Gilroy’s viewpoint: Can profitability issues be found through innovation?

David Gilroy is the managing director of Store Excel

Imagine your personal work performance being played out in the public domain and constantly commented on by ‘experts’ and stakeholders. This is the lot of Premier League football coaches with the brutal, relentless emphasis on results. Thirteen coaches have been sacked this season out of 20 clubs. That’s a 65% disposal rate. Why so destructive? There’s a ton of money flooding through the game and the stakes are high.

Football was codified in England in 1863. It soon became a serious professional national sport. By the 1980s, the old First Division top-tier had become stale and tired. Stadiums were deteriorating, and hooliganism and racism were rife. Football matches were not family friendly, and attendances were declining. English teams had been banned from European competitions and the English game was decaying, being overtaken by more progressive European nations.

The founding of the FA Premier League in 1991 was a reset and a turning point. The new league could negotiate its own broadcast, media and sponsorship deals. The 1991/92 season started with a £304m deal with BskyB. The financial reward structure ensured that every match was important, increasing competition and generating much-needed investment for club facilities. New all-seater stadiums were being built.

Today, the overall level of the game in all areas is unrecognisable from that of 30 years ago. The current deal is £5bn, due to rise to £6.7bn in 2025. The Premier League is the most-watched sports league globally. High-quality players and coaches from all over the world operate in the English league, and standards have risen massively.

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Tom Allnutt of the Sunday Times points out that it is 40 years since an English manager last won the European Cup/Champions League – the highest-ranked club competition. Of the 20 Premier League clubs, only four have English coaches, with clubs preferring to hire talent from abroad.

A more academic and thoughtful approach to the game is an increasingly common trait among the very best managers. Allnutt cites Jürgen Klopp of Liverpool as an exemplar, with his expertise in psychology, medicine, physiology and anatomy. He says Arsene Wenger’s appointment at Arsenal in 1997 was a pivotal moment in English football. As an innovator, he introduced specific player conditioning regimes, athleticism and dietary management to improve performance, insulate against injury and prolong playing careers. Arguably the best innovator is Pep Guardiola at Manchester City. His coaching is completely different to anyone else’s, and his success rate is phenomenal.

Read more: Gilroy’s viewpoint: Customers are increasingly expecting their providers to demonstrate good ethical practices

Innovation is well underway in other major sports. Cricket has experienced a transformation since the launch of the Indian Premier League (IPL) in 2008. The Twenty20 format is compelling for fans and the media. Media rights for 2023 to 2027 sold for $6.4bn to Viacom18 Star Sports.

Last year’s final was the most-streamed live event, with 32 million viewers. The IPL has had a profound impact on Test cricket, too, inspiring faster scoring and sharper fielding.

Could we experience a Premier League event in our industry? Businesses need continual investment. This requires cash, and cash requires profit. Sales and margins are under pressure. Overheads are rising; punitive energy costs hurting, business rates soaring and the new minimum-wage increase of 9.8% – which represents the largest-ever labour cost increase in cash terms – is a challenge. There is a profit imperative in wholesale. Is it possible to innovate for profit? Michael Boyles, of Harvard Business School, defines innovation as a product, service, business model or strategy that is novel and useful.

Innovations don’t have to be major breakthroughs – they can be as simple as upgrades to a company’s customer service, or might be features added to an existing product. How might we harness such innovations?

Real-world suggestions

Emulate discount-retailers’ middle-aisle strategy by featuring seasonally relevant high-margin non-food ranges. These ranges are incredibly popular with all shopper types. Merchandise in a highly visible location, powerfully themed and supported by the marketing.

Introduce electronic point-of-sale shelf labelling across the depot. This technology is now widely used in Europe and Asia. It significantly reduces time taken to adjust shelf pricing and opens possibilities for flexible pricing, which could strengthen margins and help clear short-life goods. The additional benefit of the labour, paper and print savings in replacing hard-copy labels adds further value.

Next up is space efficiency. Stock equals money and slow-moving stock is capital tied up that could be better employed elsewhere. Defining what a ‘slow seller’ is and then purging any from a range is vital. Just as important is recognising declining markets and slimming down the space and range to make way for the growth markets. The overall range becomes more productive, resulting in higher margins and improved liquidity.

Product availability is pivotal to any successful business. Substantial profit is lost through missing products. Monitoring and following up on the stock-out status is a constant challenge for management.

Spar Scotland wholesaler CJ Lang has adopted a camera system that scans shelves to identify low or no stock. Seventy cameras count stock automatically overnight and monitor product positioning during the day, producing product availability reports for management.

Morrisons is implementing a similar camara-based system that will provide real-time on-shelf data to direct staff to where stocks are running low, improving service and saving labour.

Supercharge online and digital; there is so much profitable mileage to be gained from exploiting digital in many areas. Stepping up WhatsApp marketing through Meta’s business package enables low-cost, agile and targeted marketing to the customers who best respond and return the highest profit.

The shorter lead times for WhatsApp campaigns make it a perfect vehicle for tactical calls such as weather-related offers and sports events.

There is a spin-off saving in brochure costs. The beauty of WhatsApp is that it requires no technological development and most business people operate 24/7 on their mobile devices. This can be linked to extracting value from the customer files to incentivise the most profitable customers and to lock in loyalty-driving sales in the most customer-appropriate categories to improve margin mix.

The next level up is an app-based loyalty scheme. Loyalty schemes are being operated effectively in varying sectors, such as coffee shops and vape vendors.

Commentators attribute Lidl’s overindexing sales growth to the Lidl Plus rewards initiative launched in 2020. It rewards users with personalised product discounts and enables Lidl to collect data on their purchases and preferences.

In February, Lidl focused on discounts on bakery purchases and secured a 24% increase in sales in the first quarter as a result. Wholesalers could drive profitable sales in selected categories using similar methods.

Open banking offers serious cost savings in payment functions. Implementing open banking across all channels is straightforward. It is a frictionless experience; customers can see what they owe and view previous invoices.

They can pay off a balance, an invoice or multiple invoices. Money can be transferred immediately, and high merchant fees associated with debit cards can be avoided.

This can save wholesalers hundreds of thousands of pounds every year. In parallel, the accounts team receives an email confirming that monies have been received, who the sender is and which invoice the payment relates to. With open banking, requests for payment are incorporated into automated digital notifications sent to customers based on the specific payment terms of the invoice or account thus closing the follow-up loop.

Even in our margin-thin industry, by critically analysing all profit elements and by taking an innovative approach to improving business results, wholesalers can enrich bottom-line performance. It’s not as brutal as the Premier League – just as effective.

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Paul Hill is the Editor of Better Wholesaling. He can be found on Twitter at @BW_PaulHill, or contacted via and 07960935659.


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