Successful Retail Business Models Can Overcome a Depressed Market #059

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Published on 1 August 2011by Tony Groom

Successful Retail Business Models Can Happen in a Depressed Market

Despite the ongoing doom and gloom on the High Street there have been some

bright spots.

All the following success stories illustrate a crucial point – that retail decline is not

terminal, as long as businesses think innovatively.

The first success story is Coffee Nation, which has recently been bought by Costa

Coffee. Coffee Nation achieved its success by cleverly positioning machines in

existing outlets delivering fresh ground coffee from bean to cup. Their machines

were taken up by Tesco Express, Texaco, Shell and Welcome Break.

This was a business model that kept costs to a minimum, with no retail outlets of their

own and no staff needed to operate the equipment. Instead they developed a

machine and a back-up maintenance service and piggybacked into already well-

known outlets, al of which were serving people in a hurry. This kept staff overheads to

a minimum.

The second success story is Kiddicare. This Peterborough-based company is

essentially an online store but with one larger than normal warehouse/store.

Customers can browse but they place their orders and organise delivery online at

booths in the store. The company has recently been acquired by the Morrissons

supermarket chain.

The third example is an electrical goods supplier, in Eastern Europe not in the UK, but

its model could easily work in this country. Wanting to roll its business out nationwide

in a country with very limited rural retail buildings or internet access, it positioned

some of its electrical goods in village stores and also supplied these stores with



internet access and terminals for customers to make orders and organise delivery to

the village shops for pick-up.

In the wake of the recession and the fall out in the UK’s High Streets many villages

and towns around the country are unable to support a large number of shops,

forcing people to drive further to a retail park

The above business models show that a new way of doing business is emerging

where the retailer no longer needs dedicated premises but can provide online

access, possibly with a nominal level of in-store stock or samples for consumers to

then purchase online and either have their goods delivered to the shop or direct to

their homes.

It is a shame that the Post Office has not yet embraced such a model as this would

justify the Post Office remaining at the heart of the community.

Some years ago one of the UK’s big four supermarket groups started to experiment

with teaming up with local village stores to stock a range of their goods and allow

customers to order items to be delivered to the shop. This particular supermarket

chain operates a loyalty card points scheme but did not make it available through

the village store initiative, although it was available to customers who used the

company’s online ordering and delivery service. The village store scheme is being

discontinued because the relationship between staff time and return on sales was

not considered good enough.

However, turnaround advisers argue that with a bit of thought and planning and a

proper business model there is no reason why larger retail chains could not operate

similar schemes to survive and prosper as well as bringing some life back into village

stores to help restore them as the viable, environmentally friendly community hubs

they once were.

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