Celebrity chairman adds sharper focus

John Wood and Katie Davies report on the business leaders' presentations at last month's FWD Annual Conference

All the leading players in the wholesale channel were represented at the biggest conference in the trade's calendar, the FWD Annual Conference, and this year there was a VIP chairman fresh from being at the heart of a dramatic General Election.

Just five days after the election, and even before the coalition Government had been formed, John Humphrys, the presenter of Radio 4's flagship news programme Today, was in the chair giving additional authority to the event and helping to explore the issues covered.

In his introduction, the outgoing FWD chairman Francis Ball said Humphrys had received the "Oscar of Oscars" of the radio industry, the Sony Gold Medal for Lifetime Achievement, and said the citation read "John has truly changed the face of radio and the nature of the radio interview for a generation".

This year the conference theme was Impulse, Sustainability & Campaigning and it was addressed by speakers from across the industry. They presented papers in three sessions, and at the end of each session the speakers formed a panel for a Q&A session with John Humphrys, all of which is covered in this feature.

Charles WiLson: Booker

Booker chief executive Charles Wilson looked at sustainability in three ways: in terms of the company, its customers, and the environment.

In relation to the company he outlined how the viability of the company had been strengthened since he took charge. In 2006, in the first results after he joined Booker, it was £360m in debt, sales were declining by 5.9% and credit rating agency Dun & Bradstreet gave it a score of just 13 out of 100. In its latest results it had net cash of £7m, sales were up 6.5% on the previous year and its credit rating was 99 out of 100.

Turning to Booker's customer base independent retailers and caterers Wilson said they faced enormous challenges including complying with ever increasing Government red tape, intense competition from the multiples and the generally depressed economic climate.

He criticised the banks for their attitude towards independent businesses in the current economic climate, saying: "The banks do nothing to support small businesses."

Wilson then outlined a range of initiatives by Booker to make it more environmentally sustainable. One of the most important actions, he said, was working with the Carbon Trust to calculate Booker's carbon footprint, adding: "If you do not measure, you cannot manage."

The result of the initiatives, according to the Carbon Trust, was a reduction of 7,000 tonnes of CO2 produced by Booker.

David Glennon: Nielsen

Last year the convenience sector outperformed out-of-town stores, David Glennon, retail services manager UK, for Nielsen, announced. He said: "The total convenience market is worth £28bn and is up 5.6% versus 0.5% in the prior year." This compared to sales growth in out of town stores of 4.2%.

Glennon added: "Promotional spend increased during 2009 and was a factor in driving footfall during the recession, and this trend looks set to continue in 2010. The level of promotional purchasing has increased despite consumers claiming to look to reduce promotional spending. This implies that this increase may have been driven by brand owners and retailers, not by consumers."

He added: "Although the proportion of shoppers who prefer to buy products that are ethically produced or kinder to the environment has not changed the number who believe it is worth paying extra for these products has not improved since January 2009, giving further evidence that some shoppers are being forced to compromise their ethical and environmental credentials." He said climate change and packaging waste are the most important environmental issues for consumers.

He finished with a word of caution: "The first quarter of 2010 has been tough and slowing inflation hasn't helped. Continue to plan for a lower growth environment in 2010 as the post-recession shopper remains cautious, savvy, and is still looking to make savings."

Simon Harrison: AB InBev

Simon Harrison, commercial director off trade wholesaler for AB InBev, talked about the importance of getting the right range. He asked whether a 'two for' case deal on beer worked for consumers walking to their local store?

He said: "Value, for our consumers in impulse, is all about appropriate pack sizes, with compelling consumer communications around value, be that price marking or extra free. Wholesalers and retailers need to do more of this, to meet this real consumer demand.

"We've just completed some research with 750 independent retailers, and the synergies between the needs of independent retailers and consumers are significant, in that the right range is critical. But what independent retailers are also looking for is a strong support package, and good advice on growing their category.

"What this leads me to conclude is that there is an opportunity for us to continue to work together on brand and pack architecture and SKU dislocation. There are more opportunities for collaborative approaches to offering advice and help to independent retailers to grow their business and add value to the consumer. This is an area in which a well respected body like the FWD can really make a difference."

He also urged delegates to support the FWD activity against duty fraud, adding: "A personal commitment from both myself and Stuart MacFarlane, AB InBev UK and Ireland president, is that we will continue to offer our support to James and the team."

Mike Laney: Imperial Tobacco

A campaign to "denormalise bad fun" threatens other categories in addition to tobacco, warned Mike Laney, head of distributive and vending at Imperial Tobacco.

Taking as an example Government plans to regulate display of tobacco in retail premises, and the campaign against it waged by retailers, manufacturers, wholesalers and their trade bodies, he issued a call to arms.

He said: "The campaign against ineffective, illogical and ill-conceived legislation must continue. It is not just a tobacco issue more and more categories will be targeted. We will all feel the impact on our businesses."

Laney said the campaigning by the FWD had already achieved a breakthrough for wholesalers. He said: "Thanks to FWD chief executive James Bielby and all at the FWD the impact of the proposed display regulations will be limited for the day-to-day operations of our wholesale customers. This demonstrates well how the combined efforts of the tobacco manufacturers, trade bodies such as the FWD and individual members can educate the law makers to obtain clarity and ensure common sense prevails."

Looking at what had happened in the Irish Republic where a retail display ban had been implemented, Laney said it had no impact on the level of smoking but the quantity of non duty paid tobacco consumed increased massively, hitting sales by legitimate retailers and the wholesalers who supply them.

Chris Etherington: P&H

Suppliers were praised for the support they give to the impulse sector by Palmer and Harvey's chief executive Chris Etherington.

He said that his buyers were telling him they were receiving some of the best account support they have had for years.

He added: "In the UK the impulse sector is without doubt supplied by some of the most innovative manufacturers in the world. My team tell me the new product development and product launching campaigns generated by suppliers were the best ever."

He highlighted the Cadbury's drumming gorilla adverts, which generated 500,000 hits on its website in one week and six million over the campaign, and Walkers' Do us a Flavour campaign, which got hundreds of thousands of people casting votes online.

He said: "There has been a level of engagement and collaboration between manufacturers, wholesalers, retailers and consumers that we have never seen in the sector before. The result has been millions of pounds of incremental sales and the independent retailers got a significant share of that."

But he told wholesalers that with the intense competition from the multiples, their customers needed them to be more than just wholesalers. He said independent retailers were seeking impartial advice on how to stimulate sales and were looking for a closer relationship with their wholesalers.

Chris Doyle: Landmark

Wholesaler groups can appear complex, but doing business with them need not be, Landmark business development manager Chris Doyle told delegates.

He compared "head office wholesalers", which could make centralised decisions and were only one step removed from retailers, to "member group wholesalers" where individual members could take decisions at their local level and which appeared to present two steps between suppliers and retailers.

He said his aim was to remove complexity and make it simple for suppliers to do business with Landmark.

Doyle said Landmark's role was to leverage scale and synergy and to work alongside suppliers to support the needs of its members. In addition, it worked collectively with its members to deliver supplier needs and provide a return on their investment.

Turning to marketing solutions to deliver these needs, he said: "We need a plan which works through the line for suppliers, from the wholesaler to the retailer and right the way through to the consumer."

He said there were key campaigns for suppliers and at these points Landmark would work with them right through its estate and on to the retail customers.

But it was up to members to differentiate locally by running local promotions, being "the friend"of their retail and catering customers, and being local produce champions.

David Pogson: Cadbury

"The headroom for confectionery growth in foodservice remains considerable," said David Pogson, director of sales UK for Cadbury.

According to Pogson, in the last 12 months confectionery value in independents has declined by -1% while foodservice has gone up by +5%. He said the foodservice business is growing and substantial.

He told the conference that cash and carries only deliver confectionery to 60% of foodservice outlets and they only deliver Cadbury confectionery to 25% of outlets. He said this provided a "significant opportunity to fill the gap that is potentially being created by this continued slow decline in independent outlets."

He said the decline in outlet numbers in independents was offset to an extent by the rise in symbol retailers and that shopper behaviour is changing with them using different types of outlets.

Pogson said he was mostly preaching to the converted but reiterated that: "Impulse is critical to all our futures and there is a well established menu to drive success in impulse." This includes "clear, consumer and shopper-based insight and advice, product innovation that adds value to the category, promotional investment that drives sales and manufacturer and wholesale personnel who help customers build their total business."

He added that the factors affecting product choice continue to evolve with more and more consumers being interested in animal welfare and the ethical nature of products.

Bill Laird: Today's

Bill Laird, managing director of Today's Group, gave a round-up of the year and said: "The independent wholesale and retail sector has been highly resilient throughout the last 18 month, and I think spectacularly so in some instances.

"Investment levels not only by Today's members, but also members of other businesses, demonstrate the strength of the entrepreneurial spirit across the entire sector."

As examples he cited Today's Group members Dhamecha and Savage & Whitten, which had recently opened their latest depots at Hayes, west London, and Newry in Northern Ireland.

Laird said that during 2010 Today's Group members will invest a total of approximately £50m in developing new and existing business premises.

However, he warned that there were challenges facing the independent sector, and added: "Duty fraud and misguided legislation could undermine future growth."

He also warned that the unwillingness of the banks to lend money also risked undermining the progress of the independent sector.

Addressing suppliers at the conference, he told them that they needed to recognise the role they should be playing in supporting independents.

He said that innovative new products and speed of implementation were a key part of this role.

Lindsay Winser: 3663

There are advantages to going green, Lindsay Winser, communications controller for 3663, told the conference.

She said: "The commercial impact can be seen in cost saving as well as business building terms. Cost savings can be seen in transport, packaging waste, food waste, power usage, water usage and operational costs. Market benefits include customer retention and customer acquisition."

She added 3663 has been using recycled oil, with the programme started nearly three years ago. Over 350 of the vehicles run on B30 mix and Winser said that to date 3663 has saved over 11,000 tonnes of carbon. Other environmental aids include efficient refrigeration. "Vehicle refrigeration systems reduce total fuel consumption as they are powered by the truck engine, negating the need for an additional auxiliary diesel engine."

3663 has also looked at its food products. With the public looking for salt, fat and sugar reduction as well as concern about artificial colours, MSG and hydrogenated vegetable oils, 3663 has been working with the Food Standards Agency in this area.

Addressing another area of public concern, she added: "Local produce is driven from customer need to reduce food miles, support the local economy and present local fare to consumers. Provenance is a need to present a point of difference on a menu, show food knowledge and traceability."

Steve Collins & Marcus Vallance

The background to SalesOut and some of the services it offers was presented by CEO Marcus Vallance and commercial director Steve Collins.

Collins said SalesOut collected sales data from its partners in the wholesale sector and processed it to produce actionable insight.

He said: "The SalesOut survey includes over 14,000 stores who have consistently purchased from their wholesalers over the last 104 weeks and who collectively account for sales in excess of £4.5bn a year. This is the largest data pool in the industry."

Collins said SalesOut had helped to develop core ranges, such as Retail Best sellers for Booker, but the data had many other uses.

Vallance gave more detail on SalesOut's SmartCash service, which enables suppliers to target promotional coupons.

He said the industry average for coupon redemption was less than 5%, but suppliers using SmartCash had achieved over 40%.

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Panel of speakers faces up to a grilling from Radio 4's feared inquisitor

Booker chief executive Charles Wilson launched a blistering attack on the banks during the panel discussion after the first session.

When John Humphrys suggested that Wilson's earlier statement that none of the banks are doing anything to help small businesses was an extraordinary thing to say, Wilson said Booker asked its customers about their banks and they were "getting a really shockingly bad service from the banks".

He said the cost of clearing cash has rocketed and just when small businesses needed credit it would be taken away, so most small businesses were not going to the banks and were instead using their own money.

He said he was confident small businesses would weather the economic slowdown well, but he added: "It will be despite the banks rather than because of them."

Humphrys also asked the panel why the convenience sector was doing better than the multiples in the teeth of a recession. David Glennon from Nielsen said consumers had begun to experiment, had found value and quality they liked in c-stores, and this had broken the habit of buying everything from the multiples.

Simon Harrison said c-stores were providing a solution for consumers whose money was limited, and Charles Wilson highlighted the FWD's My Shop is Your Shop campaign and said retailers, caterers and pubs were benefiting from a perception that they were part of the community and were doing good in their community.

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Humphrys asks for relationship advice

John Humphrys asked the panel at the end of the second session which was the most important relationship for wholesalers with their customers or the suppliers and he told them they couldn't answer "both".

Chris Etherington came straight back with: "The customer, because without them you won't need any suppliers." He added: "If you build a strong relationship with your customers you will drive sales and that in turn will drive partnership with the suppliers."

Chris Doyle said wholesalers could almost see themselves as having two sets of customers, the retailers and the suppliers, and the common ground was that they all wanted to sell more to consumers through independent shops.

From the supplier perspective, Dave Pogson said he was looking for more collaborative relationships with wholesalers and greater sharing of data.

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How to drive on from a really strong year

In the final panel session of the conference John Humphrys said the sector had had a good year, and asked speakers what businesses should be doing in order to have an even better year next year.

Lindsay Winser said she would like to see more concentration on marketing rather than sales, so that businesses became more consumer-focused and understood consumers' needs better.

Bill Laird said suppliers needed to recognise the growth in the sector, to invest more in it, and to have a differentiated policy to enable the independent sector to grow.

Marcus Valance said that businesses should continue to collaborate and to make smarter use of the data at their disposal, and Steve Collins said retailers needed to understand the locality they were working in and differentiate themselves to offer a point of difference.