Happy New Year and Our Predictions for 2016!

Who can believe that the year 2015 has gone past so quickly, and here we are in 2016! Hope everyone has had a great start to the year and looking forward to keeping their New Years resolutions.

2015 has been an eventful year for the wholesale industry with Booker making another solid acquisition, Bestway nearing the 40 year mark and the likes of Lidl and Aldi continuing to create havoc in the grocery sector with the Big Four continuing to suffer.

So what are our predictions for 2016? Here we go bold and make some predictions for 2016 and so lets see if they come true by the end of the year!

Amazon Finally Arrives

We all know that Amazon has been testing the market in the grocery delivery market and has been stealthily growing its business. But we believe 2016 will see a shift in gear for the retailing behemoth and they will begin to make decent in-roads into the retail grocery market, affecting the big boys and shackling the status quo. They may also start their expansion into the wholesale sector but we see a few years yet until this will happen.

Lidl and Aldi move into Convenience Market

Lidl and Aldi have tested their pilot stores in North London in the convenience store market and we see this taking on a much larger momentum in 2016 with the opening of multiple stores. This will have a knock-on affect on the wholesale market with demand peaking and the more convenience stores being affected too.

Oil Stays Cheap

Cheap oil and hence cheap petrol will mean that deliveries become cheaper and product prices will decrease. This has already happened in 2015 and we see this trend of deflation continuing into 2016.

Consolidation

We see further consolidation in the wholesale market and the food delivered market too. It makes perfect sense – all those delivery vans running around central London – a merger would reduce the vans, traffic congestion and make more efficient deliveries too – Hey presto!

On-Line Ordering

On-line ordering which already has been growing will see explosive growth in 2016, reaching the tipping point as customers see just how much time and energy they can save from ordering online. We expect to see the increase in online sales doubling in 2016.

So there we have it – lets check back at the end of the year to see how close our predictions came!

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Government Plans to Soften Sunday Trading Laws Facing Defeat

This week, the government plans to soften the Sunday trading laws for the large retailers is facing defeat, with the SNP fearing it could drive down Scottish workers wages. That combined with the fact that other MPs and some Tory rebels are voting against the motion means that it is most likely that the law will be defeated.

With the current law set at a maximum of 6 hours trading on a Sunday for the large retailers, this can have a big affect on current and future business in both the grocery and wholesale markets.

They competition is from online ordering – whereby orders can be made any time, any day and so with the shorter trading laws on a Sunday the online presence is looking even stronger.

The wholesalers with a strong online presence, like JJ Food Service, Booker and Bestway will continue to grow their business away from the retail side. However, other smaller wholesalers who do not have an online presence yet may see their share of the market slip as those looking to order online can only do so with the larger established wholesalers.

This is even more important in the wholesale sector with the convenience store owners typically do their stock takes and replenishments over the weekend when they have a break from running their business, or another family member can fill in for them.

Thus, the impact of the vote on the local wholesalers and retailers will be very interesting to see over the next couple of months.

54% of Supermarket Products are on Promotion

This week, market research firm IRI Group has announced the results of their research shows that 54% of products sold by the supermarkets and major retailers were on promotions such as ‘multi-buys’ and Special Offer promotions.

This compares with 28% in Europe overall, making the UK the country with the highest number of promotions in Europe. The impact for manufacturers is immense, as the promotions are no longer having the big impact on sales they once had, and the manufacturer is no longer seeing the uplift on promotions that are subsidised at the retailers. That combined with the misleading promotions means that something has to be done to tackle this problem, perhaps by introducing a cap or percentage of products that can be promoted by a retailer or supermarket on promotion.

So how does this fair in the wholesale sector?

The wholesalers all have their own ‘Special Offers’ for the week and also for the month and these are usually the most popular products to help bring the customers in through the door with seasonal variations. So soft drinks may be on ‘Special Offer’ in the summer, and alcoholic drinks in the winter close to the Christmas period. This product range is usually limited and no more than 10% of the range of products the wholesaler will sell.

Most wholesalers also feature a ‘multi-buy’ offer where if you’re buying 2, 3 or 4 products then you will receive a discounted price. This is prevalent and a ‘multi-buy’ is available on almost all products. Indeed, Start Catering and JJs Food Service offer a ‘multi-buy’ on more than 80% of their product range.

With our analytics software, a wholesaler can keep track of the ‘Special Offers’ and ‘multi-buy’ prices charged by competitors and so that they can time their own ‘Special Offers’ accordingly.

We will be looking in more detail at the ‘Special Offers’ and ‘multi-buys’ offered to customers to see if these really work and will report back with our findings!

The Living Wage Standards – How will this affect the Wholesale market?

The big four supermarkets have all announced varying responses to the Living Wage Standards which will come into affect next year, but have been trumped by the discounters Aldi and Lidl (again!).

Aldi said that it would pay its employees £8.40 an hour or £9.45 in London and Lidl has said that it will be paying at least £8.20 in England, Wales and Scotland and £9.35 for those in London.

Both Aldi and Lidl have been able to offer this as they already pay their employees a higher hourly rate than the supermarkets, and so it’s not so much of a big jump for them. Its also great publicity and advertising for them too, showing that they are the best paying retailers in the market today and looking after their staff. But essentially it’s also a business decision, as paying higher wages for staff reduced staff turnover and the costs that come with it.

So far, the supermarkets haven’t had much of a response with Sainsbury’s saying its employee wages are £7.20 for the workers over the age of 25 from April 2016. Tesco’s are at £8.80 and Morrison’s at £8.20 and so still behind the discounters but this could change.

With the wholesalers employing vast numbers of staff then what is their position? Well, Charles Wilson, CEO of Booker plc mentioned at the last AGM that they constantly monitor pay against retail sector standards and although they are keeping an eye on the situation they feel that they offer a fair wage.

So far, no other wholesalers have come out to comment on their current wage structure and the new Living Wage Standard and whether they will be increasing employees’ hourly pay to reflect this.

However, there is another big factor to consider here. With the rise of the Living Wage Standard then a large number of cafes, restaurants, bars etc. will be affected and the increased employee cost will hit the bottom line. Many of these bars, cafes etc will not survive and go bust, which in turn mean that wholesalers who supply them will be affected too.

So it would be interesting to see the affect on the wholesaler market next year, once the Living Wage Standard is live!

Tesco Faces Brand Guarantee Anger – Could this happen in Wholesale Too?

This week, Tesco has come under pressure from the Advertising watchdog on its Brand Guarantee campaign, which is said to flout the ruling that Tesco originally put in place itself. Tesco referred Sainsbury to the ASA over its brand match promotion three years ago and is getting the same treatment towards its own Brand Guarantee scheme now, how ironic!

The other supermarkets have complained the Tesco promotion is not clear – that the promotion is valid if you buy 10 branded goods or more, and that it only matches against its Big Four rivals and not the others. If it’s cheaper, you can get the saving on the till straight away.

This is Tesco’s attempt to turn around its worst year in history and get the shoppers coming back into its stores. It’s interesting to see that both Tesco’s and Sainsbury’s have used a ‘price comparison’ strategy to lure the shoppers back with both their Brand Match and Brand Guarantee promotions. So could this every happen in wholesale too?

So far, no wholesaler has been offering a ‘Brand match’ of their product prices versus a competitor in the same way as the supermarkets do. The main reason for this is that the wholesaler offers a range of prices for the products – there is a standard price and a ‘multi-buy’ price where a different price is offered if you purchase more than 3 items of the product. Hence, it can become quite difficult to compare the prices on an ‘apples to apple’s basis.

That coupled with the large number of products and difficulty in matching one product to another, makes the process very complex. However, we at ‘Improve That Price’ have been able to match wholesale products accurately using our propriety algorithms and compare the prices from each wholesaler on a like for like basis. Indeed, many of the wholesalers use our analytics to help set their prices in the marketplace too.

So a ‘brand match’ or pricing promise by the large wholesalers could eventually become a reality in the near future, as this data becomes more transparent and easy to understand.

National Curry Week is Here!

This week National Curry Week is in town from 12th October – 18th October and what a week it’s proving to be. Held every year since 1998 it is here to show case Indian food and to get the taste buds going. We at Improve That Price love Indian food and can’t wait to try out some of the traditional dishes from old and new restaurants this week.

Whilst chicken tikka may be the most popular dish in the UK, a traditional Indian curry still is behind pasta and pizza in the popularity stakes (according to The Independent) and so still has some way to go to being amongst the most popular dishes in the UK.

With the uplift in sales expected for National Curry Week, now may be a good time for wholesalers to be stocking up on their curry essentials for the numerous Indian restaurants up and down the country. Perhaps even giving a few promotions on curry related stocks like vegetable oil, onions, tomato’s, chilli powder, garlic etc may lure the Indian restaurant owner into their warehouse to stock up on the wares.

At Improve That Price, we have been tracking the cost of ingredients at the UK’s largest wholesalers over the last year and this data ensures that the restaurant owners can save money on their weekly shop for all their ingredients and dry stock needs. For example, Star Catering has Olympic Vegetable Oil 2 x 10Lt on Special Offer for £11.99 this week, a great saving for any Indian restaurant against the usual price of £16.99.

So be sure to check the best prices you can buy at using the Improve That Price website when your free!

Wholesalers – How to Get the Price of your Products Right

Over the last month, we’ve been having a look at how to help wholesalers to get the selling price of their products right. Typically the selling price has always been a fixed mark-up on the price of a product.

So if a wholesaler bought a product for 80p, then he would be adding a 25% mark-up and selling the product for £1 which should have enough margin to cover the overheads of storing the product, handling and delivery etc.

However, today using this pricing strategy has its limitations, and why is that? Firstly, there are competitors in the marketplace and each competitor is setting their own price of the product based on their own specific cost structures e.g. storage, distribution and how much they bought the product for in the first place. The larger the purchasing power of the wholesaler the better discounts the wholesaler can get from the manufacturer.

Hence, to be able to set your own price, you’ll need to see how much the competition is selling in the marketplace for. If you’re price is too high, then the customers will go to the competition. If you’re too low then you’re throwing away good margin. Hence, getting the price right is essential and the first step to doing this is to know what your competitors sell at.

Secondly, there will be products which are bring customers in e.g. Coca Cola cans, Red Bull etc. which are very popular products and can be promoted at a special price to lure customers into buying. These products will be on promotion and typically loss leaders.

However, you will also want to see what the competitors have on promotion and whether you can beat or compete with that price. It may be the case that a competitor has such a low price on a promotional product, that you cannot compete with the price and so best to promote a different product or wait until the competitors promotional period is over.

This is what our ‘Improve That Price’ analytic’s product does.

A wholesaler can see the competitor pricing for all products, and then decide how to price their own products. They can also download variance reports which will show which products are 5%, 10%, 20% etc higher priced than a competitor and make changes accordingly. The can do this instantly for all of their product range, and even against the closest match of a competitor.

This is a great piece of software and now used by some of the largest wholesalers in the UK. So if you want to see how this works, then email faisal@improvethatprice.com and he would be very happy to give you a demo!