5 questions to ask when planning a retail expansion

Are you sensing the potential of an exciting expansion in your bricks and mortar business? Dreaming of a bustling coffee counter, a lucrative new chiller area or just a few extra aisles to ease congestion in store? You’re not alone. Mark Ellis, project manager at rural retail developers Appetite Me, found this year’s Farm Innovation Show buzzing with interest around expansion. “So many estates, farms and garden centres are looking to expand their food offer, or get a food offer launched, because they know the demand is out there,” he says. So where do you start?

Is it feasible?

A feasibility study, whether an informal bit of digging or a deep dive into the economics of fine food retail, is the kind of due diligence that will decide whether your project sinks or swims. For Mark, the conditions are definitely right nationally for indie foods to expand, you just have to find out if that’s the case locally too.

“You only have to go into supermarkets now to see the potential for indies,” says Mark. “The supply chain is still not good. There are still big gaps with drivers, staff and stock… a lot of people have fallen out of love with supermarkets and would rather buy from their local area. Even so, in terms of feasibility it’s very important to look at your region and the local competition. For existing businesses it’s a case of developing an offer that’s different enough from what’s already there. Sounds easy, but it really isn’t. One of the key things is making sure the shop is the right size, you have the right equipment to display the product, and the right kind of product.”

Where are the cashable benefits?

If your USP is offering the finest selection in a particular market, expansion can give you the opportunity to consolidate your position. For example The Courtyard Dairy, which expanded into new premises in 2017, has just opened the doors on its newly-extended shop enabling “more cheeses, less queues”. For others, expansion allows a lucrative food service element. So what suits you? “Let’s say you had a farm shop that was 500 square feet, now it’s 3,000 square feet,” says Mark.

“Stocking it means choosing products that will drive a margin you can make a profit on. As an existing operator you have a good idea what currently sells but it’s a case of what more can you sell. That’s where we come in with the data – should you to expand into fresh food, open a butchery… Not every farm shop operator has the skill set or the time to run a butchery, but also not everyone has the time. A lot of our clients farm during the day, so when it comes to making their farm shop a more interesting destination it can work really well to outsource some of the work, work with local suppliers who might be interested in running a concession counter.”

How will it look?

You’ve visualised a new space extending your existing shop floor, but what do you do with it? “The trick is not to just fill it with stock,” says Mark. “Yes, in the short term you might get a very high density of sales but in the long run you’ll damage your brand. What people want in farm shops is space to be able to navigate around. To look, touch, feel and browse. Supermarkets are spaces for people to mechanically pick up products. With a farm shop you need to allow space.”

Normally when farm shops are expanding they’re creating a café or restaurant space. You want those spaces to be flexible so you can increase the space in the farm shop and decrease the café or vice versa. Mark and his buying team have been working with Marshall’s Farm Shop and Kitchen in Aberdeenshire, which opened its doors last month on a seven-figure expansion that includes a ‘still house’ hosting Scottish whiskies from 50 distilleries. “We spent the last six month working with their local suppliers to create a very specific range just for them,” says Mark. “They had an existing farm shop that was very small so they developed plans about two years ago and it’s just come to fruition.”

How long will it take?

Here’s the rub. Grasping the opportunity you’ve spotted might mean moving fast, but with so many others doing the same experts caution about managing your expectations. “Whatever time frame you want to put on your extension you usually have to add more on,” counsels Mark.

“Right now everything is taking longer than normal. If someone says they want a farm shop extension open by next April it’s a no brainer. The first thing is planning and that’s a big factor. There are many challenges from planners and we face them daily; you only have to look at what Jeremy Clarkson is doing to see the issues for farm shops. Some operators do it on their own and have been very successful. Some need a little more help, so companies like ours can come in and hold their hand on that. At the moment the planning system is very clogged up and very slow. On top of that building materials are difficult to get hold of, and getting people to build is difficult. Unless your building is up and it’s a case of retro-fitting an internal space, timing is going to be the biggest challenge.”

Is it future proof?

A great example of expansion across an extended timeframe is Mainsgill Farmshop in Yorkshire which, since it moved into a purpose-build space in 2001, has been extended in 2006 (a new tearoom), 2007 (a dedicated butchery and gift shop), 2011 (an expanded tearoom and kitchens), 2014 (a two-story granary retail space) and 2020 (when the food hall was extended). “Your building needs to be designed so if you want to put 20% more floor space on it’s quite easy to do that,” says Mark. “It’s not just ‘We want to open a bigger farm shop in a year’s time’ but also what will it look like in five years’ time?”

“If you want to add more retail space or add some concessions does the building allow you to bolt those extra elements on? A farm shop extension we’re working on one now that has been purposely designed so that three of the four elevations can be easily extended.”

The dynamic customer habits that are enabling so many expansions will never stop evolving. The pandemic has taught us all to be more flexible and canny in our planning – secondary routes out of shops, a rethink of outdoor spaces – but it’s also given independent retailers a golden opportunity to break new ground. So go and seize it!