On the last day of July, just a couple of miles apart two of Scotland’s leading wholesalers were reopening expanded depots following millions of pounds of investment, so what does the increased competition mean for retailers?
A recent report by IGD estimated that by 2019 the convenience sector will have grown 30% and be worth £49bn across the UK. If the convenience market is to achieve this level of revenue then it needs a strong wholesale sector behind it.
Cash & Carrys have responded to the advances made by symbol groups in recent years by increasing investment and improving offers for retailers – whether they be members, unaffiliated, or part of another group.
No city has illustrated the changing face of wholesale more than Glasgow, where there has been considerable movement in the past few months.
United Wholesale (Scotland)’s expansion plans have seen the company’s Maxwell Road depot double in size and introduce licensed products, while the acquisition of Sher Bros by Bestway has seen a massively expanded and refurbished 100,000 sq ft depot open just south of the Clyde. Add to this increased investment by both JW Filshill and United Wholesale Grocers and the wholesale market serving central Scotland has never been in better shape for local retailers, and this could have knock-on benefits for the whole country’s convenience sector.
“Competition makes others raise their game and improve services and that’s a good thing for our industry,” says Kate Salmon, Chief Executive of the Scottish Wholesale Association.
Independent retailers, Salmon says, now have more choice than ever before when it comes to getting help and advice. “It is our members who are helping to turn around the fortunes of c-stores the length and breadth of the country – it’s hugely encouraging to see many more retailers joining a symbol,” she says. “We’re witnessing considerable investment in the sector all over Scotland – not just in the Glasgow area – and that is sending out a very strong message indeed that wholesale/cash & carry is still relevant and will have an increasingly important role to play in the future.”
Kilbirnie St opens its doors
The acquisition of Sher Bros was a savvy move and has given Bestway a depot just minutes from Glasgow city centre and even closer to the motorway.
Since the deal went through in April, the company has been working hard to get it ready for the July 31st opening. While continuing to trade a huge amount of construction work was carried out, expanding the size to 110,000 sq ft. In addition to a deep concrete floor being laid to support the weight of the towering shelving, a new fresh and chilled area, new tobacco room and butchers have been added.
On the day of the grand opening, initial results showed sales were up 196% on the corresponding day the week before and the depot posted a healthy margin, which Bestway says demonstrated that customers were buying both promotional and non-promoted lines at launch.
At the launch, Sir Anwar Pervez OBE, Chairman of The Bestway Group, said: “We chose Glasgow as the first Bestway in Scotland because we knew there were a high proportion of Asian and Pakistani customers in the area. Customers who shared the same values, beliefs and goals that we have as a company. For our part, we wanted to share the Bestway values with [our customers] and build on our community’s rich heritage.”
He acknowledged that Glasgow was a highly competitive area in wholesale but said he was confident that the new Bestway Batleys branch would benefit the businesses of its customers.
“The business community in Scotland will be key to the success of this depot – a depot that I firmly believe will be one of the best performing depots in the UK,” he said. “Yes there is competition. There always has been. And there always will be. Winning is not about reacting. It’s about developing your own strategy that builds your business and making your own decisions that allows this strategy to become reality. You have to offer something different to what your competitors are offering. And that is exactly what we are delivering today.”
Maxwell Road reopens
On the very same day Bestway’s top brass were heralding the opening of the new depot, just a couple of miles away in Pollokshields, United Wholesale (Scotland)’s executive team were relaunching the “rejuvenated and extended” Maxwell Road depot with the help of former boxing world champion Amir Khan.
The relaunch of Maxwell Road follows an investment of £2.5m that doubled the size of the depot to 41,000 sqft and also brought licensed products back to the company for the first time in seven years. 12,000 sq ft of the new 20,000 sq ft of floorspace has been dedicated to licensed products, with the remaining 8,000 sq ft set aside for non-licensed grocery. The number of checkouts has also been increased to 13.
Managing Director Asim Sarwar says: “It’s clear that the cash and carry sector in Glasgow is growing and developing. Wholesalers are investing in depots in response to the needs of the retailer, and we’re seeing a good level of growth in the sector overall. Cash and carry operators seem to have much more of an understanding of what retailers need now. There’s more being done to retain existing customers and to bring in new ones.”
He says that the increased competition motivates the company to strengthen its offering and to move forward. “It’s important for us to look at what the competition is doing and to respect that, but we will always look to move forward with something that’s original and to be doing something that’s a bit different from everyone else,” he says.
Sarwar adds that reintroducing licensed products on shelf is a big step for the company, and since opening the feedback has been positive. On the depot’s opening weekend the company took £2m across its Maxwell Road and Queenslie depots.
“Increasing numbers of unaffiliated stores are now looking to be affiliated under one of our four banners,” says Sarwar. “Our investment in Maxwell Road demonstrates that we are enjoying enough success to be able to invest at this level, and in doing so, are in the position to strengthen the package we provide to retailers of all shapes and sizes.”
The developments at Maxwell Road come as the company continues to grow and expand its reach across Scotland, which includes the acquisition of the 68,000 sq ft Terston House in Newbridge, Edinburgh, which the company is now turning its attention to. Refurbishment work is set to begin this month.
Filshill investment
While much of the attention was focused on Bestway and UWS in recent weeks, during this period, JW Filshill posted revenues of £158m. While this figure was down 4% on the previous year, a focus on cost saving left the Hillington-based wholesaler with pre-tax profits of £800,000.
Simon Hannah, Managing Director of JW Filshill, agrees that competition in the wholesale sector in Glasgow and the central belt has intensified in recent months. But he points out that this is not just because there has been an increase in the number of depots. “In Glasgow, what we’re seeing is investment by two wholesalers and that is to be welcomed,” he says. “Competition in wholesale is good because it helps rejuvenate the sector and, of course, when you relaunch a depot or hold a trade day you are always going to attract more custom,” Hannah added. “Indeed, at our own trade day in July, we had over 200 customers attend from all over the country.”
Hannah highlights the intense competition in the Glasgow wholesale market – and that competition is something that is good for local retailers. “Everyone knows that the Glasgow market can revolve around the deal of the day and it’s not unusual for some retailers to visit several cash and carries in the city chasing the cheapest deals,” says Hannah.
For retailers in Glasgow and across the central belt, where much of the country’s independent retailers are concentrated, the competition in the wholesale sector is to be welcomed. As Hannah points out, with company’s holding trade days and special deals, there may be a little work required, but by putting in the effort, retailers can improve the offer for their customers and that can only be a good thing for the convenience sector overall. When you examine the levels of support being offered by wholesalers then those 30% increases over the next five years that are predicted by IGD begin to look a bit more attainable.
