By Denys Shortt, Chairman amp; CEO, DCS Europe
Fired up? Well the Wholesale sector should be things are good this year and the convenience sector continues to be in growth outstripping the Grocers.
DCS are growing, too we are on for another record year. We have had to adapt and change through the recession by cutting costs, improving service levels and maintaining a laser like focus on sales growth. A strong strategic plan has enabled this.
However, the recession brought changes to all UK households fear of losing your job, staying at home, eating in, doing more with the family plus a habit of shopping locally and even a sense of community in supporting our local shop.
So wholesale is in good shape and at DCS we, too, are very fired up. We have progressed some initiatives with our wholesale customers that have really made a big difference. Our Poundzone concept is now visible in many cash and carries nationwide and it’s producing some superb sales growth. Poundzone is a range of £1 retail items and also offers retailers “a pound shop in a box” concept.
But it’s not all good news. What’s happening in the multiples is worrying we have recently seen some wholesale packs on sale in major supermarkets. Big box washing powders which were once the territory of the caterer and professional cleaning have now appeared in the major multiples and at prices that are far cheaper than even the wholesale sector pay. Is this the start of the multiples becoming “Britain’s biggest Wholesaler” me thinks. Of course it is. Any market share that the multiples can take from the wholesale sector is fair game. It is dog eat dog out there.
Suppliers need to be careful this crazy pricing is already causing unrest in the wholesale sector and it’s not sustainable. Manufacturers are already in a deflationary spiral and there is only so low you can go.
We now have a manufacturing plant at DCS and the margins on toiletries are wafer thin, especially when you see a brand retailing at 66p and below. I am not sure what this does for a brand but certainly to reduce your price to what I believe is nearly cost seems crazy to me. How does that brand expect to reach the reasonable RRP again and what does this do for brand equity? It’s a very slippery slope. We have seen many brands disappear off our shelves. Who is next and how many will go?
OK I have had my whinge. On a brighter note we have some new exciting stuff in store for 2010 a new focus on retailer visual merchandising called “visually brilliant”. We have worked on making sure 100% of core range is listed nationwide and the next major step is to do a “make over” on the health and beauty section after all, in many stores it looks neither healthy nor beautiful.