and suppliers more reasons to support the entire convenience channel.”
Six ways a buying group could help your business
Increased bargaining power: One of the primary advantages of joining a buying group is the enhanced negotiating power that comes with collective purchasing. By amalgamating the purchasing needs of multiple convenience stores, buying groups can command more favourable terms, discounts, and promotions from suppliers and manufacturers. This ability to secure better pricing leads to improved profit margins for each participating store.
Access to a diverse product range: Buying groups also enable convenience stores to access a wider range of products from various suppliers. Independent retailers may find it challenging to maintain a vast inventory due to budget constraints, but by joining a buying group, they gain access to a broader selection without tying up excessive capital.
Shared expertise and resources: Buying groups often offer valuable resources and expertise to their members, including market insights, industry trends, and best practices. Such information-sharing fosters innovation and helps individual stores adapt to changing customer demands effectively.
Marketing and advertising support: Working together as a unified entity, buying groups can pool their resources to fund marketing and advertising campaigns that would be costprohibitive for individual stores. Coordinated marketing efforts enhance brand visibility and customer engagement, ultimately driving foot traffic and sales.
Operational efficiency: By leveraging combined purchasing power, buying groups can streamline their supply chain and distribution processes. Consolidating orders and deliveries leads to reduced logistical complexities and cost efficiencies, benefiting both the members and suppliers.
Financial benefits: Joining a buying group can often provide additional financial benefits to individual store owners, such as shared membership fees, bulk purchase discounts, and potential revenue-sharing opportunities.
