Convenience Credit In The Spotlight

By Publications Checkout
Convenience Credit In The Spotlight

A study by AIB Bank and Amárach Research, in association with RGDATA, has found that more than half of convenience retailers have had difficulty sourcing new finance from the banks. This article originally appeared in the May 2013 edition of Checkout

The level of financial involvement by AIB in the convenience retail sector has been somewhat subdued (and occasionally controversial, see page 48) in recent years, yet a report issued by the bank last month, in association with Amárach Research and RGDATA, indicates its intention to put that right. The report forms part of a series of outlook reports for the SME sector being launched by the bank, which, according to the accompanying press release, ‘will help to inform AIB of the issues facing businesses around Ireland and the bank will use these findings to work with customers in the future’.

The report’s key findings are largely unsurprising. Out of a total of 167 retailers that were surveyed, 55% said that they had found difficulty in obtaining new finance from the banks, with 50% adding that they have had difficulties in renegotiating existing finance terms. 

Managing Costs

The conensus among the retailers questioned is that they are increasingly finding themselves competing for a share of an economic pie that is not getting any larger. 57% of those surveyed said their sales had decreased between 2011 and 2012, while 26% say they had stayed the same and just 16% reported increased sales. 


As a result of this decline, two-thirds of retailers (66%) say they have reduced the number of floor staff working in their operation in order to manage costs, while 60% say they have reduced profit margin by discounting prices. Around a third (35%) have reduced the range of products in store, while 32% have changed the opening hours in their outlets. 

Interestingly, the report also found that just 22% of convenience retailers say that their business will be taken over by a family member in the future, although against this economic backdrop, it’s probably not all that surprising. It found that 20% plan to sell their business as part of their long run ‘exit plan’, while 58% don’t know or haven’t decided on their succession plans. 

Survive To Thrive

Despite this, there is a hunger in the trade to reinvest, as retailers switch from ‘survival mode to thriving mode’. In terms of whether they will seek finance over the next 12 months, 35% said that they would, while 44% said they wouldn’t, and 20% answered ‘Don’t Know’. As to where this investment funding will come from, 66% said they plan to reinvest profits from their business, while 42% are confident of securing a bank loan. 

Investment priorities for those surveyed include upgrading or renovation of their premises, cited by 81% of respondents, upgrading equipment (60%), staff training (60%), investment in advertising and marketing (57%) and investment in social media (30%). 


Speaking at the event, RGDATA’s Tara Buckley said: “I think this report very clearly shows you that the enthusiasm and hard work ethic is still there. To see retailers talking about investing in their business and investing in their staff is hugely positive, and is something that the banks and other financial institutions that work with the independent trade need to understand.”

What’s Next?

Of course, impressively produced reports such as these are only worth the paper they’re printed on if they are backed up by actions. Or as Buckley put it at the event, “you can do all the PR and all the reports that you like, but what you do on the ground with these business owners and entrepreneurs is what is going to make their opinion of you count. Listen to them, and go in and support them.”

In a section of the report devoted to ‘Getting Finance For Your Business’, Ken Burke, AIB’s Head of Business Banking says that ‘The reality for AIB is that if it is to return its own business to viability, it needs to lend more money to SMEs’. Let’s hope the bank is ready to put its money where its mouth is. 

© 2013 - Checkout Magazine by Stephen Wynne-Jones


Stay Connected With Our Weekly Newsletter

Processing your request...

Thanks! please check your email to confirm your subscription.