>>c-store sector could be giving credence to a discredited theory
Students of history will no doubt remember all about the domino effect and how it came to be such a hallmark of the Cold War. For those who didn’t pay attention in their history classes, I’ll just remind you that politicians (mostly American) came to believe that if one nation switched to communism, this would set off a chain reaction that would result in all its neighbours ditching capitalism and embracing the teachings of Karl Marx.
As Mrs Bamford taught me (clearly, very well as I still remember 20 years on!), history shows that the domino effect was a deeply flawed political philosophy. But as yet another leading independent chain was snapped up this week by a multiple, I couldn’t help thinking the analogy was spot-on when it came to explaining what is going on in the c-store market at the moment.
I realise that the Co-operative Group has been very active in this arena for years, but I would argue that the first domino really fell when Tesco bought T& S Stores. That started a process of dealmaking that has seen Balfour, Adminstore, Bells and now Aberness fall. As the dominoes have kept on tumbling, neighbouring retailers have started to feel pretty vulnerable. So it’s not surprising that when a multiple - or another independent chain - comes along with an attractive offer for their business, they too decide to sell up. And another domino tumbles.
That then forces other independent operators to decide they need to merge or acquire each other to build the scale necessary to compete (or even survive) in this scary new retail landscape, which means the dominoes continue to tumble. You can expect more of the same in the coming weeks and months.
But what will we do when the very last domino has fallen? Will we find we still have a diverse retail market that is well placed to meet the needs of every local shopper? Will we be pleasantly surprised to find that those convenience store chains being acquired have been replaced by a new generation of entrepreneurs? If not, will shoppers find that they are actually better served in a highly consolidated sector? And what about the rest of the independent market? Will it thrive, or will the domino effect put many wholesalers and independent small store operators out of business?
I don’t have the answers. All I know is that once dominoes start tumbling, they are virtually impossible to stop.
the dominoEs keep falling
Students of history will no doubt remember all about the domino effect and how it came to be such a hallmark of the Cold War. For those who didn’t pay attention in their history classes, I’ll just remind you that politicians (mostly American) came to believe that if one nation switched to communism, this would set off a chain reaction that would result in all its neighbours ditching capitalism and embracing the teachings of Karl Marx.
As Mrs Bamford taught me (clearly, very well as I still remember 20 years on!), history shows that the domino effect was a deeply flawed political philosophy. But as yet another leading independent chain was snapped up this week by a multiple, I couldn’t help thinking the analogy was spot-on when it came to explaining what is going on in the c-store market at the moment.
I realise that the Co-operative Group has been very active in this arena for years, but I would argue that the first domino really fell when Tesco bought T& S Stores. That started a process of dealmaking that has seen Balfour, Adminstore, Bells and now Aberness fall. As the dominoes have kept on tumbling, neighbouring retailers have started to feel pretty vulnerable. So it’s not surprising that when a multiple - or another independent chain - comes along with an attractive offer for their business, they too decide to sell up. And another domino tumbles.
That then forces other independent operators to decide they need to merge or acquire each other to build the scale necessary to compete (or even survive) in this scary new retail landscape, which means the dominoes continue to tumble. You can expect more of the same in the coming weeks and months.
But what will we do when the very last domino has fallen? Will we find we still have a diverse retail market that is well placed to meet the needs of every local shopper? Will we be pleasantly surprised to find that those convenience store chains being acquired have been replaced by a new generation of entrepreneurs? If not, will shoppers find that they are actually better served in a highly consolidated sector? And what about the rest of the independent market? Will it thrive, or will the domino effect put many wholesalers and independent small store operators out of business?
I don’t have the answers. All I know is that once dominoes start tumbling, they are virtually impossible to stop.
the dominoEs keep falling
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