Local Knowledge

Local Knowledge

Business Sales Article

Space Race

The way we shop for groceries is changing. Busy lifestyles and modern tastes are heralding a resurgence of smaller, local food stores, after decades of dominance by the major supermarket chains.

For many consumers the big, weekly shopping trips of the past are being replaced by daily top-up purchases, often in smaller neighbourhood food shops that stock products tailored to meet the demands of their local customers.

These smaller format outlets offer a personalised shopping experience, something lacking from internet, food-bag and grocery shopping. It’s a point of difference that can attract a loyal customer base and drive sales.

Drawing on his extensive experience in the supermarket industry, Bayleys Business Sales specialist Prashant Vijan says it’s this personalised shopping experience that’s key to making grocery businesses more profitable and ultimately, more saleable.

“The biggest emphasis for a grocery store is understanding their customers and the local market,” Prashant says.

“The ones that are highly successful understand their demographic, their marketplace and their customers’ requirements; and they ensure their offer is reflective of that.”

Local market knowledge allows owners to tap into demand, something essential to drive sales, especially of perishable, fresh products.

“It’s extremely important to customise to your local market and customer base,” says Prashant. “Knowing your market allows you to stock the right products, increase turnover and improve customer satisfaction.

“For example, in South Auckland, there are ethnic foods that are in much greater demand. Whereas in central Auckland, stores tend to have a bigger range of health foods and fresh foods, as well as wines and beers.”

The key challenges for any grocery store owner – whether an independent store or part of a larger franchise – will always be managing stock and staffing levels, as both can be difficult when restricted by shop size and wage bills.

When it comes to selling a grocery business, Prashant says there are other factors to consider.

“The most common factors in a successful sale, including large-format franchised stores like SuperValue and FreshChoice, are almost always the store presentation and a strong trading history, backed by a good set of accounts.

“The cleanliness and overall presentation of a store is critical, as most buyers form an opinion within the first 30 seconds of walking in,” Prashant says.

Thorough bookkeeping can sometimes be lacking in the smaller segment of the grocery industry, but every prospective buyer will want to do their due diligence and inspect the accounts. Therefore, it’s vital to ensure financial records are complete and up-to-date.

“Having a strong lease in place, in terms of rent and duration, is another significant factor in the sale process. A strong lease will give purchasers greater confidence in the business.”

Auckland’s population is rising, as is its grocery bill. The move to shopping at local, neighbourhood food stores is gaining pace, and so too is demand for businesses. So, if you’re thinking about selling your business, contact one of our specialist business brokers. Their expert advice will ensure that you maximise your store’s true potential and make the most rewarding sale of your business career.