Cash or credit?

Should more wholesalers offer customer credit cards to inspire loyalty? Elit Rowland reports

It’s not easy standing up in a room full of your biggest competitors and revealing strategies for the next six months. That’s why most wholesalers at the IGD Wholesaling conference last month kept their lips tightly pursed.

What they did give suppliers was an overview of some of the channel’s strongest operators. One speaker raised some particularly valid questions that every good wholesaler should consider.James Walton, chief economist at IGD asked how wholesalers can make symbol status more attractive to ­retailers.“Symbol membership is proven to boost sales for an independent store. Attracting and retaining a retailer to a symbol package is essential to growth,” he explained.
But some wholesalers have found other ways to inspire loyalty. Costco trading director Steve Barnett explained how the group’s customer credit card is encouraging shoppers to spend more in‑depot.

Another well-known wholesaler also took to the stage to unveil similar plans: a customer credit card for cash-strapped retailers, albeit the statement was later withdrawn.

But it did beg the question: could there be an opportunity for other wholesalers or buying groups to capitalise on the loyalty that credit brings?

It’s not on the agenda for Landmark Wholesale at the moment, according to MD Martin Williams. It’s not a big surprise – with hefty security deposits of around £500K needed, the scheme could cost Landmark members up to £12K each.

Still, it could it be a more attractive proposition for a buying group that has a larger membership base, perhaps.
Foodservice was also identified by Walton as a key area that needs support. “Everyone thinks that foodservice is easy, but it’s a complicated sector – what more can we be doing to help these operators?”

5 key messages for wholesalers

  • INSPIRE: Find the best way to inspire customer loyalty.
  • ENCOURAGE: Help as many retailers to attain symbol status as possible.
  • SUPPORT: Do all you can to support foodservice customers.
  • EMBRACE: Adopt trends, such as social media.
  • FOSTER: Determine what you can do to attract and retain young talent.

Walton told delegates that while food-led pubs and casual dining are doing okay, foodservice is the first place that shoppers cut back on when recession bites.

18,000 new foodservice operators have appeared in the past two years, but they haven’t all survived. “There isn’t much advice out there for foodservice operators – they need help from their suppliers,” he explained.

The channel is reacting. Just weeks ago, Landmark announced the launch of an on-trade arm to support foodservice operators, while earlier this year, Today’s Group launched Take Stock, a magazine offering business advice to foodservice and catering customers.

Specialist foodservice operators such as 3663 and Country Range have been offering nutritional tools for some time, but is there an opportunity to do more? Walton thinks so – and it doesn’t stop at foodservice.

Making the channel more appealing to the younger generation is another area that needs attention. “28% of business owners in grocery are under 40 years’ old. Supporting these people will secure the future of the wholesale sector,” said Walton.

One of the ways to do this is to follow social media, according to Booker’s Guy Farrant: “If you look at the way the younger generation of retailers engage with social media, you will see why it’s such an important part of our business.”

While it’s important to attract young talent, retaining it can be difficult. The solution, according to HJ Heinz’s Simon Digby, is to present the channel as a low-risk way to break into convenience and impulse, with a road of opportunities to look forward to.

“Wholesale has gone from zero to hero… now it’s the sexiest part of our business and people are clamouring to join,” he said.

Simon also took the opportunity to give wholesalers a tip or two. “Get rid of the brown boxes – customers don’t know what’s inside. Use shrink wrap instead.”


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