In order to survive, wholesalers must constantly review their range and profitability, says David Gilroy
It bestrode the UK’s high streets like a colossus. It sold everything from groceries, housewares and DIY to books, CDs and gardening. Its eagerly awaited Christmas events garnered massive sales figures. Its hugely successful own-label brands such as Ladybird clothing, Winfield and Chad Valley were unique and brilliant footfall drivers. Woolworths was the most popular, successful and profitable retailer of its time.
However, its time finally came on 6 January 2008, when it closed the last of its 807 stores and laid off 27,000 employees. A litany of other famous high-street names have followed in its wake over the past 10 years, but what catastrophe overtook such a dominant player as ‘Woolies’? Was it simply a victim of change?
The short answer is identity, or lack of it. Woolworths lost its mojo and then its customer base. As it tried to be a ‘onestop shop’ it became trapped in stocking a wide range of categories, but doing none of them well. One category it clung on to was music and books when consumers were finding better choice and value elsewhere. New assertive exponents of discounted general merchandise, Wilko and Poundland, now occupy many of the old Woolworths stores. The skill is to recognise when the time has come to junk declining assets and to regenerate. One of football’s most successful managers, Sir Alex Ferguson, always knew when to refresh his squad and unload fading assets.
Over the past few years, WHSmith has diligently focused on which categories it does best and which to ditch. Furthermore, it has opened stores in profitable travel locations, reducing dependency on the high street estate. This regenerative approach has protected the business by delivering profit growth and sustainability in a tough market.
Are there parallels here for our industry? We have witnessed the demise of delivery giant Palmer & Harvey and the collapse of Bargain Booze. Now, after a period of turbulence, wholesale distribution seems to be settling down.
Despite the fact that our industry is over-supplied in a highly competitive market, I believe we can be reasonably optimistic for the future provided that wholesale operators have a clear focus on their mission and that they are ruthless about clearing out unprofitable activities.
Blakemore, for instance, has done a great job by getting out of the cash and carries that were a drag on its business, and instead concentrating on the profitable Spar estate and foodservice. Parfetts’ clear focus on Go Local is driving market share and delivering excellent results.
Dhamecha, meanwhile, steadily builds share with its stripped-down, no frills cash and carry approach. It ensures its prices are always competitive and retailers regularly tell me its front-end service is first class.
Booker continues to lead the way with its clear focus on range development, operational simplicity and leading-edge customer service and engagement. There are also many other smaller clear-sighted operators thriving in this challenging space.
In categories, too, wholesalers need to be decisive. Despite experiencing problems in the US, vaping and CBD products offer a significant and long-term growth opportunity.
Vegan, plant-based and free-from products are all becoming mainstream and being demanded by consumers.
Fresh and frozen ranges continue to enjoy consumer growth. Wholesalers need to reflect all of these market trends in their ranges.
A steely commitment to the mission is vital. Continual review on the profit from all business activities and a constant appraisal of range productivity is paramount. No wholesaler can risk becoming a Woolies.
David Gilroy is the founder and managing director of Store Excel