John Cummings, chairman of the National Association of Retail Grocers Australia, has seen it all before, interestingly, from a number of perspectives. He remains focussed on and confident about the future.

John currently operates, with his two partners, three IGA supermarkets in the localities of Duncraig, Leederville and Glengarry in metropolitan Perth.

During the 1980s John was the driving force of a fabric wholesale business which was the state agent for the brands Nike, Slazenger and Spalding. Like many of its then contemporaries, the wholesaler was located in King Street, in Perth city.

Things changed. Supply chains were rationalised, consolidation occurred between manufacturers and distributors, while smaller agents had their contracts, and thus their futures, terminated. King Street was also subjected to a makeover, transforming from a precinct of wholesalers to a high profile, retail destination, featuring retail names like Louis Vuitton and Ruth Tarvydas.

Change, like fame, can be thrust upon one. In November 1987, just one month after the share market crash which financially brought down many of the world’s “four-on-the-floor” entrepreneurs, John and his then partner acquired a small independent supermarket in the northern reaches of the Perth metropolitan area (Glengarry).

At the time the percentage of business defaults was around 24% per annum. Prevailing interest rates were 19% and the weekly interest bill on the $1.4 million loan to purchase the supermarket was $5,100. That was before rent, staff wages, electricity, insurance and public utility service costs.

Some 20 years later, John Cummings can still be seen regularly front and centre in the Glengarry store of 900 square metres trading area. Weekly turnover often exceeds $200,000, with an average $185,000.



Mind your own business



John has never been daunted by the local presence of the two local national supermarket chains Coles and Woolworths. He respects them and studies their stores closely and regularly.

He is sensitive to the fact that his product range of approximately 14,500 is not as large as the 19,500 (excluding general merchandising) of a full size, average Coles supermarket but greater than 5,500 SKU’s (stock keeping units) of a typical Coles Express outlet.

The primary focus of this retailer is on internal ratios, over which John and his people have control. Apart from the measurement of stock turns, which quantify the productivity of each outlet, the key ratios are monitored as a percentage of turnover, being:



Rent – up to 4%

Wages – 8–10%

Electricity – 3%



Personal visibility



All staff members are encouraged to be visible and accessible to customers. Responsiveness to requests for specific brands, products and sizes are considered to be the most effective counter to expensive national mass media advertising of the two major chains.

Satisfying the needs and immediate wants for the local 2,500 neighbourhood households is fundamental.

The ubiquitous mobile telephone has impacted on shopping habits, with heads of the household being able to react quickly to purchase requests from partners on the way home. This accentuates the increasing importance of the 3.30 to 7.30pm trading hours each day of the working week.

Little wonder then that John walks the aisles of the supermarket he is in at around that time, looking for inspiration and interaction. And with a customer count of around 10,000 per week he finds no shortage of those willing to ask, to complain and to propose innovations.



Something special

Consistent with the experience of retailers throughout the world, this independent supermarket operator has concluded that specials and discounts are not as effective as they have been. Price reductions in Coca-Cola, washing powder and toilet rolls do not have the pulling power of the past.

Specials tend to have a greater influence on when people buy than on what they buy and where they buy from.

Buying an attractively priced special “just in case” belongs to the thinking of an earlier generation. Today, pantries are used far less than ever before. Supermarkets have become the “virtual pantry” for many households, with a commensurate increase in the number of store visits each week. To John, that represents potential increases in sales.



Free range



The limited retail space of most independent supermarkets dictate the need for greater discipline in the stock profile and the management of stock levels. For example, 21 of the average 25 flavours of branded cordial may be retained, with little or no downside on customer satisfaction.

Exclusivity of a brand to the IGA network is a problematic proposition. However, the philosophy of this business is that “if a customer asks for it, we stock it”.



Get staffed



On balance, the three John Cummings owned and operated independent supermarket group would not be deemed to a small to medium sized enterprise, because of the total workforce of some 200.

However, each store is a small business, with the original Glengarry outlet employing 85, including 50 permanent part-timers.

In recent times the twelfth person currently on staff took advantage of the long service entitlements.

Endorsed Enterprise Bargaining Agreements operate throughout the three supermarkets.

Local 15 to 17 year old teenagers are welcomed, encouraged and trained. They enjoy lifetime benefits from developing their own work ethics from employment in the local supermarket.

Recruitment and retention is not a pressing issue.



A growing force



During the immediate past, independent supermarkets in Western Australia have enjoyed a 1.6% growth in market share. That is a fact that warms John’s heart.

Individually and collectively they have lifted their game, investing in store presentation and merchandising displays.

The word and underlying concept of “local” offers a compelling reason for consumers to support independent supermarkets.

“Fresh” has another dimension of appeal, with cakes for example, being baked and distributed both locally and daily. That stands in contrast to the Tasmanian based products that are transported and stocked by the nationals, over extended periods, still with the label “fresh”.

There is a broad spirit and expectation of growth among the ranks of independent supermarket business owners at present in Australia, Western Australia in particular. Business brokers make regular calls with offers to purchase.

Product representatives do too. So, “the deal” is still available, primarily because of the growing presence and importance of the disciplined independent supermarkets.

Then what of the Achilles Heel for independents? Like most sectors, the very strength of the independent is its own weakness. Independence should not equate to isolation. An integrated, cohesive presence can be and is good for – business owners, staff members and consumers.

It is and remains a lesson well learnt.





Barry Urquhart is MD of Marketing Focus, Perth. He is an internationally recognised conference keynote speaker, author and business analyst. You can order his books here.