UK off-licences move to defend position
third of its stores into franchises and rival Bargain Booze has
been sold to venture capitalists as supermarket dominance takes its
toll.
Six hundred Threshers stores will be converted in the scheme, which will copy a similar formula to that of its close competitor Spar-owned Bargain Booze.
It is hoped that the organic nature of a franchise company, which has the ability to fine-tune its operations to suit different neighbourhood environments, will better position Threshers to compete in the aggressive convenience market.
And reports yesterday that Bargain Booze was bought for €93 million by finance group ECI Partners proves that the franchise model is desirable in the current climate of supermarket dominance.
A Threshers spokesperson told the Telegraph newspaper: "The main thing about the franchise scheme is that off-licences are in a highly competitive position. But these are local shops and we can compete with the big boys if decisions are made on a local basis."
Supermarkets currently take a 66 per cent share of the UK's retail alcohol market, and this figure is set to rise if off-licences and convenience retailers cannot compete on choice and price.
But data analysts at Verdict Research believe independents are more likely to offer a stronger service that is personalised to local shopping habits, and larger supermarket chains need to work hard to appeal to local shoppers.
Verdict retail analyst Nick Gladding said: "Promoting local events and developing product ranges and services that cater for the immediate population will enable [independents] to forge closer ties with the local community - something the major grocers have yet to achieve."
Average sales densities in the neighbourhood retail sector grew two thirds faster than in the retail sector as a whole, and now amounts to £527 per square foot, according to Verdict data.
And as the sector becomes more lucrative, supermarket operators are moving in to open small-scale neighbourhood stores, piling the pressure on smaller businesses that are struggling to maintain profit margins.
Unwins, which was a leading retailer in the UK of wines, went into administration in December.
Industry experts believe it failed to keep up with market trends whilst trying to compete with growing supermarket dominance.
Threshers acquired 200 stores from the bankrupt company for less than £10million, and now owns over 2000 outlets in the UK.
