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.

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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!

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.

ITP Analytics Launch

After many months of research, programming and data gathering, we launched the Improve That Price Analytics online reports. The report provides users with live data on the Foodservice Wholesale and Cash & Cary market. These reports can be viewed by category, brand or type. The data can also be filtered to show only the Price Marked, Promotions or the Multi-buys. The site also features the price history of products, is very user friendly and you can have a two weeks free trial at  improvethatprice.com/analytics. For further information email Faisal on faisal@improvethatprice.com.