Campbells Cash & Carry closures: a sign of the times?

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Metcash announced this week that it will be closing 15 of its regional Campbells Cash & Carry stores. With Coles and Woolworths continuing to make moves in the convenience industry, and the growth of franchises including 7-Eleven, are such closures a sign of the times?

IBISWorld's Convenience Stores in Australia December 2011 report, reads "IBISWorld anticipates that concentration will intensify over the next five years, as existing operators embark on expansions of their store networks. Unfortunately this is expected to be to the detriment of existing small players as increased competition will lead to their demise, merger or acquisition by larger operations.

"Overall, IBISWorld forecasts that convenience stores will follow a similar trend to that of supermarkets, whereby a few players control the majority of the industry."

The report's comments are inline with the recent announcement by Metcash that it will be closing 15 of its regional Campbells Cash & Carry convenience stores.

Metcash CEO, Andrew Reitzer, said "This recognises the changing dynamic in the convenience sector as our mix of business swings more heavily towards the organised petrol and convenience sector and away from the accelerating decline of traditional convenience stores."

The closures will see 315 positions be made redundant.

As part of its report, IBISWorld makes a number of recommendations for small convenience outlets trying to avoid being cannibalised by larger brands or supermarkets.

"Independent convenience stores need to implement new strategies to compete with convenience outlets operated by large companies like Coles and Woolworths. Larger players will effectively crush those that continue to offer the same product range and methods of doing business.

"Comprehensive refits and store refurbishments are possible means of providing a fresh approach for customers," it reads.

Other recommendations include incorporating more of a restaurant feel to convenience stores, larger cool rooms for the expanding beverage market and an more extensive range of fresh, prepared foods.

The IGA network of independently owned convenience stores is also part of the Metcash portfolio.

Tips for convenience success

IBISWorld has identified five key success factors for a convenience store business:

  1. Ability to control stock on hand - Stock control processes minimise costs

  2. Access to multiskilled and flexible workforce - Employees should be willing to work flexible hours, especially those working in a 24-hour business model

  3. Experienced work force - Staff should offer efficient customer service to ensure repeat visits.

  4. Attractive product presentation - Stores should have a clear layout and design. Products need to be presented well and be well stocked.

  5. Proximity to key markets - Stores need to be close to residential areas for ease of access.

Courtesy of IBISWorld Industry Report G5112 - Convenience Stores in Australia, December 2011

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