Booths - Difficult market

17 February 2017

An email on Booths today, the regionally based grocer in Yorkshire / Lancashire / Preston area. They have found things hard going in recent times with profits under pressure as they invest in their store network and update stores alongside shedding older ones.

They did 3 last year, which for a chain of c.33 shops is a big ask and you can potentially automatically, cannibalise your sales by having to sell the older store to a rival, so there's always risk involved.

It's not easy for Booths having a low store base so struggling to get the volume that the larger retailers benefit from, plus with their upmarket stores and locations meaning those customers expect a level of staff interaction and a wider premium service alongside the product offering.

However recently, with the cost base under pressure - Booths have been seemingly reducing staff in store, with not as many about on the floor when visiting. Whilst it makes sense from the cost base, higher end shops almost need to over-staff given the level of service that's expected.

Core trading remains challenging it seems and with the Brexit / niche retail facing a real test, particularly with the impact of inflation and trying to prevent cost price increases coming through chain, what are Booths on with?

Quite a nice piece of work for Valentine's earlier in the week, nice flags and the meal deal was sharp - a bit expensive in the market perhaps versus £15 everywhere else near enough.

Not ideal for February, still pushing out the festive fragrances and it's whether this is appropriate for the smaller retailer... Either way, it shouldn't be on the shop floor.

There's certainly been some impressive work having gone on in own label in recent months, they've worked hard to bring together ranges within ready meals (before it was numerous tertiary brands and local suppliers) and also Desserts which have benefited from some nice new work.

Impressive packaging and look / feel - colourways match the product broadly speaking. All fits together very well in fairness, and more of this is required to drive the equity of the own label and therefore, profits upwards.

There are more lower prices in store at Booths too, and it's unclear whether Booths themselves think they are too expensive, or they're trying to bring parity to some lines versus the mass market.

Their nearest demographic competitor is Waitrose, although they haven't that many stores around the Booths locations, yet Waitrose still match brands to Tesco so their prices continue to come down, similarly M&S match up with Sainsbury's (own label) so again - there's a level of security there.

With Booths, their strength comes with lots of good fresh foods, own label, local and the stuff you can't really get in another supermarket. Dolmio isn't a strength of theirs particularly, but any lower prices are appreciated by customers.

But a continual wave of 'lower prices' doesn't feel genuine, it isn't a concerted price campaign like Rollback or Price crunch for example. So it perhaps feels that they're continually doing lower prices without a message of them staying down....

The problem with lower prices as a rule is that alongside the promotional package, it can be entirely undermined as a message.

In Confectionery; a deal on large bags of Maltesers at £1.50 undermines the lower price on the medium bags as they're 25p more expensive; even on the lower price.

So what do customers take from that? Wait for a deal? It seems that despite lower prices, there's no reduction in promotions which confuses.. Do Booths believe their issue is core value?

They have to get sharper and better at counters and Produce, the centre of the shop needs to be reasonable (not outrageous) but their core is in fresh foods, yet that appears to have been forgotten a little.

Not great here for the Easter end; how many signs advertising just how many price points? A bit of a mess in terms of standards but also various offers and pricing.....

A great deal, but a little bizarre given the focus on lower prices and the moves away from huge trade volume driving deals..

Especially for a smaller retailer, someone buying 8 bottles means there's a need for regular replenishment - which is expensive.....

So for Booths; it's still a confused picture for them. What are they standing for in the market? A premium retailer in many respects but it feels that their points of difference are coming away and they're becoming like anyone else - however they're not as cheap....

Plus are their customers after ultra low prices? Everyone is after value but value comes in many different forms........

From the Grocery Insight newsletter archive, first sent to subscribers on 17 February 2017. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.