Shakeel Arshad owns two Spar stores, the 1800 sq ft Spar store and Post Office in Bishopmill, Elgin, and the 1000 sq ft Spar Store in Buckpool, Buckie. He is currently buying a third store.
How optimistic do you feel about convenience retailing?
I was in telecommunications sales but I wanted to have my own business. I bought my first shop about seven years ago. I was optimistic then and I still am. You have to be in this business. If you’re not up for it you can forget about it.
Which areas currently present the best opportunities?
I’m very keen on the Post Office. It works very well for us in Elgin and I’d like to put it into Buckpool. I go on to the Post Office website, look for where there is an opportunity and then start looking for a convenience store or an empty unit that I could take a Post Office into.
I think it’s easier than a lot of people realise. There are potential problems with errors, but that’s down to training and coaching. The commissions are good. If you didn’t add a single sale to your retail turnover it would still be worth it. But you do add to turnover. It’s especially good when you look at everything that’s going on with PayPoint at the moment.
The second big thing is fresh and chilled food. Our fresh and chilled is up in both Elgin and Buckpool even though they are quite different stores. Elgin is mixed. It includes a quite affluent area and is on quite a busy road, so there’s passing traffic. Buckpool is in a scheme with most of the customers regular working people from the local area.
I think a lot of small retailers miss a trick. They only see the wastage. If you are going to do it well you have to have availability and that means you will have wastage. We actually throw out very little. We’ll reduce to half price the day before the sell-by date. If there’s anything left on the day we price it at 10p; it doesn’t matter what it is, it’s 10p. If it still hasn’t gone we offer it to the staff for free.
I count all of that as wastage, anything I’m not making full margin from. Some people might think it’s quite high. But we have good starting margins so even with the reductions the eventual average margin is good. If you try to cut your wastage you’ll cut your sales too. We’re growing our fresh and chilled.
What are the biggest difficulties facing convenience retailers?
I’d like to have 10 to 15 stores but I always want to build that from a very solid base, one at a time, taking on as little bank funding as possible. But it can be difficult to find a business with potential. Some areas are saturated. I’m not really interested in what city a unit is in, I’m only interested in the immediate area. But much of Glasgow is pretty saturated and Tesco Express is popping up everywhere there.
Costs are high too. Electricity is spiralling. We have to invest more to reduce costs but we have to balance that against taking opportunities that we find.
What do have in mind for the coming year?
I’m going to look at social media for our Elgin store. My brother Tony runs the Buckpool store and he launched a Spar Buckpool Facebook page. I didn’t think it would work. It’s a scheme store with regulars who see all the promotions when they are in the shop. But it’s been great. People will tell you things in a private message that they won’t tell you when they are in the store. And Buckpool has done better on some promotions than Elgin, even though Elgin is the bigger and busier shop. The only difference is Facebook. We were always very competitive as kids. So it breaks my heart to say it but he’s right on this one.
This interview is part of the Scottish Grocer New Generation series where we ask leading modern Scottish c-store retailers, from all across the country, about how they see the business and about key issues of the day. It’s SG’s New Generation – the people who will be shaping the business now and for years to come. We’re currently looking for new generation retailers with new ideas from all across Scotland. If you’d like to take part we’d love to hear from you. Just contact John on 0141 567 6032 email@example.com