What makes a successful mobility retail business? If we base our idea of success on market share, then there are few better people in the industry to ask than Spencer Coe, founder of ScootaMart.
Now trading for around two decades, ScootaMart boasts a portfolio of more than 10 stores and ‘a customer in every postcode in the UK’. It is one of the most well-known mobility traders in the country and there is no contesting that the retail model works and serves its purpose.
Like a number of players in the retail market, ScootaMart started as a one-man-band selling equipment on a small scale. Coe, who was working as a travel agent on Teletext at the time, says he took inspiration from a friend who had started buying mobility scooters and then selling them on for a good margin.
“I was working seven days a week from nine in the morning to nine at night every single day. It was really hard work for very little reward. My friend had started buying in scooters. At the time it was a case of putting a simple advert in a national newspaper and from that he’d get a handful of leads and then go up and down the country selling scooters at £4,000 a go – they were much more expensive back then. I thought: ‘what am I doing here?’”
Instead of chasing leads around the country however, Coe decided to set up shop in Fleetwood Market, Blackpool. This way, customers came to the business. He explains that this was instantly more successful than a model that relied on travelling hours between appointments and paying for £1,000 newspaper adverts.
ScootaMart, says Coe, “hit it off straight away”. While the customer of yesteryear may have been less knowledgeable than today’s typical client – some thought scooters had engines – they would travel far to visit a store. Coe’s initial shops could therefore afford to be out of the way and end-users would make a day out of their visit. Nowadays though, the customer is different, he believes.
“They won’t go 100 metres. We had the initial shop but I think if we’d have moved location and opened more years ago we’d have been far richer now. As the years went by we started to open more outlets. I think every shop we’ve got except Fleetwood Market has relocated with the times. It’s a natural thing that when your lease is running out you renew it. But we haven’t and we must have moved every shop closer and closer to the centre of towns.”
‘It’s our time on the high street’
Each mobility retailer will have its own theories on the best shop location. Do you gravitate towards areas of higher footfall or put yourself outside of town where there is better parking and cheaper rates? Of course each business will suit different areas. For Coe though, his portfolio is spread across a variety of diverse locations and experience has taught him which model works best “by a country mile”.
It is his belief that while people used to make a dedicated journey to a specialist mobility shop there are now so many of those showrooms that “they are by definition, no longer specialist”. Of course certain mobility dealers will have their own responses to Coe’s notion and some will say specialising is the only way to differentiate and survive in today’s market. But the correlation between ScootaMart’s continued march into town and city centres and its booming business ought to give some credibility to Coe’s logic.
He comments: “Our mobility stores are easily reached and I have a general theory that if someone has a go on a mobility scooter then they’ll buy it. If you’re off the beaten track, you’re not going to find that customer. It’s impossible. So we’ve gone more town centre-focused and users are going past us all the time. We can leave the door open and give that one line: ‘You’re a scooter user, we’ve just got this brand new one in, can we value your opinion?’, and they’ll get on it.”
Many businesses in the industry have avoided the high rates and crowded centres of urban areas in favour of out-of-town areas with the idea that mobility products are items that customers need and so will always travel to find one on a special visit. ScootaMart still has shops like that but Coe is confident that the changing market demands relocations. As far as he is concerned, it simply comes down to footfall and increased selling opportunities.
“We’re here to sell”, he says matter-of-factly. “Especially with extras and add-ons. If a customer’s going past on a scooter and they haven’t got a bag on or something, when they come in the shop, that’s another opportunity for you. When you’re out-of-town, they come in with a purpose and a pocketful of money to come and see you. When you’re on the high street and they’ve just ambled past and see you’ve got all the add-ons they come in.
“One store might be £10,000 a year but it’s 500 metres off the beaten track and the other one might be £20,000 a year but you’re in the heart of it. You’ve then got a bigger commitment but you will make ends meet. The ratio is far, far superior when you’re in a town centre. Our Southport shop has been there for 15 years and we’ve recently moved 800 metres along the strip and now turnover has trebled. We’ve taken all of our old customers but the amount of new ones we’re picking up is just incredible.”
Interestingly then, while many players in the industry believe the high street is under significant threat, ScootaMart is focusing its resources in this area. For Coe, the negotiable rents and general climate means ‘it is the mobility retail industry’s time on the high street’.
The world of franchise
ScootaMart is one of very few companies in the sector that has ventured into the franchise concept. It’s a hotly debated topic and some believe strongly in it while others remain sceptical. For Coe, if the model is to work, it is vital that the franchisee does exactly as the parent group tells them. Unsurprisingly, that concerns location too and Coe does not want spots where customers are going to be intercepted by competitors. And while the strict franchise guidelines may give some applicants itchy feet, Coe insists they need to be there. For him, failure is not an option because of the costs in setting up a franchise and the damaged brand image if one goes under.
“We were going to just let people run away with it and let them set up wherever they want but we’re not going to let them set up just so they’ll fail. It scares me that I might sink people’s money because the people coming forward to enquire are often on their retirement money. I’m not spending it for them and I’ll pull the handbrake if I have to.”
Of course, the benefit of being a franchisee is the buying power that comes with the group and the subsequent discounted prices you can offer the end-user. A model like ScootaMart has to run its business based on percentages but Coe says it sometimes pays to break the rules.
“Sometimes you’ve got to take one on the chin. If a customer comes in with a print out and says they can get something on the web for £600 when realistically it’s £999, if you sold it at £600 all day you’d have no business. But if you take that £600 deal just so that person isn’t going around saying you’re expensive, if it hasn’t cost you, then it’s worth doing. I think there’s a lot to learn on the franchising with that. Instead of just turning a price tag you’ve got to be flexible and knowledgeable.”
With all the advice and support ScootaMart gives its franchisees, their chances of survival could be regarded as relatively high compared to one-man-band outfits. But while they are an important part of the business, Coe says they will “never be a big money earner”. ScootaMart charges 7% of net value, which is around £18,000 in revenue for a very successful site turning over about £250,000.
He comments: “You’ll never get rich off it and they constantly need help. It’s like having babies but if you give them that impression they’ll stop ringing you and they’ll fail. We know what we’ve got to do so we give them the support. The main gain we get is better buying power so franchises can technically sell a product for the same price the competition can buy it for which means you can’t lose. They’re buying cheaper and that’s the whole idea of it.”
While franchises might not be huge money makers for ScootaMart individually, collectively they are a steady stream of revenue for the business and consequently Coe says he would like to open “a lot more” and form a chain of them. He is keen however to avoid any “chaff”.
“We’ll wait for good quality. It’s bad record if shops have shut. We get a lot of enquiries every week and with 95% of them you have to say no. The other 5% we’ll work on to see if we can put the whole package together but we only want them on the high street.”
Why most online mobility retailers ‘will not last’
Better buying power and the ability to discount products while maintaining acceptable margin is one of the best weapons any physical dealer can have in the fight against e-commerce retailers. ScootaMart is fortunate in this sense. However, Coe, who operates several mobility retail websites not associated with the core business and knows the market well, does not fear the online dealers undercutting even his prices.
He explains that where online retail is concerned in mobility, the margins are so slim that businesses struggle to make any real money. Even if a company shifts £1m in a year online it might only make £7,000, Coe says, who believes that this kind of model is based on vanity.
“If you buy a mobility scooter for £900 and sell it for £1,000 you’ve made £100 profit. First of all you’ve paid £900 + VAT so you’ve shelled out more and you’re waiting for a VAT return. Then you’ve delivered the scooter and if that customer has a problem you’ve got to drive out to it, repair it and drive back with a paid-for driver and fuel. If you do that once a year you’ve just wiped out that profit. If you do it twice you’ve cancelled out two sales. And if a customer cancels the order in 14 days you’ve got a second-hand machine that you can’t sell as new and can’t discount any further.
“It’s not being greedy but you can turn over £3m and not make a penny. You’re obviously too cheap and so there’s something very wrong. The only reason we can do [online retail] well is all the back-up and aftersales we offer.”
Where next for ScootaMart?
With ScootaMart’s recent store expansion programme and ambitions to open a chain of franchises, Coe has still got a lot to give to the mobility industry. His ultimate goal is to be able to retire but he is yet to put a detailed exit strategy in place. He hints at the possibility of selling and joining forces with one of the other key market players to become a truly national company.
Looking at the wider market, Coe certainly feels consolidation will be the way forward. He says: “Sales wise, it’s a steady old game in this industry and everybody is doing similar figures. If you ask me my five year prediction, I think all the small dealers, unless they do something drastic, could be shut down so it’s just a big game of multiples. The price difference we can get from a supplier against the one-man-band is incredible and the choice we’ve got is incredible against a small dealer. We could see smaller dealers ending up as service workshops and then getting the odd sale.”
While others may disagree with these predictions, it’s difficult to argue with Coe when he says that mobility retail businesses must change now to survive. Even with ScootaMart’s initial success, it has continually adapted its model by relocating its stores, for example. The market knows that evolution is the key to thriving and ScootaMart is proof that even the largest players must develop. While the growth of firms like Coe’s may concern some retailers, there are still points to take from his model, not least experimenting and taking risks. In this way, all businesses can capitalise on more of the expanding market.