Convenience stores

HFSS: Small Convenience Stores Request Exemption Details | Analysis and Features

But franchise agreements complicate matters. On paper, that should mean many convenience stores are dodging the new rules altogether. Unfortunately, it’s not that simple.

This is because convenience stores deemed to have a “franchise agreement” must count headcount based on all employees of the franchised business or symbol group they are a part of, not just those directly employed in the store. .

In other words, an independent retailer who might only have 20 employees could still be subject to location restrictions if their stores are larger than 2,000 square feet – although some have circumvented this by reducing floor space. to comply, adding a post office, storage room, seats and parcel lockers, among others.

Still, many are worried. As James Lowman, CEO of the Association of Convenience Stores, writes in this week’s issue of The Grocer (p22): “There are now thousands of businesses that have had to revamp, redesign and reimagine their stores at great expense, pending a potential visit. of an enforcer with a measuring tape.

It doesn’t seem to help that this rule applies regardless of any agreements retailers may have with their symbol or franchise group. This is why traders are always advised to check with a lawyer about the status of their contracts, either through their brand or franchise head office, or by sourcing their own.

Take Nisa, for example. After a “rigorous” review of the HFSS regulations, its interpretation of the definition concluded that Nisa retailers should not be classified as franchisees. Since most of them have less than 50 employees, the group of symbols deemed to be the majority should not be affected by location restrictions.

“Our position does not preclude any Nisa client from obtaining their own independent legal advice on regulatory interpretation if they so choose,” a Nisa spokeswoman added.

However, as Lowman warned in April, “there is still a lot of interpretation that will be left to law enforcement officers when the regulations come into effect.”

This step of the HFSS law is now upon us, as location restrictions kicked off last week. The ACS says it has not heard of any initial concerns from retailers about their compliance, following the rulings, based on the legal advice they sought. However, the trade body will ‘keep an eye on’ the situation as trade standards tours begin to take place across the country.

“Retailers have spent a lot of time and money preparing for the introduction of HFSS regulations, but we are now entering the next phase, which involves enforcement officers checking stores for compliance, both in terms of individual store solutions and whether or not the store is exempt,” says ACS’s Lowman.

“We will work closely with our trading standards partner Surrey and Buckinghamshire to seek feedback on the results of these visits and if any additional issues arise as a result of local interpretation of the regulations.”

A lot of money indeed. The ACS estimated that smaller stores had to spend £13,000 to comply with the regulations, which rose to £100,000 for larger stores redesigning their layout. So it’s no big surprise that symbol groups and franchises went through “rigorous” research to make sure such an invoice was necessary.

But at least for those affected by the regulations, there is evidence that compliance with the HFSS regime will not negatively impact overall profitability. Southern Co-op began trials in March that saw five stores adapt three different types of formats to become fully compliant.

The company said the purpose of the trial was to develop an understanding of the impact of HFSS regulations on customer behavior, the costs associated with new formats and the overall impact on profitability.

While the biggest impact on margins was expected to come from removing HFSS products from impulse locations, such as bins near checkouts and queuing areas, no effect of this type has been observed.

“While we have seen behavioral changes in the store, our overall profitability has remained exactly the same,” says Andrew Farndell, Southern Co-op’s Head of Commerce and Format. “In an inflationary market where margin is everything, in fact our margin was absolutely what it was before the trial.”