Helena Drakakis meets the boss of Costco Thurrock, the firm’s most profitable UK depot
For Jon Reed, branch manager at Costco Thurrock, the personal touch is the key to a successful wholesale business. All well and good, but when your customers number in the thousands, that seems like an impossible task.
Nevertheless, injecting a family-run-business feel into a large multinational has been one of Reed’s missions since he took over in 2016.
“Traders want the personal touch – they want to be spoken to,” he says. “I place huge importance on attracting new traders and bringing others back by giving them confidence and consistency.”
It is a strategy that has paid off. In the past two years, membership, which is at the heart of the company’s profit model, has swelled under Reed’s management, making it the most profitable Costco depot in the country.
“We cold-call businesses, not only to attract new membership, but also to analyse the data and look at traders whose membership has lapsed, find out why and work on ways to attract them back,” Reed explains.
Communicating through roadshows and marketing, as well as maintaining consistency and availability, have become key elements to taking the depot from flatlining sales to 8% year-on-year growth.
To increase communication, Reed hired a dedicated marketing manager.
To maintain consistency and availability, a system that enables managers to check gaps regularly and adjust orders in real time has been introduced.
Moreover, driving footfall by promoting Costco’s ancillary departments has also paid off.
Who knew, for example, that you could shop in the depot while waiting for tyres to be fitted on your car or van? Or, that there is an in-house optician complete with a range of glasses to buy?
Traditionally, these departments did not act as profit drivers, but under Reed’s stewardship they have increased sales by 7% combined, as well as having the knock-on effect of attracting more people through the door.
The centrepiece, however, is the newly built deli and fresh-produce area towards the back of the 140,000sq ft depot, decked out with spider fridges filled with meats, fish and cheeses, as well as a large fruit and vegetable area.
Behind, and visible to customers through large glass windows, is the theatre of butchers expertly preparing cuts of beef or lamb, fresh fish being gutted, bread dough being kneaded and cakes being iced.
The six-figure investment has not only improved the working environment for Costco staff, who now have far more space to move around, but it has also doubled the size of the fresh-produce area in response to changing customer needs.
“The investment in the deli was so we can cater better to the trend in fresh and chilled produce and also to customers with a smaller basket spend but who want to shop more frequently,” he says.
By highlighting certain products at key times, the team at Thurrock has also capitalised on seasonality, with an area at the centre of the depot dedicated to a rotation of stock, whether it be garden furniture or Christmas decorations.
Given Costco’s central buying system, purchasing products unique to every depot is limited.
However, Reed has persuaded teams to bring in some items.
Scottish square sausage, for example, was a bestseller in the Glasgow depot but unheard of south of the border. Reed brought it in for his meat-heavy customers and let them smell and taste it on demo. Now, it ticks over a consistent £3,000 in sales a week.
It is the same story for his introduction of Nigerian Guinness, which the depot is now supplying to 8% of its top customers.
Good business, he says, is about “trust”, “being fair” and always talking to your traders. He and his team work hard to list items based on customer demand, but no one is left short, either.
During this summer’s very warm weather, Reed refused a sale of all of his pallets of bottled water to one trader, as it would have left his other customers short.
Savings on waste have also been made as every item is now recorded and tracked with short-dated stock highlighted and given greater visibility instead of sitting on pallets in the back.
Next year, a further transformation will occur. A complete overhaul of the depot’s cafe area is planned, as it is currently packed with customers, but rather short on space.
Figures for food consumed there are impressive, with 4,500 hot dogs sold every week alongside 2,000 chicken bakes.
Sales are up 11% this year, but Costco projects a further 20% increase following completion of the work, which will see the service and till area expanded as well as the seating area, and the introduction of a gelato bar.
The company culture, Reed says, is supportive and inclusive, and the Thurrock depot is a clear example of the energy and passion of its staff.
“We are constantly thinking about what we could do better and how to push the business forward,” concludes Reed.
60 Seconds With Jon Reed
What is the best piece of advice you can offer?
Consistency produces excellence. You must lead by example and set the standard every day, especially for small things such as picking up a piece of litter. Ignore something like that and you set a new, lower standard for everyone.
What is your philosophy with regards to work?
As a manager, I would say 90% of my job is teaching and trying to ingrain the culture of the business into staff. When you teach employees why things are done in certain ways, you create a culture that will last well after you leave.
What has had the biggest impact on you in your career?
Before I opened a new building, I thought I knew everything possible. But when I opened one from scratch, I learned every element of the business inside out. It was an eye-opener.
What do you get up to in your spare time?
I have a young family, so I dedicate most of my free time to them. I also enjoy fishing.