Booker Reports Strong Growth in Sales – What is the Impact of this on the Wholesale Market?

Booker last week reported good sales growth over the  quarter, with Non-Tobacco like-for-like sales up 3.1 percent for the quarter. Sales growth for all stores including the Makro stores was 0.1% up on the same period last year, for the 12 weeks to 12th September 2014 – a pretty solid result.

However, Makro endured a 10.8% decline in its sales for the quarter, as it disposed of its unprofitable categories.

Shares in the company were up 4.5% to 121.5pence on morning on trading after the announcement and continue to trade well at 123.55 pence by the end of last week (26th September).

What does this mean for the wholesale market as a whole? Has Booker taken share from the other wholesale players? Or is this the result of real growth in the market, as a result of more convenience stores being opened?

The number of convenience stores, bars, restaurants, kitchens and caterers in this country has largely stayed consistent at around 450,000. There hasn’t been significant growth in the number of convenience stores which is the largest customer base of Booker and the largest part of the market with approximately 250,000 independent convenience stores in the UK today. Thus, the growth comes largely as a result of an improved offering which existing customers find very attractive.

The Makro acquisition has added sales to the Booker group, as well as enhanced synergies from added purchasing power etc. However, as it was already a loss making business before the acquisition, there is still a lot to do by reducing the categories which are loss making e.g. electrical, fashion etc. and so we can expect to see further improvements in profitability over the coming quarters too. By focusing on their core customer group and market lines Booker will be able to improve the supply chains in those areas.

By consistently delivering high levels of customer service and competitive pricing levels of promotions on the key product lines, Booker looks set to continue its strong performance under the leadership of Charles Wilson, Booker CEO.

Scotland Voted ‘No’ to Independence, what is the Impact on Wholesale Prices?

It was a big day for the UK on Friday morning, with the results of the Scottish Referendum. With Scotland voting ‘No’ on leaving the UK, it was one of the biggest days in the last 300 years in the history of the United Kingdom, and not to be repeated for a long time too!

So how does this affect wholesales prices of your food and drink items, I hear you ask? Well, we can look at it both in terms of a ‘Yes’ and ‘No’ to Scottish Independence and see what the affect’s on the wholesale prices would have been.

Today, all trade freely moves between England and Scotland in the UK. The big wholesalers have their headquarters in England, and run their Scottish stores usually as a subsidiary of their UK branch and so the stores are just treated exactly the same as the English stores with the same products, similar prices and the same distribution network.

However, if Scotland had decided to go independent, there would be a new border created between England and Scotland, with a new currency too, as the pound most likely would not have been allowed to continue as a currency in Scotland. This would have had a large implication on the prices charged to customers and the transfer of goods between the two countries.

Prices would be open to a foreign exchange rate, and we forecast that prices would have increased in relation to those in the UK, with the exchange rate fluctuating with the new independent status of the country. Additionally, transferring stocks to the ‘new Scotland’ would have incurred further charges with import duties going up, especially for Tobacco and Alcohol as the ‘new Scotland’ tries to raise funds to support their new independent country.

Additionally, the cost of distribution may be affected too. As Scotland is a separate country, they would be able to choose which taxes to apply to petrol prices in the country, making distribution to stores more expensive if petrol prices were to rise with the higher taxes.

All in all, it was a beneficial result for all wholesale businesses up and down the country that Scotland did not vote ‘Yes’ to independence and with this uncertainty removed, small businesses can now get back to working on improving their own sales, profitability and growth – the real issues that they face today, rather an issues brought about through decisions outside of their control.