In our last blog, we said that any good wholesaler – and retailer – knows that their success, and the viability of the channel, cannot be built solely on being cheapest on display. Wholesalers must attract the best retailers – so how do they do that?
For most wholesalers, this is done by recruiting retailers into a fascia and locking in a proportion of their spend. In this sense, symbols and fascias operate as the ‘loyalty cards’ of wholesale, providing ease of shopping, assurance on price and some form of reward thrown in, in exchange for this commitment.
This has always operated on a continuum of sorts, from the wholly independent retailer doing his or her own thing, through retail clubs, symbols, to the fully managed model of the likes of SPAR and Co-op. Some retailers would perceive the latter too restrictive but from the wholesalers’ perspective, how do you grab the loyalty of the unaffiliated retailer? Unaffiliated retailers usually enjoy their freedom and like to shop around, they are the equivalent of the consumer with ten loyalty cards in their wallet.
For the wholesaler, a retailer in a symbol fascia provides guaranteed buying through their group and some assurance of implementation of store standards and promotions. Traditionally, the retail club was a route for demotion of non-performing fascia retailers or retailers could be relegated to a different fascia by their wholesaler based on performance, so a Budgens could become a Londis, for example. There is a fine balancing act though – if a supplier calls on a fascia store and discovers their core range line is not stocked or, conversely, they can’t get a listing with the wholesaler but find their sku in store – the very definition of fascia compliance is significantly undermined and any additional investment in retail club activity becomes debatable. So, what about those retailers who simply don’t or won’t be limited to a fascia but are top-class, entrepreneurial retailers?
We believe that the answer, to a large extent, lies in data. An effective business intelligence system that underpins a strong digital strategy is essential for wholesalers who want to attract the best retailers. This will allow the wholesaler to know who their key (read most valuable) customers are and understand what they want.
To drive spend further, the wholesaler must be focussed on closing any gap between what the retailer wants and what the wholesaler is offering – to minimise the need for the retailer to go elsewhere. Further, a data-led wholesaler will be able to personalise offers to drive loyalty, as well as be responsive to new trends – ensuring they can react quicker than their competitors.
This is not about being cheapest on display on every line – it is about tailoring deals to the products and services that matter most to each customer and it is about trialling activity to learn what drives that retailer to spend more. In the old days, the depot manager did this whilst the customer was shopping the depot – they would spot the regulars and keep an eye on their trolleys to identify the big spenders. Then they would build a relationship and use tactics such as offering manager’s specials to stretch spend; or they would use one sku as a loss leader, increasing the margin on another product to offset it; or they would provide credit terms.
With a new generation of younger retailers who prefer talking by text than in person and the sheer volume of customers now ordering remotely, it makes sense to let technology do the hard work and apply logic to the problem. It might also be that some form of loyalty and reward/bonus incentive would motivate these unaffiliated retailers more than the offer of a fascia, But, again, let the technology monitor and reward the customer for the right purchasing behaviour and automate it – the customer does not need to carry a loyalty card – they shop on an account number (most) of the time!
As the ultimate data company, Amazon already does this. And we know Amazon is encroaching our channel, so a data-led approach is not only the best way to attract the best retailers, but also essential to avoid being left behind.