Retailers….We need them!

The following appeared in article I wrote for one of the Party trade magazines in 2014. Hopefully, this will reach a wider audience as I believe it becomes increasingly relevant. So many retailers, not only in our market but in most areas of retail, are asking the same question, is there a future beyond the internet.

In a time long ago, when Ford Cortinas ruled the M1, German shepherds were the dog of choice by the local drug dealer and a personal music system was the size of a small kitchen extension, Brits enjoyed partying with a few cardboard hats, some blowouts, a few paper decorations, crepe garlands and a pack of balloons. If you were really lucky you might find a retailer who would sell you latex balloons in the colour of your choice. We did not know any better and we felt we were the Party capital of the world. Then, came the Americans, to our rescue.

Initially, it was a combined wave of latex balloon decoration by Qualatex and Anagram (now Amscan) with their strange foil balloon things. At the beginning we all poopooed these items as American fads……balloon decoration that will never take off here…too gaudy, too American….too expensive…foil balloons ….once the retail is over a £1 they will fail….Wrong, wrong and wrong again . Most players in the market, author included, did not see it coming. It did not happen overnight, but both sets of product started to take hold. The second wave of Amscan and Unique introduced us to party decorations, piñatas, themes, huge ranges of loot bag toys and of course Halloween product.The like of which we had never seen before. This was soon followed in the costume market by companies such as Rubies. The only UK Company that seemed to see this coming was probably Smiffys. Without, the background of a huge home market (USA) it is hard to see how a UK company could have originated similar product ranges. So for all this we have our American Brethren to thank as it is without question that the UK Party (and maybe European) would not have developed in the way it has. Apologises for any company left of the list, it is not supposed to be exhaustive, nor an historical transcript, just trying to paint a picture. Now that’s the praise out of the way.

Traditionally, the distribution chain in the UK, was supplier, wholesaler, independent retailers and a few multiples. Now wholesalers are few, independents are few, multiples are more (in terms of volume), and now we have online retailers. Let’s be quite clear suppliers are not charities, they are there to make a profit. They have to chase the dollar. This can be done in 2 ways. You, either, seek to maximise your volumes, or you sell low volumes at a high margin. Realistically, if you pursue the former, you have to chase the big boys or do you?  If you court and supply the multiples, it is like the first ice cold beer, instant gratification. The results are great. More often than not, the benefits become less obvious. Pressure is put on margins, pressure is put on stock holdings, ranges can be reduced, sales reduced, and the heat is on. A major is lost, even gone out of business (Woolworths, Clintons etc), and all of a sudden life is not so sweet and all of a sudden SmartyParty Pants Plc. is chasing every independent that they have offended and ignored over recent times because the WonderfulRetail store group is long gone, importing their own or has lost all interest in the party market.

Can a balanced basket of customers be achievable? Before answering that question, let us examine why the good independent retailer is important to the Party Market. In a previous article we examined the USP’s of the independent. The ability to spend time with a customer, having product knowledge and local knowledge to work with the customers. All of which in turn will ensure repeat business, hopefully increase the customer spend and spread the word. If you are a good supportive supplier, the good independent is your point of contact with your target consumer. This is the person who will sell your brand and product, secure awareness and longevity not the WonderfulRetail store group, nor cheapaschipsparty.com .  Strong supportive brands are very important to the good independent. If they know they are going to earn money, confident in the product and know they can get supply, they will work for you before your competitor. They are the outlet that will build your brand. Their shop is your Brand shop window.

It is not the purpose of this column to propose marketing plans for the supply industry. Even, if it were, they would be ignored. However, in answer to; is it possible supplying a basket of various customers? Yes, it is, and there are examples even within our market place. But look beyond into other markets. To be quite honest, a lot of other retail sectors have more independents to work with. But it should not be beyond the wit of a good supplier to develop various routes to market. Unless you are Cocoa Cola, you have licensed product, or a very unique (and saleable) product you ignore the ‘Indiepartyshop’ at your peril. The tumultuous supplier cry of…without volume we would not be able to purchase or produce the product at the price we do, even for the independent…..no argument with that, but it not should prevent imaginative supply initiatives.

Just remember your target consumer’s first and last experience of your product. Is it the anonymous shelf of a large multi-product retail outlet? Is it the image on a web site of 16000 other party products? Or is it the experienced retailer who has gone to the trouble of telling the consumer how good your product is, how suitable it is for their purpose and why don’t they try this other item as they were produced specifically to match the original item.

If the good professional independent is not supported and encouraged, their future will be threatened. If they fail, then so will many suppliers. We ignore them at our peril.

 

This is not directly related to the party market, even though  both operators sell party products and what is more, POUNDLAND is probably the largest Halloween retailer in the UK.

I am absolutely gobsmacked that the monopolies commission has found suitable cause to investigate this takeover. I quote…

‘Sheldon Mills, senior director of mergers at the CMA, said: “Without competition from 99p Stores, there is the possibility that Poundland may have the incentive and ability to deteriorate its offer in these areas to the disadvantage of customers that have come to rely on their offer.”

How so ? 

1. POUNDLAND came into existence long before 99p stores, when there were other single price discounters, all of which have long gone. Consequently, they have been operating in areas where they had no competitors . Did they offer less value in those areas ? I don’t think so. 

2. There is a relatively new kid on the block ie Poundworld. Is it not possible that they may want to fill the gap? This is ignoring the fact that there are  at least  four other major discounters (albeit not single price) who may see similar opportunities. 

3. Where were the CMA (competition and markets authority) when UK’s grocery retailers took it on themselves to dominate small towns and wipe out all local competition, leaving the local consumer with little choice ?

4. Not wishing to offend all discount operators, especially the single price outlets, but I suspect much of the expenditure is not essential. Even to the least fortunate in our society, the removal of a competitor selling product at £0.01p less than an alternative player is going to save £0.10p in every £10 (and I don’t believe the average spend is anything like £10). This is not going to make a great deal of difference to their lifestyle.I know this is an oversimplification as there are pack size issues. However, the principal remains the same.

I am no apologist for the discount retailer, but to suggest the merger of 2 of the larger chains are going to substantially alter the offer is about as likely that the new group will rebrand as ‘ONEPOUNDFIFTYLAND’.

If the CMA wants to examine deteriorating offers within the retail sector, there are far bigger and more important fish to fry. The discount sector is the one sector that have actually had some impact in improving the consumers offer and I am quite sure that going forward they will not be any less aggressive in pursuing this objective.

Perhaps I am missing the point. If so, I would be delighted to hear from anyone who feels there are some serious justifications for this investigation.

 

 

 

During March , I travelled nearly 3000 miles , visited over 36 towns, from Maidstone in Kent, through Swindon, Torquay, Manchester, Liverpool to Glasgow , Edinburgh and back. The overwhelming conclusion is that we live in an extraordinarily diverse nation.

Yes, there is an enormous selection of culinary delights, a vast number of different languages and accents, and all combinations of the worlds major faiths plus a large number of lesser known beliefs. Furthermore, there is the enormous variety of landscape, from rolling hills, ancient woodland, through dramatic coastal regions to snow capped mountains.

No , I am not talking about any of this.  I am talking about the diversity of the party market. It is something I have been aware of for some time but when seeing so much in such a short period of time it focuses the mind.

There are two particular areas I would like to talk about. The outlet and the type of product sold.

The outlet

There are party shops, there are costume shops and there are party and costume shops. Within these three, there are big and small, old and new . Beyond these traditional outlets, there are numerous varieties which feature party as a key component of their product mix. The following are some of the more esoteric varieties…

Bong Shops- for those who don’t know, a bong shop is a place that sells smokers accessories, water pipes, herb grinders and various odds and sods that nobody else sells. But often they sell dress up and party items. The other peculiarity is that these shops tend to be in coastal towns. Why party ? Haven’t got an answer to that. The only connection that comes to mind is that the customers in bong shops seek other forms of mental relaxation and then go and party. The reality is that in a number of cases there is no fancy dress shop in the town , and in a seaside town it gives the retailer out of season opportunities.

Discount shops- There are various independent discount retailers who decide to spread their wings into party retailing. In general they do not operate with same discount pricing policy as their original store. It is often the case that they see the opportunity to make increased margins. What some have done is to utilise their retailing skills into Party retailing with good effect.

Dry Cleaners- I have to mention this one , as I have only come across the one but there is a remarkable synergy. This particular operation has been in business for some years. The synergy is that one half of the unit is a dry cleaners the other half is primarily costume hire. Need I say more !

I have seen retailers operate from barns, private houses, railway stations, old houses, new houses, and market stalls . There are supermarkets, card shops that sell some party, online operators that have a retail outlet, and of course, what we know as the traditional retailer as outlined in the first sentence of this section. Some are good some are bad.  The remarkable feature of all them is that they are all quite different, even on the odd occasion where there is more than one in a town . Even more remarkable there are towns of a reasonable size that don’t have any.

Product

For sometime, when asked by a potential customer, for ‘ …your top 50 items…’ I, politely, refuse or rather defer. Of course, there are products and ranges that sell well no matter where, especially licensed product. However, it is quite extraordinary the difference in what does and doesn’t sell even within a small geographic area. It is quite possible to go to an outlet in one town where the owner will tell you they sell a large number of one item . Yet 3 miles away another retailer will tell you they have never been able to sell that product.

Of course, the demographic has a large part to play and within the UK this can change very quickly. Where the demographic has less of an influence, is with online operators. Still, the principle can apply. Even with similar online profiles, you can find huge differences in what one can sell against another.

So what does this tell us ? It tells us that we live and work within an intriguing and diverse market place. It also shows it is disparate and unorganised. It indicates that as independent retailers, you are very vulnerable. On the one hand it makes it a nightmare for an entrepreneur seeking to open a  national chain as a store plan in one town may not (change ‘to will not’)work in another . On the other, it does, in some cases, offer opportunities to the better retailer with good local knowledge and know how, to invest and operate effective small local outlets.

The immediate thought of how different we are to our European cousins, was dispelled on  a trip to Arctic  Norway. Walking into a tourist gift shop looking for some Norwegian memento, I was not surprised to find most of the product came out of the Far East. However, I was surprised to find half the shop selling fancy dress.

The other thought was that the better online operators can easily compile such diverse data as what is sold, where, when and by whom. It is what is done with that data , that is of interest.