Drive to the edges of the Foxhills Industrial Park on the outskirts of Scunthorpe and you cannot miss the giant new building that now dominates the skyline on a spot where a steel mill once stood. It measures in at a jaw-dropping 625,000 sq ft - making it one of the biggest distribution centres in the country. It has the capacity to handle two million cases of ambient product a week. And it is costing a cool £30m. Welcome to Nisa-Today’s Project Vision.
The distribution centre is being built as part of a series of major investments in the business, which have also included sizeable sums spent rolling out a new supply chain management system and the opening of a temperature-controlled depot in Harlow.
Admittedly, IT and warehouses are not glamorous. But they are critical. And for chairman Dudley Ramsden the investment shows the confidence Nisa-Today’s has both in its own future and the future success of its 340 wholesale and 630 retail members. He says the group has a clear vision of where its supply chain is headed: “Our distribution is going to emulate that of the multiples.”
It’s no idle boast. The group already runs a temperature-controlled service offering deliveries six days a week - a major USP for the independent sector. And the team at Nisa-Today’s is convinced the investment now being made will provide the capacity the business needs to keep on growing - as well as maintaining a powerful point of difference over rivals.
At the same time, Nisa-Today’s has been redefining the role it should play in a rapidly changing retail market. Such thinking was brought into sharp focus by the acquisition of key members such as Aberness, Bells and Jacksons by the multiples last year, and the defection of Musgrave, which led to the demise of Nisa’s Central Buying Consortium. So the talk in Scunthorpe is now about how the retail side of Nisa-Today’s should be developing a strong front end business to complement its supply chain expertise. In other words: becoming more than a buying and distribution conduit for members.
“We realised that we could not be a supply chain alone; we needed to develop much closer relationships with retailers,” says Neil Turton, MD of commercial services.
Today, the business is underpinned by different relationships: there’s the 10-year distribution deal with Costcutter; the supply agreements it is winning with national chains such as TM Retail and BP; and the way it has historically serviced the needs of independent retail chains operating under their own brand, such as Booths.
For some years now, the group has been attracting a growing number of retailers to its Nisa brand. Turton says the group’s strength in fresh foods, the size of its range and its focus on servicing the needs of members have all proved powerful tools in recruiting. The symbol group has boomed and with more than 300 members accounts for 25% of the volumes going through Nisa-Today’s. The plan is to double that business.
Ramsden says: “The Nisa symbol group developed because the new generation of independent retailers want to trade under a brand rather than their own name. It is vital that independent retailers are locked into the support offered by a symbol operator and we want to be the main one.”
He adds: “There is a very good future for the ambitious, entrepreneurial independent retailer and we have many of them in our group and are giving them the tools they need to develop their business.”
Members of the Today’s wholesale arm are also enjoying plenty of success with the development of their fascia groups, says MD Rodney Hunt. There are 650 retailers operating under a Day Today fascia, while its new symbol group for cash and carry customers is also doing well, he says. “There are 40 Today’s Local and Express stores now open with a further 60 in the pipeline. So we hope to have 100 in just two years since the launch. And there are still parts of the country where we are not covered.”
The Nisa and Today’s groups are all about the same thing, of course, namely: locking in retailers, building loyalty and driving business to mutual benefit. But, as we reveal in our news pages this week, there is a new twist to this particular part of the tale - the development of co-branded stores for some of the larger Nisa members.
Turton says it’s a no-brainer: retailers can keep their identity, which they have often built up over many years, while Nisa-Today’s continues to strengthen the link between the front end of the business and its back room functions of buying and distribution.
It also means Nisa-Today’s is able to offer a flexible approach for retailers, says Turton: “You can be a member in many ways.”
But does flexibility breed unnecessary complexity? Outsiders would argue it does.There’s another issue: as Nisa-Today’s services the needs of both independents and national accounts, doesn’t its business model create some obvious conflicts?
Not so, says Turton. “Provided they get the right service, people understand there’s an economic logic to sharing costs. Retailers are positive about deals such as BP - they understand it’s the right way forward.”
Of course, this idea that pooling the volumes of different, competing businesses works to the benefit of all has been one of Nisa-Today’s core values from the start.
“We have always worked on the principle that big is beautiful and that you should harness volumes for the benefit of all members, whether wholesalers or retailers,” says Ramsden. “With the multiples having in excess of 90% of the grocery market, it’s more important than ever that people put local differences to one side to concentrate on the volumes they can achieve.”
Right at the heart of this philosophy is the mutual status of Nisa-Today’s - where every member is an equal shareholder in the business. As Ramsden says: “Our members like to think we are working for them and not them working for us.”
He adds: “Not enough of the investment made by suppliers in our industry finds it way to the independent retailer. We pass on everything. It does not get caught by a wholesaler whose first priority is to make a profit and whose second priority is to give customers a good deal.”
Ramsden agrees with those that argue there are too many independent operators doing their own thing. “But that’s the sector we are in,” he says. “It’s a mentality that frustrates me because independent retailers should never have been allowed to lose their share of the grocery market.
“If I have any regrets it’s not being able to persuade all my fellow independents to get all their volumes together in a power bloc. There are still too many wholesalers or distributors who are doing well even if their customers are not.”
With that in mind, it clearly rankles that Nisa-Today’s was not given a chance to bid for Londis, whose members eventually opted to sell out to Musgrave. He says: “I have spent my life fighting for independents and I know that was the wrong deal. It was a great opportunity to create a mega-mutual but there were other people of influence who saw a different route.”
Ramsden shrugs. That’s now in the past. And one of the key benefits of mutuality is that it has always allowed Nisa-Today’s to take a long-term view of the future.
That’s why it was able to invest the time and money needed to build a range of 3,000 chilled and frozen products and a supply chain that delivers a staggering 700,000 cases a week. Deciding to do that took a lot of guts, and plenty of vision, as did the more recent decision to spend £30m building a mega-warehouse to ‘future proof’ the group’s ambient distribution.
The latest chapter in the Nisa-Today’s story opens on September 16, when the group starts moving into its newest facility. Those in Scunthorpe are confident it will ensure there are many more chapters to come.