Everyone loves the traditional sweet shop – for children it’s an adventure, for adults a throwback to childhood. Running it as a profitable business can be hard, due to competition from supermarkets, but it can be done. Establishing a strong brand, along with a unique selling point, is the way to go. Jamie Lawrence explains how this can be done, and provides information on start-up costs and compliance regulations.
What does the market look like?
Supermarkets dominate much of the market as shoppers tend to pick up supplies when they do their weekly shop. Newsagents also do a good trade. Dedicated sweet shops either rely on passing trade (and so must be in a relevant location) or have such a strong brand/unique selling point that people make a special journey. Without one or both of these characteristics, it is very hard to make a living as a dedicated sweet seller.
The market has also expanded considerably – the classic products are still popular but share their shelf space with new versions and also a host of trendy products. Buying into new trends, and ensuring product ranges are up to date, are important for independent sellers looking to compete with supermarkets.
What skills will I need?
Independent sweet shops carry themselves on brand – many have a rustic feel that people enjoy. The personality of the proprietor is important, particularly if people bring their children. Engaging with the children, and ensuring they have a good time, is a great way to encourage a return visit.
A head for figures is important, as the sweet shop business model can be tricky. You need to sell in volume to turn a profit. You need to watch out for your ‘cash cow’ products and maintain a good supply, and see what items are popular at certain times and ensure your stock and promotional materials reflect this.
Marketing skills are also important (less so if you rely mostly on footfall) – people need a reason to visit your independent sweet shop when they can pick sweets up when they go to the supermarket. Creating a good reason is important, and making this reason clear to potential customers is more important.
Location, location, location
Location is important for all retail establishments and especially so for sweet shops. Opinion is mixed as to the ‘best’ location for a sweet shop – all have advantages and disadvantages. A common mistake is to overvalue the school trade, which although substantial at times, offers a low value per transaction and significant seasonal dips. However, some sweet shops are located on school routes and make a good profit – it depends on how ‘out of the way’ the school route is, and whether trade dips too much during the school holidays.
Many sweet shops are located in town centres. This guarantees heavy footfall and a passing trade but high rent is a disadvantage. The high profile, however, is a big advantage and can help secure business for other services you provide, such as sweets for parties. If you choose to locate your business in a town centre, research walking routes to make sure your shop has footfall during busy periods e.g. people leaving work, lunchtime.
Training and development
There are no dedicated courses available for sweet sellers, but there are an abundance of general retail training which can help you set up your business, present a professional image and deal effectively and personably with customers.
NVQs are very popular, including with City & Guilds, which offer three levels of qualification for those who want to work in retail. The courses give participants the chance to specialise in a discipline including management, visual merchandising and food safety. Higher qualifications, such as Edexcel’s BTEC Higher National Diploma in Retail Management (Level 5), cover a wide range of topics including consumer behaviour, retail marketing and supply chain management.
Some higher education institutions also offer foundation courses in retail and retail management – check with Skillsmart Retail, the sector skills council, for more information.
As with other retail businesses, rent and retrofitting will be your biggest initial costs. The more prominent the location the higher your rent, although obviously you’ll gain the advantage of greater footfall. Rent, along with retrofitting and marketing, could set you back between £10,000 and £30,000.
Although sweets are often seen as inexpensive items, stock can be surprisingly expensive, especially when you make your first order. Budget between £7,000 and £15,000, although this figure will depend on whether you predominantly stock popular ‘penny sweets’ and similar items or more expensive, trendy products.
Buying a franchise
The franchise model is well-known in the sweet shop market. There are a number of options available which provide full shop retrofitting and use of the brand name (and perhaps promotional materials), although stock will be extra. Franchises run between £15,000 and £25,000, with initial purchase of stock around £7,000 to £15,000.
Franchises work better in some situations than in others – since the brand is established you go into business with established goodwill and credibility, which can help generate sales in the early stages. However, many franchises are based on historical visions of sweet shops, featuring jingling door bells, old fashioned tills, etc, and this look can be easily recreated – if appropriate for your target market – without having to pay for a franchise.
Franchises do often work well in town centres, where high footfall and a recognisable name can help drive people into the shop. You also gain the support of an established brand, which may appeal if you need assistance in the first six months of operation.
Diversifying revenue streams
Independent sweet shops do struggle with competition from supermarkets – although location and brand can help secure business, shops that can offer services supermarkets cannot will always be in a better position.
Here are some additional services you could provide:
- Corporate events
- Candy buffets for parties, weddings, events
- Machines – candy floss, chocolate fountains, ice luges
- Sweet hampers for birthdays/special occasions
- Fudge-making workshops
Insurance and compliance
Like all businesses that sell foodstuffs, you will need to comply with relevant health and safety legislation. The Health and Safety Executive (HSE) should be your main port of call; the legislation you need to comply with will depend on whether you are preparing any food on the premises e.g. (making fudge), decanting sweets into different containers, or just selling pre-packaged goods.
Public liability insurance and professional indemnity insurance are important, particularly if you offer additional services at third-party locations. Make sure you read your policies carefully to ensure you are covered for liabilities arising from ‘unorthodox’ situations e.g. burns from a popcorn machine.
Once you hire your first staff member, you’ll need employer’s liability insurance.
Find out more about starting a business in the FMCG industry from Melissa Burton, managing director at confectionary brand Goody Good Stuff, who gave us a number of tips on how to be successful in one of our Q&A sessions.