Convenience shop owners investing up to 10% of sales in revamps
Up to 40% of Bank of Ireland loans to small retailers in 2018 and 2019 spent on revamps
Bank of Ireland claims that its clients who invested in store refurbishments subsequently enjoyed sales boosts of 5-10 per cent.
Smaller convenience retailers are investing as much as 10 per cent of their annual turnover in store revamps every four or five years to keep up with larger rivals, according to lending data from Bank of Ireland.
The bank has released data showing it loaned just over €100 million to family-owned SME retailers in each of 2018 and 2019. It said between 35 and 40 per cent of this was loaned for the purpose of store revamps.
Bank of Ireland claims that its clients who invested such sums in store refurbishments subsequently enjoyed sales boosts of “between 5-10 per cent”, while their margins were boosted by around one percentage point.
“The sector is so competitive, if store owners are not investing those sort of sums to improve the customer experience, they will go elsewhere,”said Owen Clifford, the bank’s head of retail convenience.
Mr Clifford said that many many of its loans were to allow shop owners invest in food service or in-store dining facilities, as the trend for consuming food on the premises grows. He said this trend was particularly noticeable among forecourt retailers, who are looking for additional revenue streams as motoring shifts towards electric vehicles and away from traditional fuel sales.
“What’s key here is that for retailers, investing in food service facilities is a new departure,” said Mr Clifford, who worked for SuperValu owner Musgrave prior to joining the bank.
“Standards need to be maintained. The food service business is tough and retailers can’t be expected to turn into restaurateurs overnight.”
Londis, for example, has earmarked €10 million to invest in store revamps across its network.
The bank said it has a “strong pipeline” of finance deals in place for retail store refurbishments in 2020.
The bank said it was also arranging an increasing number funding deals for retail leaseholders looking to buy out the freehold in their properties, as well as refinancing deals to allow retailers exit arrangements with non-bank institutions that previously bought loan portfolios from Irish banks.