Liquor City offers business lifeline to independent liquor retailers

National trade marketing manager, Vania Martins-Fouche says, "We have more than 250 stores in the group and plan to top 300 within the next two years.

"Our franchise growth strategy comes at a critical time for many smaller independent operators. Consumers are under pressure and value as well as premium service is key. This means independents must offer affordable pricing, but without reaching the high targets set by suppliers, they do not qualify for volume discounts from the various companies.

"This puts them at a great disadvantage versus major retail chains. In some cases, continued viability is threatened. A franchise deal offers a new lease of life as it creates access to volume discounts along with a host of additional benefits."

Industry sources suggest that over 10,000 independent retail outlets currently compete with major retail groups. An increasing number are small-scale operations owned by black entrepreneurs.

"Pressure on consumers will remain intense and 2015 could be an extremely tough year. Industry diversity and the current structure of the retail liquor trade could be threatened if casualties among smaller independents begin to occur. "Franchising with a strong partner is the optimum solution for many of these embattled independents."

According to industry projections, the South African liquor market is expected to top R91 billion this year. Retail channels account for more than a third of the total and the company believes smaller players that embrace franchising of the model can achieve continued growth.

Franchise strategy

• affordable set-up costs
  
• equity of house brands
  
• brand recognition
  
• 20-years' experience
  
• fixed monthly fees
  
• advertising and marketing support

"Franchisees account for about 50% of the group's business. They are a critically important component of our business and we do everything in our power to support them and make them viable members of the group. We see significant potential for growth by this aspect of operations in all provinces.

"Rugged independence by micro-operators is admirable, but you can't solve 21st century problems with 20th century solutions. In a period of acute consumer pressure, value is critical and that means affordable pricing through volume discounts. A franchise turns a problem into an opportunity for the embattled independent," concludes Martins-Fouche.

For more information, go to www.liquorcity.co.za.