Notes From a Native Son: Making a Traditional Business Model Modern
I have a deep and consuming passion for small rum shops, apart from the fact they tend to take up too much of my time when visiting Barbados.
But then again, I have a confession to make: I am the product of a rum shop culture, on both sides. My paternal grandfather had a rum shop and bakery in Nelson Street (Ye Olde Grogge Shoppe), which ran from the 1930s to the 1960s. And, on the maternal side, my mother ran a shop for years in the Ivy, until she immigrated to the United States. But being called rum shops was about all they had in common, along with selling the amber nectar to people who were a bit too careless about their earnings than was good for them. The clienteles were totally different. While my paternal grandfather, later grandmother and aunt, ran an establishment which also functioned as a low-cost food provider, with my mother’s establishment, it was more hard drinking, and non-stop gambling, especially poker. To this day I do not like the idea of gambling – or drinking rum. However, on hearing that there were moves ahead to bring stubbornly independent rum shop owners together, my first reaction was: about time.
Small business people are always the first to be forced out when a society is developing and the emerging middle class wants to move away from the old customs – their parents’ generation. In Barbados, post-independence, one of the first casualties of the emergence of a middle class was the small rum shop. But, a question I always ask myself, have we been throwing out the baby with the bath water? But, if the proposed rum shop body, let us call it a Cooperative, is to work, then the business model must be simple, transparent and practical.
Simple as it may seem, it must concentrate on being a wholesaler, driving out the exploitative middle man that for generations have made a fortune on over-charging ordinary Barbadian shoppers. It must be customer-centric, organised around the needs of customers rather than the convenience of the Coop organisers and staff, if any; it must be based on low-cost, speed of delivery, and be detailed in its analysis of customer needs. It must be based on loyalty, not only the customers, but also a visible and much-admired Coop wholesale brand – for example, all the members shops should be painted in distinguishing colours so that no matter where people are in the country they will not be far from a Coop franchise.
Some of us are old enough to remember the Alleyne Arthur brand, with its bright red and green distinguishing colours, which sent a message about quality, service and prices. Shopping in one of these franchises must be an experience, so that calls for training – and small shop keepers can be trained, ought to be trained. Above all, shopping should be an experience, not one of rummaging through some hole in what passes as a mall, or in some Broad Street emporium where everything is piled up, from food to self-help books, to nylon shirts. From the store design, to signage to shelving, to customer interaction, shopping at a Coop franchise should become an experience for both locals and tourists.
The key to the success of the discount stores is that their have smaller square footage than is normal for most large supermarkets, offer fewer items, between 600 and 200 products, compared with between 7000 and 9000, and own-labels dominate the shelves. Again a Coop franchise can offer own brands at vastly reduced prices, from rum, beer and other spirits, to ground provisions and meat. For example, with an order book for tens of thousands of bottles of rum, they have the buying power to put their own label on the product and negotiate substantial discounts, which can be passed on to shoppers. And with a business model based on an annual increase in sales per square foot of floor space, it could generate highly competitive earnings before interest and taxes.
In a time of austerity, low-cost, discount stores are an idea whose time has come, they have an opportunity, a market reach, which the premium brand stores do not have. They can help shoppers to economise, without compromising on quality and service. And, with a nationwide distributional network of, presumably, hundreds, if not scores, of member-shops, a Coop franchise will have the opportunity to not only use its massive buying power to get essentials at a discount, which it can pass on to the end shoppers, and to introduce its own highly lucrative brands, but just as important, to also manufacture its own products due largely to economies of scale and customer care.
In times of great prosperity middle class and aspiring middle class people like to demonstrate their status by buying brand products, from foodstuff to leisure items, from the top shops, but as the belt tightens, as in the UK, the pound shops and Aldi and Lidl, the two German-domiciled discount supermarkets, have come in to their own.
A Coop franchise could also make an invaluable contribution to the small agricultural sector by bulk buying produce, including ground provisions, meat and fruit, thereby providing the much-needed cash flow small farmers need, while at the same time guaranteeing member shops a supply stream. The introduction of a Coop franchise in the retail food sector in Barbados will be a win-win for consumers since to compete the top supermarkets and stores will have to reduce their prices (a win for consumers) and offer better service (a win for consumers). Such value-based consumer spending can only be good in the long term for the economy, and in terms of educating consumers on how to spend their money.
Prices aside, the quality of service is going to be the key to the success of any such enterprise: friendly, smiling faces, quality goods, transparency, low prices, the exchange of faulty goods, loyalty cards, good communication, training and, a facility that we all knew as young people, loyal customers should be able to open small credit accounts to stock up their larders if they run out of cash mid-week. But, as has been pointed out, the operating model must be customer-centric, a sustainable pricing and overall service strategy, which may include free home deliveries, special offers, the value chain integration, and the freshness of products. The one thing they can avoid is the silly idea of that Oistin’s supermarket which brings in carrots from Canada.
In a market as geographically restricted as Barbados, the option of online shopping will take on a totally different character than in bigger geographical areas. However, a Coop franchise can offer a re-designed online option by taking grocery orders online or by telephone and delivering them through the local franchise, rather than direct, to the shopper’s home. The thinking behind this is to familiarise shoppers with their local franchises and sending the message that no matter how big or small, their local franchise can act as an intermediary with the big suppliers.
By using its buying power, a cooperative wholesaler would have more bargaining power, apart from bulk-buying, and would be able to access markets geographically further away than just the Caricom region when sourcing goods. The only serious challenge with this is that of warehousing, especially perishable goods, which would need refrigeration. This can be overcome with an out-of-town storage base and by adopting the Japanese just-in-time logistics method of delivery, thereby avoiding long periods in storage and having a first-rate distribution network covering the entire island at a time when the roads are relatively clear, such as at night and early in the morning.
Analysis and Conclusion:
There is a powerful moral and business case for small rum and grocery shops to combine and share economies of scale. However, a much more dynamic imperative is that it could be one way for ordinary Barbadians to re-capture a fundamental part of traditional culture, while not locking themselves in a bygone age when everything was milk and honey.
Although a Coop franchise will be the concern of the private sector, government can play a crucial role by introducing relevant legislation and a regulatory framework in which such an enterprise will operate on a level playing field with the more established wholesalers. The big challenge for any new collective wholesale distributor will be behavioural, convincing the aspiring middle class that a discount store, located in old communities and managed by everyday people, can offer the quality goods and service – and status – that they are used to, or aspire to. And, this resistance will be compounded by shop owners who, in the old Barbadian way, would resist anyone telling them how to manage their own business.
However, the most powerful attraction of a rum shop coop is the tradition, reminding people of what it means to be Barbadian, while at the same time subscribing to modernity by the use of technology for ordering and stock-checking. A Coop, adopting some of the old practices, would also remind people in these tough times that when they shop in the new supermarkets and hyper stores they must pay in cash or go without.
On the other hand, traditional shops operated on ‘trust’, a form of credit that went back to the end of slavery; they have a since of civic commitment, of community-spiritedness. If parents or the elderly do not have any money to buy essentials, including food, they can always go to the local shop owner and ‘trust’ a basket of groceries until the next pay day.
At a time of growing affluence it is easy to ignore this facility, dismissing it as something for the poverty-stricken, old people, but when times are hard it is one that cannot be ignored. So, not only lower prices, ease of access and freshness of produce will be the winning factors with a Coop franchise, but an invaluable loyalty.