People, product and place: The key to independent retailer success amid the onslaught of multiples and online giants

02-May-2018 - Last updated on 02-May-2018 at 02:40 GMT

Coles and Woolworths still account for around 60% of the nation's food market.

At first, independent Australian grocery and health food retailers had to contend with the challenge of the big beasts Woolies and Coles, and more recently, Aldi and the threat of Amazon, but a former exec at Whole Foods insists the future is bright for the nation's indies.

Tim Sperry, who oversaw purchasing decisions for the US-headquartered organic supermarket recently acquired by Amazon, maintains there is still a big space for the independent retailer.

Speaking at the Naturally Good Expo in Sydney he said: “Sure there’s a time when it feels like an uphill struggle, and days when it feels like all is lost. But, trust me, there is a lot of opportunity out there.”

There are thought to be around 10,000 independent food, health food and grocery retail stores in Australia, but Woolworths and Coles account for around 60% of the market, with Aldi claiming a further 12%. One prominent online independent, Aussie Farmers Direct, folded in March.

Sperry, who took part in Whole Foods’ expansion into Washington, New York City and London, alongside helping to develop its national purchasing strategy, highlighted three tactics to take on the big boys, and one pitfall to avoid at all times.

“Whatever you do, don’t try and compete on price. You will never, ever win. Now, I’m not saying you have to be the most expensive store in town for every product, but if you try and take on the discounters over cost, I’m afraid you are doomed to failure.”

He cited his experience at Whole Foods, where, for a period, the company tried to compete against rival Trader Joe’s.

“We tried to compete on cost, but all we did was give away profit. We eventually created a private label brand to compete with them, and that’s how we found success.”

Instead he argued independent retailers had to focus on the three Ps – people, product and place.

“When it comes to people, you can beat the multiples day in and day out with the service you offer,” he said, encouraging business owners to invest in staff training, educating them about product information, and giving them the confidence to make recommendations.

“It is vital that you create a sense of community for people, both in the stores and online,” he added.

Risk-taking retail

In terms of products, he conceded that it is becoming harder for independents to compete as sectors such as organic and gluten-free become more established, especially in more developed markets.

“This means you need to become the risk taker; you might not want to be, but you have to,” he said.

“Customers are looking to you to be the pioneers. Be at the cutting edge for new products and help build the smaller brands out there. Some will get to the point where they are big enough to move on, but many will stay very loyal to you.

"It is becoming harder to compete, but there are still tonnes of brands that are not going to be in the multiples.”

With regard to place, he said the smartest independents were experts and creating environments where people want to linger.

He cited examples of US outfits who offer home fermentation courses, provide recipes on blogs, or open community farms to engage with children.

“If you are a mission driven company, you need to let your community know who you are and what you stand for.

“Believe me, people still want to buy from mission-based companies as opposed to big companies in the food business. You need to engage with them as much as possible.”

He also said that increased competition could often lead to independents upping their game and creating new niches.

“You can always act faster than the multiples, so stay nimble and be on your toes.

“Also, don’t forget that retail is a theft business. If you see the multiples doing something well around marketing and merchandising, steal it, craft it to your needs, and do it better.”