As Booker joins forces with Tesco in a game-changing move for the sector, Martyn Fisher checks in with the MD of one of the wholesale industry’s other major players – Bestway Wholesale’s Martin Race.
Life could have worked out very differently for Bestway Wholesale MD Martin Race had he followed his original ambition.
“When I was at university, being a lorry driver was what I wanted to do,” he reveals. “I loved the idea of being master of your own destiny. You could meander around and you wouldn’t have to be at home all the time… although I have managed to succeed on that bit!”
Race is talking about the job he has on his hands at Bestway Wholesale, which recently saw a significant drop in profit in its most recent financial year – he says this was largely due to retailer-enhancing promotions, and investments in other channels such as symbol and foodservice.
The Bruce Springsteen fanatic has only ever worked in the wholesale channel, starting at the age of 21 after graduating from Leeds University – just.
“I got my degree from Leeds, even though my professor told me in my final year that I would fail because I was not working hard enough,” Race says. “In the end, I got it and I got higher than he thought I was going to get, too, which he was mightily annoyed about.
“In those days, you then did what was called a milk round, where companies would come round and try to recruit you. So I had a job with Morrisons, but also with a cash & carry called Joshua Wilson, which eventually became part of Linfood, which eventually became part of Booker.
“The only reason I went there was because as a graduate trainee, they gave me a company car. It was not graduate fast track – it was ‘get out there and find out how you do all the jobs’. It was not a lifelong ambition. I was annoyed with it at the time: I used to think, ‘I should be further on than this.’ But it really did serve me in good stead.”
Race worked his way up through Joshua Wilson to become a regional director, before moving to run a Batleys depot near to his home in Stockton-on-Tees. Batleys was expanding rapidly at that time and Race ran the site “for what seems like a lifetime”.
A promotion to regional controller soon followed, before Race was made operations director in January 2000. Some more moves up the ranks of Bestway Batleys later and Race is now MD of Bestway Wholesale.
Sunderland AFC-mad Race is clear on what the business needs to achieve this year: “For 2017, we need to return profit growth, so it is all about cash. The last couple of years have been really tough within the wholesale industry in general.
“To help with this, we need to get Bestway and Batleys as one, as Bestway Wholesale. Currently, we have two different IT systems and two different processes. Our new system went live in one of the Bestway depots in December, so we will roll that out shortly. That hopefully will make such a big difference for us – currently, it is very difficult to move Bestway and Batleys people between the two sides, as it is a six-month training plan, and then that negates the impact that they are going to have.
“I have always been dead keen on moving managers around because you get to a situation where you are stale. It is not very good for development and people get stuck where they are. But until the processes change, it is difficult.”
Race candidly admits that Bestway’s club and symbol offering “could be better” and requires investment. He adds: “Any downturn in unaffiliated retail – which there has been for the past two years and more – will always affect us more than anyone else in the industry. We have tried to shore up unaffiliated retailers and help them, because they are still an important part of our business.
“But independent retail is all about price. The fact that you have so much of your business in independent retail and you’re trying to shore them up – draw your own conclusion as to why it has cost us money. Some of it was done for the right reasons but sometimes we went too far.
“But now we need to build club and symbol, and the catering and foodservice businesses, without forgetting about unaffiliated retail.”
An increasing focus on delivered presents another problem for Bestway, one that Race does not necessarily have an answer for: “The lack of footfall is a challenge. The younger generation will use the website and the app, and the transfer to delivered is only going to grow. If, in five years’ time, it’s gone even further towards delivered, we are going to have some pretty big spaces in our depots and we’ll be trying to decide what to do with them, because most of the depots are between 80,000 and 105,000sq ft,” he says. “So all ideas are welcome on a postcard. We have a few, which I don’t want to reveal yet, but it is definitely a big consideration.”
As with most wholesale businesses, wages are Bestway’s biggest cost and so the National Living Wage (NLW) will have a significant impact on the company. Nevertheless, Race notes: “You can whinge and complain, but it is a fact of life, so you just have to get on with it and find a way to work round it.
“We have just got to work more efficiently, as that is the only way we are going to survive. That comes back to deliveries – if you are trying to deliver from 60 depots, that is not efficient. So if you can make some savings there, that can counteract the impact of the NLW.”
Mergers and acquisitions have been the talk of the industry of late, not least because of the game-changing Booker and Tesco deal. Bestway has made its fair share of acquisitions and we may not have seen the last of them, Race says: “We are always looking and we are always interested in any conversations. Currently, there is nothing bubbling away. Sometimes, it has come out that we are interested, even though we are not – it is a tactic to drive up interest. If something comes up that is a good fit, we will look at it. There has got to be some more consolidation in the trade, though.
“I think everyone is investing in wholesale. We probably will be investing proportionately more because of the independent retailers that we have. We have invested an awful lot of money in price and promotions to try to keep them competitive and to keep their heads above water. But in fairness, you have to invest, and any wholesale company that does not invest will end up being part of the consolidation or they will give up.”
There was a time when Bestway “would list virtually anything”, according to Race, as long as suppliers paid the money. Times have changed, though, and Bestway has recently taken out 20% of its soft drinks range.
Race is keen to establish and maintain healthier relationships with the business’ suppliers these days. He says: “You could quite easily accuse suppliers of using the wholesale sector as a profit opportunity. Indeed, in some cases, some suppliers do not seem interested in the convenience sector anymore.
“But I think generally speaking, suppliers do not want to end up in a situation where 90% of their business is going through the mults either. And that is usually the thing that countermands the other side.”