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 12^th October – 18^th 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!