Sainsbury’s has started new investigations into potential franchise opportunities with independent retailers to increase its share of the convenience market, RN has been told.
A senior industry source, who asked not to be named, told RN the supermarket chain is considering its options carefully. “Sainsbury’s is open to the latest stage of starting a franchise, but it is nervous about its brand and own-label products going into independent retailers’ stores,” they said.
“It doesn’t want to spend money and get very little return. Anything other than an own-label offering would require more energy and resources.”
Another senior industry source, who also asked not to be named, added: “These latest stages are early, but Sainsbury’s is looking into stores that can provide a good return on investment. The benefit will be that the shops have Sainsbury’s above their doors, but they want store owners who are already successful.”
Initial reports of a franchise opportunity for independent retailers surfaced in May last year. Sainsbury’s had signed a nine-store franchise trial with forecourt specialist Euro Garages in 2016. However, this was terminated in February this year.
Thomas Brereton, retail associate analyst at Global-Data, told RN the plans could have both positive and negative consequences for independent retailers. “If an independent can gain access to Sainsbury’s buying power and trusted brand image, it will be able to maintain a viable business in a tough trading environment,” he said.
“It’s not all good news, however. A franchise system would inevitably see more money flowing in the direction of the few grocers at the top of the market. But given supply pressures in the market and customers’ newfound love of low prices, survival may be a case of ‘if you can’t beat them, join them’.”
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