Nisa CEO Michael Fletcher is promising to radically overhaul the buying group’s operating and cost structure in a bid to become more competitive for retailers.
The Grocer has learned that Fletcher outlined his plans last week in a video question & answer session with Nisa retailers. He committed to reviewing the group’s key distribution contract with DHL and Nisa’s office function, the rebates given to retailers and the price of Co-op own brand products.
The proposed changes to how the Co-op-owned buying group operates come in the wake of news that Nisa has entered a consultation with some members of staff at its Scunthorpe HQ that could see a reduction of about 50 roles.
Fletcher told retailers: “So, we must change the operating cost of business, and that’s a challenging thing to do and it takes time – that includes both a review of the office function and our relationships with DHL.”
Nisa currently uses DHL as a third-party logistics provider to supply customers across the UK from its Scunthorpe distribution centre. This system is regarded by many convenience and wholesale experts as major operating cost and a key challenge to Nisa in ensuring it remains competitive on price.
Fletcher also said that more work was ongoing to bring the inbound price Nisa pays suppliers for goods in line with the price paid by the Co-op.
“I think there’s enough value in that pot to fundamentally change the pricing structure of Nisa,” he said, adding that there was also more work needed in making Nisa’s pricing structure more simple to undserstand.
It should be very easy to say that this bottled water cost this much money; you shouldn’t be having to get the calculator out and do multiples of reductions and then perhaps surcharges in order to work out what you paid for,” he said.
In relation to this simplicity he promised a fundamental review of the Nisa rebate system.
“We recognise that we fundamentally have to restructure our rebate system and it has to do more to incentivise loyalty and it has to be simpler for partners to understand, Fletcher explained.
“I had a conversation the other day where someone told me it’s really difficult to actually understand what the Nisa price is – so we need to make that a lot clearer, and that will help customers make the right choices.”
It emerged that Nisa has already carried out work on the suggested wholesale sales price and recommended retail price for the Co-op own label range and found that changes were necessary.
“We must hold our hand up here, when we did the review properly four to five weeks ago and we looked at the rrps and wsps that we were suggesting, a lot of them didn’t make sense in isolation and in truth in the round that didn’t make sense either,” he admitted.
“We understand the importance of Co-op brand to our customers fighting the cost of living crisis and there will be a reset of rrps and wsps coming. We will outline a clear set of guardrails so each individual customer can say ‘OK I can sign up to that’ or if they want to set their rrps a little bit higher they can do. But they’ll have a frame of reference and, of course, if they want to set them a little bit lower, they can do, that’s their choice. But we’re going to be clear on our core strategy and that allows individual customers to make any adjustments they want to.”
While outlining the changes Nisa was hoping to deliver, Fletcher also called for greater loyalty from retailers in terms of buying a greater proportion of goods through Nisa.
“I understand what’s going on in the marketplace. At the moment partners are on the one hand having conversations with their customers about price and they’re being challenged to bring their prices down, and on the other hand they’re seeing all the import costs going up, so they’re in this absolutely horrendous squeeze at the moment and therefore, I understand why they’re looking for value by looking across multiple plots and picking the best price,” he said.
“I think in the current climate if I was them that’s exactly what I would do – for all the wholesalers out there that then creates significant list economies and we have to get to a position whereby if you buy a basket of goods from us on a consistent basis then we can absolutely offer you the very best price in the market. I think we will get through this cost of living crisis by having greater partnerships with our customers and restructuring the rebate system so it actually does reward both loyalty and efficiency.”
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