The wholesale sector is going through a tough time, but Midlands-based wholesaler Hyperama is battling through it and investing to improve its offer to customers.
Hyperama was 23rd in our 2006 Big 30 wholesaler rankings with sales of £104m, the same as it generated the previous year. The company achieved that turnover primarily from its two depots in Nottingham and West Bromwich. It opened a third outlet on Padholme Road in Peterborough late in November last year.
Group operations manager Mark Ridley admits that the Peterborough opening was not ideal, as it was late in the season. The £3m depot was originally scheduled to open in September, but there were construction problems. The depot is now open for business, but Ridley and Hyperama managing director Robert Lowe say that they are still completing a few minor details.
Ridley reports that despite the slow start, the Peterborough depot has been well received by the local community. "We started off slowly because of the timing, but it is going well and we are now signing up 150 new customers a week," he says.
Hyperama is an ethnic food specialist and ethnic caterers are an important part of its customer base. Ridley says caterers make up about 30% of footfall at the Peterborough location. Retailers are another 30% and individual business users make up the rest.
At 50,000 sq ft, the Peterborough outlet is half the size of the company's other two locations, but it carries a full assortment of about 16,000 lines. It also has a butchery, which is a first for the company. Ridley says Hyperama has no plans to open butcheries in the other depots. Instead it will use the Peterborough butchery to supply packaged product to its other depots.
Hyperama has been surprised by the strength of demand as the Peterborough depot has ramped up. Initially, Ridley says, the company expected customers to be interested in a more limited set of products than has been the case. For example, customers asked for Polish beers to serve the area's increasing Polish population. Hyperama has responded to the broader than expected demand by increasing the number of lines it offers at Peterborough.
The depot has been designed to give customers a user-friendly shopping experience. It has wide, brightly lit aisles and features several elements adopted from retail shopping environments. The shelving in the non food, fresh, chilled, frozen and alcohol sections is done to retail specifications and style to make it easier to shop. Hyperama uses mobile shelving in the checkout area, which Ridley says makes it easy to change and reorganise the specials featured there. And the tobacco section is designed as a self-service area, which Ridley says is rare in the business.
Hyperama has been experimenting with LCD TV promotional screens in gondola ends at Nottingham depot, but Ridley says the company chose not to use at Peterborough. Instead, the gondola ends have been designed to feature large posters in light boxes, which are used for section identification and supplier promotions.
Lowe is encouraged by the progress the company has made in Peterborough. He adds: "Things are tough in the trade right now, but we want it to be a long-term success, rather than simply give away margin."
While Lowe is reluctant to reveal his financial expectations for the Peterborough depot this year, he projects annual turnover of between £10m and £12m there by 2008.
He also expects the company to post flat like-for-like sales in the financial year ending in 2007.
Hyperama is also working to cut overhead costs. We reported last year that the company had installed new IT systems which had cut overheads by 25% (The Grocer, 8 July 2005).
Lowe says that the company has been able to generate further savings in this area and expects even more in the future.
Hyperama has also generated savings by centralising its buying processes, replacing a previous arrangement where each depot did its own purchasing.
Looking to the future, Lowe says Hyperama has considered entering delivered wholesale, but is not convinced. "We offer a very competitive cash and carry service and we will continue to focus on doing that even better," he says.n