Londis retailers can expect a major drive by its new owner to increase the volume they buy through the symbol group.
Speaking to The Grocer shortly after retailers voted in favour of his company’s takeover offer, Musgrave UK executive chairman Eoin McGettigan said increased volumes would help to obtain better prices from suppliers.
Suppliers rewarded volume and discipline, said McGettigan, so Musgrave’s challenge was to incentivise Londis retailers to improve stores and improve their loyalty to Londis so both sides could benefit from increased volumes.
He added: “I have talked to retailers about this but without going through the buying books I don’t know exactly why they aren’t getting the deals from Londis. My challenge is to harness the power of the group. We’ve got 2,000 entrepreneurs and need to get them moving in the same direction.
“However, what we have been able to do is show suppliers that we are growth-oriented. How many companies serving the independent sector have driven the kind of growth we have in the last 10 years?”
McGettigan said Musgrave’s first move would be to set up cross-functional teams from Musgrave, Londis and Budgens to scrutinise all aspects of the Londis business and formulate a plan of attack. They will report back after about three months.
“Obviously we picked up a lot of information from the roadshows but before we start talking about chilled ranges or buying terms, we need to see the books, see what facilities they have and find out exactly what retailers actually want,” said McGettigan.
”I would be surprised if there was not a demand to invest in temperature-controlled facilities at the Londis RDCs. But we’re not going to build a new depot and then find out if people want to use it.”
At the egm on Tuesday, Musgrave won a massive endorsement from Londis retailers, with 1,583 voting in favour of its offer and just 43 votes against.
Assuming the deal is sanctioned by the High Court on July 22, retailers will be sent the first half of their £31,645 windfall on August 9. The second instalment will follow in 12 months’ time if they are still trading with Londis.
Elaine Watson