Parfetts is on a roll. Having skilfully negotiated the major transition to employee ownership that began in 2008, the Stockport-based wholesaler has now posted a turnover of £304m for 2013, with profits up 23.3% on 2012 to £5.3m.
Chairman Steve Parfett believes that now, even after his 25-plus years in the industry, there are plenty of opportunities that are only just emerging for wholesalers.
At the heart of Parfetts’ success is its retail club, Go Local, which currently has just over 1,000 members. While just over 10% of the wholesaler’s business comes from its Go Local promotions, 50% of its sales are made through its retail club members. Developing a fascia has been important.
“We’re just over the 100 mark for fascia stores but we have 1,000 stores in the scheme and actually interest in fascias is snowballing,” says Parfett.
“I think it was a steady start but as you get a critical mass, people are seeing the benefits.”
Key to supporting retail customers has been getting products at the right price in order to help them compete with the multiples – although it has to be the right products, as there is no point taking something that will not meet the needs of retailers’ customers.
Parfett speaks persuasively of his obsession with the company’s customers and there is a big emphasis on all members of the group’s senior management team going out to visit customers on their own premises.
“It might be you get great praise and it might be they feel more confident to criticise you,” says Parfett. “In any case, you get a feel for their business, what they need and how you can support them.”
Exploring a delivered option for the top tier of Go Local
For six-depot Parfetts, which is also a member of Landmark, innovation and investment has been constant. The group is currently exploring a delivered option for the top tier of its retail club, Go Local Extra, and already has click & collect capabilities. Having wireless technology in-depot and taking advantage of the internet is now an essential for wholesalers, he says.
Another driving force at the company is Parfett’s passion for nurturing talent and encouraging people to succeed in wholesale careers. The industry as a whole still needs to do more to promote women and young talent, he says.
“I’ve never regretted going to university but being a success in this channel is more about energy, enthusiasm and passion.”
Parfetts is chock-full of ‘home grown’ talent, with a buying team in every depot as well as at head office.
“There are such different strategies now – if you look at Booker, all their buying is at head office, while at branch level, it’s stock management. To some extent, some of our other colleagues in the industry are at that level, too.
“We believe that part of differentiating ourselves is employing buyers in-depot and in head office, and those skills we are having to train ourselves.”
The most important lesson he has learned over his career is to trust in people – both his customers and his colleagues.
“Sometimes, people fail but broadly people love to rise to the opportunity. The more you trust people and the more you give employees and customers the opportunity to show you what they can do, the better the outcome will be.”
Having a great buying team has enabled Parfetts to give fantastic deals to its customers and in doing so, help them compete with the multiples. Parfett says it is “remarkable” how few independent shops have thought about marketing their businesses on price and regular promotional activity, especially considering how successful this strategy has been for the multiples. But focusing on price alone is not going to be enough for wholesalers, he warns.
“However much price is incredibly important in wholesale, it’s almost impossible to totally differentiate yourself on price. In wholesale, we work on gross margins of about 6.5%, net margins around 1%.
“Therefore, 0.5% is an enormous amount of money for a wholesaler and yet is a halfpenny in the pound for the retailer in terms of their cost price, so trying to differentiate yourself on price at a rate of a halfpenny in a pound is not going to work.”
He suggests wholesalers have to do a better job in other ways, such as gaining loyalty through a retail club, being constantly obsessed about having the right range and availability, and making depots destinations that are pleasant environments for customers to visit.
If Tesco delists Oxo cubes, it is a story in the trade press and it’s absolutely huge.
While Parfetts is reaping the rewards of supporting its own people – the group invests more in its staff per pound of turnover than the industry average – Parfett says there are great opportunities for suppliers to develop talent as well.
Wholesalers don’t have the buying power of a major grocer – “If Tesco delists Oxo cubes, it is a story in the trade press and it’s absolutely huge.”
But Parfett believes there are great potential rewards for both parties if suppliers share more data with wholesalers.
“I keep banging the drum that the most valuable learning experience is in our sector, rather than the multiple sector, because there are more opportunities to make a difference,” he says.
“A good supplier relationship with a wholesaler can double or treble the business and a bad one can halve it or worse. In contrast, the multiples are so sophisticated now that a good relationship might add another 5% or 10%.”