Wholesalers and leading suppliers gathered in Lisbon, Portugal, at the end of September to explore ‘trading for growth’ at this year’s Today’s Group conference.
The event experimented with a slightly different format from usual, with a greater number of panel debates, allowing stakeholders from across the sector to give their take on what wholesalers can do to thrive, rather than merely survive, in a competitive marketplace.
As John Schofield, acting managing director of the Today’s Group, noted in his opening address: “It’s vital that we develop business initiatives to drive sales and profit.”
Points of difference
Jill Livesey, managing director of Him!, pinpointed the importance of value and premium trends in the market, noting how Greggs is particularly adept at reacting to such trends, drawing delegates’ attention to Pret a Manger’s success with a vegetarian-only pop-up outlet, and Tesco’s recent Finest wine pop-up store experiment: “We need to help convenience with these concepts,” she said.
Him! client services director Ed Sibley cited research by Him! which showed that 49% of c-store retailers visit their competitors 1.5 times per month on average, and that 19% said they’d do something new in their store as a result of competition – but primarily just cutting their prices.
John Kinney, retail director of the Today’s Group, picked up on this point, and emphasised that most trade for c-stores comes from within half a mile: “They have to identify what they can do to other a point of difference in this area.”
Examples of what this could be, he suggested, were having the best e-cig range, or being the only shop with a parcel collection service.
He added: “You can’t get away from price, but it can’t be the only thing you hang your hat on.”
Speaking in the same panel session, Savage and Whitten retail director Michael Skelton said that his business had installed coffee machines in its customers’ stores. He stressed that it is a wholesaler’s “obligation” to help its customers make a difference and stand out.
Host Declan Curry brought the discussion onto the contentious topic of price-marked packs (PMPs). Him!’s Sibley said 64% of retailers are buying more PMPs than they were 12 months ago, adding that 34% of respondents said that they can’t always get hold of a ‘straight pack’ from their wholesaler.
John Baines, trading director of the Today’s Group, put this into context, citing the example of a hypothetical convenience store “taking £10k a week, £4k of which comes from tobacco on a 5% margin”, and the pressures that increasing numbers of PMPs without adequate shared margins are putting on wholesalers and their customers.
He added: “PMPs have been great and have helped a lot of independent retailers survive. But there has to be good shared margin. One of the biggest challenges independent stores face is that too many cases are PMPs. But market pressures have dictated.
“Too many times we’ve seen prices coming down, and affecting percentage margins and cash margins, too. And if wholesalers can’t give customers what they want, they’ll go elsewhere.”
Simon Hannah, managing director of wholesaler JW Filshill, added: “It’s a problem when PMP margin is already affected by the time the retailer turns the key in the door in the morning.”
National Living Wage
Hannah also told delegates that wholesalers “do not have a God-given right” for their customers to stick with them. However, he cited the National Living Wage (NLW) as a strong opportunity for delivered wholesalers, not least because Him! research indicates that the effects of the NLW will likely include c-store owners needing to be at their businesses more often, meaning fewer visits to cash & carries.
Hannah relayed another potential effect for wholesalers’ customers, citing the example of one of Filshill’s company-owned stores: “If we hold the same amount of hours with the same number of staff in 2020 as we do now,” he said, “we will need to increase store turnover by £184k a year, assuming that store takes £20k per week at 20% margin.”
Today’s Kinney said his fear was that one effect of the NLW will be that retailers respond by closing one hour earlier. “The cashier knows the shopper by name and what they want,” he said. “And that shopper will then just walk down the road.”
The second day of the conference saw the foodservice side of the business explored with the helping hand of a recognisable face, Spice Market executive chef Peter Lloyd, who has appeared on the BBC’s Saturday Kitchen. Delegates heard how delivered wholesale sales in this area were up 2.3% last year, while cash & carry sales in this same period were down 1.2%. Today’s Group foodservice value sales were up 3%, while volume sales were up 3.6% last year; the growth has been even more impressive this year, at 5.2% and 9.3%, respectively.
Lloyd suggested that “singular concept menus are the way forward” in the eating-out industry, with London restaurants Sexy Fish and Bubbledogs leading examples of this trend.
Lloyd offered insight into what chefs want from their wholesalers: deliveries that are on time, factoring in costs, offering the correct quality and building a relationship were the most important requirements.
To go above that, Lloyd said wholesalers have to “understand the restaurant”. An example of this was using social media, where “you can tap into a chef’s world”.
Lloyd also suggested that chefs find it hard to understand what allergens are in particular foods: “Wholesalers can help us have information like this readily available,” he said.
The third day of the conference saw the on-trade in the limelight. The Today’s Group on-trade division comprises 25 members serving 19,000 free trade outlets, with a total value that exceeds £500m.
Andrew Wild, of Wilds of Oldham, acknowledged the importance of data and analytics, but he stressed: “Even in an evolving age of IT, this is an industry that’s all about people.”
Richard Stephens, account director for on-trade wholesale at Heineken, told delegates: “What we have done in the past does not work with modern consumers.”
He noted that women and families are changing influences in the market, and that 80% of the 30 pubs that close each week haven’t changed their range in the last two years.
He concluded: “Many outlets are taking the leisure pound from beer, so we’ve got to work hard to get that back.”