The BW roundtable part 2

    How can wholesalers fight back against the rise of the multiples and the discount retailers? In this, the second of a two-part roundtable, leading manufacturers and wholesalers discuss how to tackle the challenges in the year ahead. Elit Rowland and Stefan Appleby report

    BW: What are the big challenges facing you in 2014?

    Simon G: I’m concerned that the relentless push of own-label/value products into the retail chain will damage the contribution major brands are able to make to both the wholesale and retail channels.

    Simon H: A big challenge for us is that banks are still not releasing loans to retailers that need it for things like EPoS and general refurbishment. They need this flow of cash to give them the support they need to get standards up. Wholesalers can’t support them forever.

    Nikkita: We need to start preparing our retailers for the tobacco display ban so that they learn how to redistribute their products. Wholesalers will also need a licence to sell alcohol, which will really crack down on the grey market.


    6 ACTIONS FOR 2014

    • INVEST IN DIGITAL: Social and digital media are driving customer loyalty and attracting young talent. Take time to understand the channels that are right for your business.
    • KEEP AN EYE ON THE DISCOUNTERS: How can you help your customers to compete and what should manufacturers be doing to help wholesalers to compete
    • ADDRESS CUSTOMER CREDIT: Banks aren’t lending but wholesalers can’t keep providing financial support. Can the banks offer a solution, such as a joint enterprise credit card?
    • TACKLE THE DISPLAY BAN: Retailers need to be educated about the forthcoming tobacco display ban. Consider running seminars, providing educational materials and tapping into supplier support.
    • IMPROVE PERCEPTIONS OF VALUE: Work more closely with suppliers and retail customers to ensure PMPs are at the right price points and on the right products.
    • GET THE BASICS RIGHT: Range, price, promotions, added value and availability are critical, particularly for retailers.


    Bill: Perceptions of value for independent retailers need to be better than ever. It’s not necessarily about the cheapest offer. We have to be mindful of the shared margin and not drive a low-margin strategy in independent convenience retailers.

    Sony: As multiples increase their market share of the c-sector, independent retailers are feeling less confident about their ability to compete. If we don’t prevent this from happening, wholesalers will be forced to compete harder for less trade.

    Simon H: Why do brand owners put price-marks on things like horseradish sauce – the customer is going to buy it anyway so why restrict the margin? If the independent retail sector was more transparent, there would be less need for price-marks.

    Nikkita: A lot of people think that Tesco might offer the cheapest bottle of vodka but the local store can still be pounds cheaper. We need to change the consumers’ price perception of local stores.

    BW: How can social media help?

    Nikkita: We stay at the forefront of our retail customers’ minds by engaging with them constantly using social media. That will drive a certain amount of loyalty but it won’t last forever if the multiples keep slashing our prices.

    Sony: I don’t think social media will bring extra sales or increase basket value immediately, but it will definitely increase brand recognition. One supplier asked me how to convert 500,000 Facebook ‘likes’ into sales. That’s the big question – how to monetise social media.

    Simon H: Social media is a great way to increase customer engagement – we’ve got Twitter feeds for KeyStores and JW Filshill, as well as my own personal account.

    Nikkita: If we keep investing in digital and social media, it will help us to attract young, smart, third-generation retailers.

    Bill: Brands need to work with convenience stores to use social media as a way to drive footfall. Until we have a smartphone-type app in place to market promotions that can be redeemed with on-screen, scannable offers, this won’t progress.

    Simon G: One important consideration is to make sure you’re on the right social media channel – Twitter and LinkedIn are used more for business, but Facebook is more for friends and family.

    John:We are interested in social media, too, and how to develop it in the wholesale channel. We’re good at the consumer side, but would like to learn how to tap into the trade.

    Nikkita: One good tip for brand owners is never to be too self-promotional – it never goes down well.

    BW: How do we drive sales in 2014?

    John: There’s a lot of room for us to grow in wholesale – we are currently under-trading in this channel. Our plan for 2014 is to keep things simple – we are not going to throw in lots of promotional packs. We know that can muck up the supply chain.

    Simon G: Better sales in 2014 is about having simple joint business plans and working with the leading products that are backed by strong marketing.

    Sony: There’s a massive FMCG opportunity here in the UK, but you have to be prepared to go out and get it. You need to be proactive. Price is important, but you have to offer the whole package if you really want to compete with the best in FMCG.

    Dan: It’s not just the multiples we should be watching. Discounters are in huge growth and it’s impacting the supplier-wholesaler relationship – there could be a price war. If there is, it will be big and brutal, and will probably materialise at the end of this year [2013] or at the start of next.

    Paul: You are right about the price war – that will happen.

    Bill: We need more discipline. The minority of suppliers have a pull strategy to get to retail customers and their consumers. Wholesalers need plenty of noise, with visually brilliant displays in both depots and c-stores through retail clubs and with disciplined in-store execution. There is headroom for growth in this sector – we just need to have a joined up plan to get to consumers, fast.

    Dan: Consolidation is another big challenge and it’s only just started. It’s a positive because the good businesses will still be around, but I do feel for the more traditional parts of wholesale because it’s not moving quickly enough.

    Paul: It’s true the basics still need to be covered in this sector: advice, promotions and compliance. Our customer research tells us that retailers still want the same things: good range, price, promotions, added value, but, overall, availability. There is a really big, fundamental job for wholesalers to do and consolidation will drive it that way.


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