BW: How much did the weather affect business?
SIMON G: The weather had a massive impact on our category. To give you an idea, soft drinks were up 2% when the weather was good – without that, they would have been 10% down.
PAUL:The weather drives more sales – we’ve seen as much as a 13% uplift from incremental sales, which would have been lost if people hadn’t gone out. The good news is that we were able to satisfy the increased peak demand. But it does come with more costs – you have more weight and you use more fuel, but it is important to give good service when the customers need it the most.
NIKKITA: It’s not just about going out. We also saw a lot of sales of Pimms and ready-to-drink cans driven by people having BBQs at home. This helped us to have a record-breaking trade day over the summer.
DAN: Sales in July for us were led by the multiples: people checked the weather forecast for the next 10 days and switched to bigger pack sizes to plan ahead. But then many people were out of pocket by August – there’s a definite drop off in volume around this time of year.
JOHN (to Dan) How do you do your budgeting from one year to the next, taking into account that last year we had a lot of sporting events and this year there weren’t as many?
DAN: We have invested in a strategic stockholding approach. There is a cost to it, but it allows us to be more responsive.
BW: Is next summer a concern for the channel?
SONY: If we don’t have another good summer next year, it will leave pressure on the whole supply chain. If demand fails supply, challenging supplier budgets will create price pressure, which will affect small and medium-sized wholesalers’ ability to compete on price.
SIMON: Planning ahead for the summer is critical. It’s amazing how many suppliers don’t get their act together early enough. Wholesalers are developing into a very structured format. We shouldn’t be having discussions with suppliers in February about the 2014 plan – by then, you’ve already missed the first quarter of the year.
DAN: Speed of NPD distribution is also important – it can be very fast in the multiples. An efficient supply chain is important, as is compliance from stores, which can still be an issue in independents and symbols.
NIKKITA: We need suppliers to give us a structured plan so that we know what we should be doing and when, but then be able to adapt that plan on a local level. For instance, during the Olympics, London went quiet, so it would have been great to have some targeted London activity.
PAUL: You need an annual plan but you also need to be reactive. Getting away from paper and moving onto EPoS, as well as web-ordering and text services, will become key in helping us to react much faster in the future, because brochures can be out of date soon after they’ve been printed.
BW: How do we manage the influx of NPD into the channel?
SIMON G: There needs to be a real clean-up in certain categories – we’ve all got access to data and we know what the bestsellers are. 450 SKUs have been launched in the past three years, but only 15 of them are driving 80% of the value. We need to bring clear and consistent messaging to the channel.
SIMON H: We need to move away from wholesaler mentality, think like a retailer and ask: ‘How many promotions can they really handle?’ It’s better to put out fewer promotions and get phenomenal execution. Running with too many promotions could lead to retailers being less supportive due to space restrictions.
BILL: Booker has been really ruthless about a ‘less is more’ approach, they don’t have a long tail of products. DCS works the same way, with a Pareto 80/20 focus on the big-brand, core range products.
PAUL: Research from the Association of Convenience Stores says that more than 50% of independent retailers’ stores are less than 1,000sq ft. More than 80% are less than 2,000sq ft. One of the things that discourages retailers from taking on NPD is the lack of space they have.
SONY: This is where Lifestyle Express, Landmark’s symbol group, does a good because no matter how small your store is, you get advice on how to manage category and increase revenue. My suggestion is to pick the right suppliers for your business and don’t try to deal with everyone.
NIKKITA: We use Plan for Profit, a tool from the Today’s Group, in our business. It takes a category approach and advises retailers what they should and shouldn’t be doing.
BW: How important are promotions to NPD?
PAUL: Products are often bought on promotion and don’t sell. Then more products are bought on top that also don’t sell. It leads to SKU proliferation. You can end up with 700 products on promotion. We’ve got over 14,000 SKUs in the business, driven by lots of different pack sizes for the same product. We can’t keep going in that direction.
NIKKITA: That does get very confusing. It’s really important that suppliers plan what they are going to do at the start of the year and try not give the multiples something much lower in value – otherwise the retailer will just buy it from them.
SIMON G: The big thing in our category at the moment is price-marking – it’s changing every five minutes, which must be an administrative burden for retailers and wholesalers.
HANNAH: Promotions are important to the hot beverages category because unlike confectionery, we are more of a top-up shop, so promotions and price-marks are critical.
BILL: We appreciate that retailers don’t have much space, so this year alone we’ve done 350 range reviews as impartial category partners. If we are being true to the convenience retailer, we need to be trusted advisors to their business. There needs to be one version of the truth, maybe on a web-based platform, through a trusted industry body?
BW: Can we make better use of data to improve core ranging?
DAN: Better data sharing and trust in data sharing on an impartial basis are important. We need a well-managed ranging process, but there needs to be effective follow through, not just a grand plan. Wholesalers need to decide on proper benchmarks that they want to hit. They must be more challenging with suppliers and ask why a product deserves to be on the shelf.
BILL: Brands don’t invest as much in wholesale as they should because the channel isn’t transparent enough. Our category [toiletries, household, health and beauty] can get confusing, so we invested £100K in a Vision system, which customers can log into to access their own category data. It also allows our brand partners full visibility of sales performance.
SIMON H: There’s a lot of talk here about retailers, but foodservice is important, too. We are all looking for different customers and with those come new product ranges.
JOHN: Yes, I agree. We deal a lot with out-of-home customers, including East Coast Trains – we’ve been working with them for 18 months and 18 million people use that train every year. It’s an exciting opportunity.
SIMON H: Data also helps us to prepare for the weather – every week, we get sent a forecast of temperature uplift. Some suppliers are very good at sharing that information but others don’t give us anything. Everyone talks about EPoS but sharing environmental statistics will allow us to react more quickly through digital communication.
BW: How do we get the most of technology and digital marketing?
SONY: Wholesalers can do more with technology – it’s difficult for conversations to travel from brand owner down to wholesaler, retailer and the consumer. We’ve invested in a platform, called Smartshop, to be launched next year, that will allow brand owners to engage directly with consumers without taking anything away from the natural supply chain.
SIMON H: We are trying to open up the visibility of digital media. Paper-based voucher redemption is at a low level. If you can get 1-3% of any paper voucher you’ve done pretty well. Having a digital voucher system that targets consumers with products they are likely to purchase will increase that redemption level dramatically and drive footfall into store. It also provides protection to the brand owners around voucher redemption abuse.
SIMON G: If you fast-forward 10 years, we might not even have any paper. That’s where things are heading. How are you guys managing the old and the new? Do you end up having to duplicate promotions?
SIMON H: I don’t agree that there will be no paper in 10 years because that’s still the way that our traditional customers like to operate.
PAUL: We’ve given iPads to our 450 van sales representatives across Snacksdirect, Sweetsdirect and P&H Direct. On the P&H Direct side, some customers often seek support with what they should be selling or how to change their menu when someone asks for it. We use technology to support them. The website is important, too: if someone orders online, they are likely to spend £700 or £800 more.
SONY: While I’m a big fan of digital, you still need face-to-face contact. We tell manufacturers that we want quality and reliable contact. It is our duty to pass this service on to the retailer. We’ve grown our retail club and improved compliance rates by increasing our people on the road.
BW: How are you investing in IT for your business?
SIMON H: We need to invest in IT to make sure that we are still around in five years’ time. As a business, we have no restrictive budget when it comes to IT. Recently, we collaborated with two other wholesalers, Dee Bee and Savage and Whitten, to invest in an EPoS solution that allows us to analyse everything from wholesale to retail and are collectively working on a mechanism for analysing retail to consumer data.
SONY: We’ve invested £240K in our IT infrastructure this year. It is paramount that wholesalers drive efficiency and become low-cost operators in order to improve profitability.
PAUL: Technology helps us to get closer to customers. Our business isn’t just about depots – we use voice picking and route software in our vans to deliver great distribution. Getting product out when volume goes up 150% isn’t easy but we can do it. But we need to be more and more local – Nikkita is doing a great job and gets really close to her Turkish retailers.
NIKKITA: You also have to bear in mind the cost of maintaining technology once you’ve got it up and running. The problem is I often get things sent to me in PowerPoint or that are too long to put on our website. It would be good to have these labour costs reduced so that information arrives in a suitable format for our customers.
BILL: The online retailers are a good benchmark: look at eBay, Shop Direct, Amazon and The Hut Group. The information they send me is relentless. I am a Scot and I try not to buy anything but I end up buying stuff! The constant multimedia messaging is very clever. There’s a lot we can we learn from them and how they target and tailor offers to customers.
SIMON G: We need to put together a new tool that can bring everyone’s interests together. It would involve the key technology providers, too. The opportunity is so big, it’s scary.
Part two of the Roundtable, which focuses on digital marketing and how to prepare for 2014 will be published in the January issue of Better Wholesaling.