Consumers are starting to make a switch in their minds about becoming more self-sufficient, and not totally relying on overseas providers for basic things like tomatoes, oil. They are products that we can produce here in Australia.
We are trying to support and drive local as best we can, but it still has to taste good and be competitive on pricing.
INSIDE FMCG: Many supermarkets and grocery retailers are getting onboard the ‘local’ trend by introducing smaller stores with tailored ranges. Is that something you’re more aware of now?
FH: Absolutely. Local is too hard for the bigger supermarkets, I get it. If you’re trying to run 900 stores across Australia, you just can’t have 900 managers doing what they want. As you get bigger, you’re bringing in rules and regulations, which stifles initiative. But I think now consumers are crying out for it, and I think everyone’s now putting their hands up and saying we’ve got to change our method of dealing with suppliers. I see local as being a massive growing category over the next two to three years.
INSIDE FMCG: What have the last 12 months been like for Ritchies?
FH: Looking at sales, it’s been a record year. Supermarkets have been the main beneficiary in all this, being one of the few retailers that was able to remain open. One of the big changes is that people are prepared to produce more meals at home. I think now people enjoy the opportunity to do more cooking and they’ve become a bit more creative, a bit more adventurous. So we’re finding that a lot of our traditional food items have gone through the roof.
Because we’re independent, we’ve got a lot more direct suppliers and we were able to go to our small suppliers for the flour, sugar, rice, those high-demand items. I think that’s what supported our business when often the chains were out of those key lines.
A lot of these products remain in our stores now. Covid was a disruptor, and sometimes to break people from their routine and their habit you need an absolute disruption. It brought independents generally back into the game. Whether those changes are forever, only time will tell, but there is a huge opportunity for local manufacturers and local retailers to really showcase their products and services and hold market share.
INSIDE FMCG: Richies recently launched an app-based loyalty program. Can you tell me a bit about the thinking behind that and what you’re hoping to achieve?
FH: We’ve had a loyalty program since 1995 but we didn’t have any data on the consumer. We had no information on who they were, where they were, what they bought; we didn’t even have their name! With the relaunch, we’ve been far more intelligent and the idea is to use the data for the greater good, to push offers to customers that are relevant.
We’re bringing it forward to the 21st century, and it’s been incredibly successful. We’ve had 110,000 people sign up since November and our aim is to try and have 200,000 active members before the end of the year. There’s an opportunity for us to double that number but it’s about building credibility and trust.
INSIDE FMCG: What are the key areas of focus for the business now?
FH: We’re about to spend in excess of $30 million over the next 18 months in upgrading our store network, we’ve got five major projects on the go. Some are pull downs and rebuilds and we’ve got another three that are massive refurbishment of existing stores. We are putting a greater focus on fresh food. And we are starting to, slowly but surely, address sustainability better than we have in the past, through refrigeration, through wrappings, through bags. We’re not there, but it is now a stronger focus in our business.
We’ve appointed a specialist buyer to really dig into direct lines so that we have a better opportunity to support local manufacturers. They dedicate themselves to what we call direct local products that don’t necessarily go through the big DCs. That’s our point of difference. We’re seeing customers trend towards premiumisation, so there’s an opportunity to compliment our base range with more premium offers as well.
INSIDE FMCG: What about online grocery? Is that something you would like to develop as part of the Richies offer in the future?
FH: We do not have an online presence. We always said we wanted to get our loyalty up and running first, which we’ve now done. We are now, as we speak, starting to focus on an online presence. We don’t want to go at breakneck speed, we don’t need to. We have a delicatessen as part of our offer so we will need to have an online offer for that as well. It’s difficult to pluck a number or a date as to when that’s going to happen, but I would like to think that early in the new year (2022), we will be active with an online presence.
It’s not necessarily going to be the be all and end all, because we prefer our bricks and mortar retail, but we acknowledge that there is going to be an element of the consumer base who will want to shop online. It is about providing outstanding customer service. Consumers are very discerning and we need to move at pace and adapt to all consumers.
INSIDE FMCG: Is it a bit more challenging to approach the online grocery space as an independent?
FH: As independents we certainly have to run our business lean and mean. We don’t have the infrastructure that, say, Coles and Woolies have, but there are a lot of independent retailers who do have online sites and they are good at sharing their experiences so we’ll talk to them about what options are available and what works best for them.