Consolidation

Speciality Bites with

Paul Hargreaves

Chief executive of Cotswold Fayre

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It seems that the larger speciality food retailers are waking up to the fact that consolidation of supply is the only way forward in the sector

I am encouraged by three conversations I have had recently with large retailers suggest that they are waking up to the fact that the way to efficient retail is to reduce their number of suppliers by consolidation by using wholesalers.

Two of these were with garden centre groups, one who had just under 200 food suppliers and one with just over 200 suppliers, and are both taking active steps to find a way of buying the same number of products with fewer suppliers.  They were both previously inundated with work simply due to the number of suppliers needing orders, making deliveries and paying for those deliveries.  The manpower required for this number of suppliers was driving them to inefficiency.

Not only that but there seems now to be pressure from board level not just from an efficiency point of view but also from a carbon footprint angle.  The third is a well-known London food hall that want to drive up their environmental credentials by generating fewer food miles by those products they have in store.  Many have always suspected that, despite being one of the oldest types of businesses, wholesalers could be the way forward into the future by “greening” the supply to retailers.

Based on what I know of order size of both direct and wholesale supply, I recently calculated that even a retailer in Scotland, with a mix of products from Scotland and the North of England would have a carbon footprint half the size by using a consolidator outside their core area of supply.  This is purely due to the much larger size of orders involved in both delivering to the wholesaler and to the retailer.  Large lumps of stock moving around is far more efficient than small lumps moving around the same area.  The environmental impact reduces even more as the customer moves closer to the centre of the UK.  In one example I looked at based on recent orders, the carbon footprint was a sixth of that compared to that they would incur by buying directly from the same suppliers.

There is more work and mathematical modelling required here, but I am happy currently at Scotland’s Speciality Food Show knowing that we can not only save retailers money through efficient sourcing but also make them greener retailers!  Let’s hope some of them receive the message!