Kishor Patel's Expert Advice: Beating the odds in 2011 and beyond

How can independents survive the VAT hike, the tobacco display ban, the drying up of credit and competition from the multiples in 2011?

At the end of the year, I'll hit the Big Five-Oh. Oh, happy days. Apart from the inevitable infirmity and death that lies ahead, having spent two-thirds of my life in independent retail, I wonder what the next half-century will bring for the sector. Well, someone once said the best way to predict the future is to take a look back at the past. That option doesn't paint the rosiest of pictures either.

"An incredibly tough year a lethal cocktail of a decrease in trade and an increase in costs." That's how Prue Watson from the Federation of Small Business summed up 2009, and I'm sure you all saw the figures from the Office for National Statistics, which revealed that more than 1,000 businesses collapsed every working day in 2009. But despite the challenges, many managed to earn a crust last year and continued to do so in 2010. Will this continue in 2011?

One thing's for sure. We'll be hit by similar costs from government obstacles sorry, 'regulation' as we were in 2010. Already we know we're going to have to change prices in-store on 1 January thanks to the VAT increase. Not too difficult for the multiples with their huge resources press a button and it's done.

But, for an independent it's a much more challenging, time-consuming task, especially for those without quality scanning EPoS systems.

And, of course, on the horizon is the restrictions to tobacco sales the display ban, plain packs etc that Westminster hopes will cut the temptation to buy cigarettes. If that were the case, surely the next logical step would be to hide beers, wines and spirits to reduce alcohol addiction.

I hope common sense will eventually prevail. A display ban is not the answer. What is required, in 2011 and beyond, is a more meaningful, early-stage education to youngsters, coupled with a more effective punishment for the proxy buyers and the sellers of counterfeit and illegal tobacco. But the misguided initiatives of government are, of course, not the only challenge independents face in 2011.

Will it remain difficult for independents to get credit? Will high-street banks continue to take the opportunity to increase their charges whenever they get the chance? Does Dolly Parton sleep on her back? Borrowing will become more difficult as a result, I strongly urge independent retailers to build contingencies and adjust any medium-term projections by factoring in these predictable costs.

We've seen the relentless march of the multiples, with newcomers to the convenience sector such as Morrisons announcing plans to open smaller format stores as well as standalone, fresh food stores in 2011.

Independents need to fight their corner. They need to create a point of difference and build a brand consumers will instantly recognise, locally and nationally. To this end, 2011 marks the beginning of a major Nisa national television campaign.

And don't forget your people during the coming year. Every time a retailer loses a member of staff, there is a huge cost involved in recruiting and developing a replacement. Retaining loyal and trustworthy staff is an art a skill. It improves with practice. Great staff is a point of difference that an independent can apply over his or her competitors. Relationship building is key motivation, encouragement and recognition can play a vital part in developing your business.

It is also important to embrace technology. The BRC expects online grocery shopping to double over the next five years. The next generation of shoppers is totally comfortable with using apps to do their shopping. This purchasing phenomenon doesn't need to be a no-go area for indies. All you need is a strategy and the will to embrace it. For my business, 2011 will be defined as the year we seized the moment in online selling and e-marketing, but with a difference. Watch this space!

Kishor Patel is a board member of Nisa Holdings and owns six stores (and an Indian takeaway).


Business Barometer

How confident are you about the coming year for your business?
Very confident: 30%
Confident: 32%
Uncertain: 30%
Not confident at all: 8%

How large an impact will the VAT increase have on your sales?
Large impact: 26%
Slight impact: 36%
No impact: 38%

What do you see as your best weapon in the fight against the multiples?
Price: 7%
Convenience: 42%
Service: 43%
Different product offerings: 8%

The convenience sector grew by 6% last year [IGD]. How have you done?
I'm doing better: 9%
Equal: 39%
Growing at a slower rate: 32%
My business is declining: 10%
Don't know: 10%

How have alcohol sales changed in the past 12 months?
I am selling more: 28%
I am selling the same amount: 41%
I am selling less: 24%
I don't sell alcohol: 7%


Propertyof the week
What: Newsagents
Where: Ellesmere, Shropshire
How much: £400,000

SA Millard Newsagents is in the centre of the Shropshire town of Ellesmere, in a prominent position. Featuring a 903 sq ft trading area, the business has been extensively developed over the past six years and is now on the market for offers in the region of £399,950 (freehold) or £99,950 (leasehold).

The business generates a news bill of £3,000 a week, and reported turnover for the year ending March 2009 was £508,000.

The property features self-contained four-bedroom owner's accommodation and a self-contained studio apartment.

For further information about this business contact Matthew Grace at Christie + Co on 01214 523708.


New in my store
Name: Paul Gravelle
Name of store: Gravelle's Budgens of North Chingford
Main suppliers: Musgrave GB

How often do you get new products in? Weekly.

What new products have you started stocking recently? Local ranging has increased dramatically over the past four weeks, along with own-brand and industry ranging.

How did you find out about them? We have a good knowledge of local suppliers because we stock them in our other two stores and central communications are sent via email on a daily basis from Musgrave GB.

Is any one product selling particularly well and why? New local products are selling well. We started stocking local for our launch in mid-November and many of the local ranges are supplied in our other two stores, so we have confidence they will enhance the range here too and they've been a great success.

What products are selling badly? No products have been identified as selling badly recently.

Have you delisted any products recently? The only products to be delisted are those in recent category reviews so far we've looked at our laundry, babycare and yoghurt ranges.

What products have you got your eye on? We are always looking at new products but are focusing on the ranges we have added in the past four weeks.