Budgens' chairman Eoin McGettigan raised more than a few eyebrows this week with his suggestion that suppliers should hike their prices to the multiples by 0.5% in order to offer better terms to the independent sector.
Now, I am sure many suppliers if not most will dismiss his idea out of hand. But I think they would be ill-advised if they chose to ignore the deep sense of frustration that is clearly behind McGettigan's thinking.
Listening to him speak at the Federation of Wholesale Distributors' annual conference, I was struck by the strength of his argument. In short, he asks, why should independent wholesalers and retailers pay more than the multiples when they are ordering similar volumes of the same product?
Wholesalers on the plaftform such as James Ward and Lee Furness took the argument a stage further by highlighting the fact that too often they get margins that do not reflect the true cost of serving the independent trade. Take confectionery, where margins haven't moved for years. Is it any wonder retailers are premium pricing? Or what about tobacco? Margins are so low, we heard, that some wholesalers have gone out of business.
I know suppliers can mount a robust defence against such criticism and over the years they have often had to. But I didn't get the feeling that the speakers at this week's conference were engaging in a bout of good old fashioned supplier bashing. And I didn't get the feeling they were whingeing either. Instead they were making a really valid point that wholesalers and independent retailers need to earn better margins if they are to reinvest in the future and provide suppliers with a healthy alternative to the multiples, who even now are targeting the c-store sector for growth.
Suppliers have for years been demanding that wholesalers and independent retailers become more disciplined, get better at ranging, and really support promotional activity. Now that they are starting to get all of this, and more, I wonder whether suppliers are reciprocating with better pricing?
Judging by what I heard this week, there are plenty who feel they are not.
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Now, I am sure many suppliers if not most will dismiss his idea out of hand. But I think they would be ill-advised if they chose to ignore the deep sense of frustration that is clearly behind McGettigan's thinking.
Listening to him speak at the Federation of Wholesale Distributors' annual conference, I was struck by the strength of his argument. In short, he asks, why should independent wholesalers and retailers pay more than the multiples when they are ordering similar volumes of the same product?
Wholesalers on the plaftform such as James Ward and Lee Furness took the argument a stage further by highlighting the fact that too often they get margins that do not reflect the true cost of serving the independent trade. Take confectionery, where margins haven't moved for years. Is it any wonder retailers are premium pricing? Or what about tobacco? Margins are so low, we heard, that some wholesalers have gone out of business.
I know suppliers can mount a robust defence against such criticism and over the years they have often had to. But I didn't get the feeling that the speakers at this week's conference were engaging in a bout of good old fashioned supplier bashing. And I didn't get the feeling they were whingeing either. Instead they were making a really valid point that wholesalers and independent retailers need to earn better margins if they are to reinvest in the future and provide suppliers with a healthy alternative to the multiples, who even now are targeting the c-store sector for growth.
Suppliers have for years been demanding that wholesalers and independent retailers become more disciplined, get better at ranging, and really support promotional activity. Now that they are starting to get all of this, and more, I wonder whether suppliers are reciprocating with better pricing?
Judging by what I heard this week, there are plenty who feel they are not.
{{COMMENT & LETTERS }}
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