| Although the weekly shop at the supermarket has become a tradition for many Britons, the convenience store still has its attractions – and not just if you have run out of eggs or milk midweek. While there are now fewer independent corner shops than in the past, the back-up of franchises such as Londis and Spar allows operators to offer a greater range of goods than before and even branch out into fresh bread or delicatessens. Some are closer to newsagents in character while others are off-licensed and cater for evening trade. Whatever type of store you choose, this is certainly not a sector for the independent operator. The hours required will be demanding, with early starts, late evenings, and in some cases round-the-clock opening.  | | SECTOR IS GROWING | John Gower of SBS Commercial explains: “It’s quite tough. You do get knocks, you may have people stealing and you have to organise staffing. “You have to be quite resilient, flexible and be able to cope with long hours.” He adds that convenience stores are often run as family firms, particularly within the Asian community, and stores often go up for sale because the children who have helped run the business have moved on to other careers. The alternative is a staffed operation, which may be too expensive for a smaller store. Even if you can afford the wages, administration and recruitment can bring challenges. Marketplace is changing On the other hand, the marketplace is changing – and it’s an exciting place to be. “One store on our books at the moment has a deli, a range of grocery, dry goods, magazines, an off licence and cigarettes,” Gower adds. “But the sector has changed. Tesco and Co-op have bought a lot – Tesco are refitting and re-branding them as Tesco Local.” The fact that independent convenience stores will have to compete with supermarkets and petrol stations for custom as well, has made the umbrellas of the franchises far more attractive to many operators. While the franchisors give advice, appraising what you can achieve with an individual store and providing other forms of support, there are catches. “You have to refit, you have to add a logo outside, you’ve got to commit to purchase branded goods through the Spar purchasing system – although they do get bulk discounts,” Gower says. Unfortunately, the sheer weight of money being bandied around by the supermarket groups means that well-situated, large convenience stores can attract hefty prices. According to Gower, stores turning over more than £10,000 per week are “snapped up”, whereas those passing more than £20,000 through their tills are “like gold dust”. It’s unsurprising that there is such demand when you consider that a profit of between 18% and 22% can be achieved – equivalent to around £200,000 on a larger store turning over £20,000 per week. However, wages and costs for fixtures and fittings all have to be deducted from this figure. This is one reason why Gower believes stores turning over less than £5,000 are a much more challenging proposition. Stock also has to be taken into account. The frequency with which stock has to be 'turned' will depend on how much fresh food you have on display, but the value of goods in a shop will typically amount to between one and a half and two times the weekly turnover. This will have to be added to the cost of the business itself. Lancashire-based Gower claims that leasehold ventures fetch from around £25,000 to £200,000, although this will be higher in the South East. Freeholds are few and far between, and vary enormously in price as in some areas the asset value of a prime piece of property is more important than the business. Lucrative business This might all sound off-putting, but it’s important to remember than convenience stores can be very lucrative and offer a more steady income than many other types of businesses. The sector is changing rapidly, and it’s an exciting time for new entrants to engage that entrepreneurial spirit and think about how they could extend a business. There is also the possibility of franchising through the likes of Spar or Londis – and this can offer an extra security blanket which many developing sectors lack. In many smaller towns and rural areas, you will be providing a vital service to the community and will become an integral part of it – which, not surprisingly, can be very rewarding. While it’s certainly not a part-time business, if you’ve got the energy and the ideas it could be the perfect way to build a successful business.
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