As Blakemore shutters c&cs what next for Landmark?

What is the impact of the Blakemore sell-off on Landmark? Huge. Around half of our Lifestyle Express stores were supplied by Blakemore, so once we knew the future of their depots, our head office team went round to those retailers to offer them other options, such as East End Foods in Birmingham and Hyperama in West Bromwich. We also had our members United Wholesale Grocers and Parfetts buying the Blakemore depots in Gateshead and Middlesbrough

But somewhere like South Wales is very difficult because we don’t have a big member there. There’s a likelihood that many of those stores will go to competitors. It’s a shame because they’re screaming out for a Landmark member there.

I can’t tell you the full impact just yet though because we’re in the process of working out what we’re going to be left with. We probably had around 900 Lifestyle Express stores before Blakemore’s announcement [in April] but we won’t lose all those Blakemore stores (According to latest figures provided for the Grocery Retail Structure there were 970 Lifestyle Express stores as of 1 May 2018).

Why didn’t more of your members take on a depot? If you’re going to buy a business like that you’ve got to make sure you can make the numbers return. All of our members are independent family-owned businesses and this is what they spend their whole lives building. So if you get it wrong once, you don’t just go back to shareholders and the city to borrow some money, you go under. You would only buy a depot if you really thought you could turn it around and make it viable.

What do the closures tell us about the health of the cash & carry sector? Margins are incredibly thin and costs are going up. Some of it is, in inverted commas, a good thing, like national living wage increases, and apprenticeship levies and so on, but the hourly salary increases over three years are going to be more than the likes of Blakemore make in margins. So you have to survive by looking at the cost base, customer base, product mix and services. Members need to examine whether there are any profit streams they’re not attacking or any opportunities they’re not taking, such as food to go and wellbeing products.

Just selling cans of beans and bottles of vodka isn’t the way forward - you need those things but you need to manage the mix. The nice thing about our independent wholesale members is they’re entrepreneurs, they’re smart, creative, risk taking people. That’s good news because they find ways to survive.

You joined at an interesting time, what with Tesco Booker, P&H, Co-op Nisa and Costcutter, Conviviality - what impact has this had? When something like P&H happens, or Conviviality implodes, your heart goes out to the hundreds if not thousands of employees affected.

However, there was a bigger bit of business for everyone else to grab hold of. P&H had 80,000 independent customers including corner shops, garage forecourts and bakeries. Those customers all needed to be serviced the next or same day, so they went to cash & carries or arranged alternative supply deals. We know Nisa and Bestway did deals. In the short term, our members also benefitted through that uncertainty. But of course, that’s not what we want, because ultimately we end up with very little choice for the independent retailer to purchase through. In any market you want choice as it keeps competition alive.

How specifically has Tesco Booker impacted on Landmark? We were dead against it because it will narrow consumer choice, and the fact that the CMA did nothing about it gobsmacks me.

In the short term it may be that there are lower prices for independent retailers to take advantage of. But in the longer term, the independent retailers who aren’t associated with Tesco Booker won’t be able to make a living anymore because they can’t compete, and then they will close their stores. And that means the community will have less choice, and the only place you can go to is a Londis or a Budgens or a One Stop or a Premier store or a Tesco Express. That’s why we’re against it.

You spoke about the possibility of future consolidation. What role do you think Landmark will play in this? If you put tobacco aside, we’re in rude health. In the short term we’ve had a great year, but my job is to make sure we have a vibrant future. So I talk to anybody and everybody about the options, to work out ways to make our members more competitive and sustainable. Last Christmas, catering buying group Fairway became an associate member of Landmark so we would be able to negotiate terms with their suppliers. We already have two other buying groups under Landmark as associates, Confex and Country range group, and I think there’ll be more of that. There’s no news at the moment, but you’ve got to keep looking at options because otherwise there won’t be a vibrant independent wholesale and retail channel. Look at Blakemore, our biggest member. A year ago, nobody knew that they were deciding to close down their cash and carry division. It was a failure and it saddens us all, and hundreds of people were made redundant. The good news was that two of our members did step up and buy two of the better depots (Parfetts and United Wholesale Grocers). But that is symptomatic of what is going to happen in our channel unless we find ways to compete and operate more efficiently.

How important do you think delivered wholesale is becoming? When I first started in the business, a lot of it was delivered wholesale. Then cash and carries became the vogue. But the way to run your business is to be in-store, not to be in a van or cash and carry thinking about carrying stock. So I think the better stores need delivery and that’s what a lot of our members offer. There’s very few of our members who don’t [use] delivery.

However, you have to be careful because if you’re not charging the right margin or you can’t charge the right price, you’re going to lose money

With the multiples disrupting the sector, are you looking to reformat the stores or improve the concept of Lifestyle Express? After launching the grey format a couple of years ago, we’ve got better stores than ever, and we will continue to refurbish and support our retailers through the members. Some of these guys will be doing £30,000-£70,000 a week, so there are good stores. We got up to a peak of 2,000 stores five, six, seven years ago but it’s not a numbers game, it’s a quality game. I’d rather have an estate of 500 but have 80% compliance rather than have 2,000 stores of poor quality.

Are you looking to cut back on non-compliant retailers? It’s a balance because we’re not a franchise. It’s not three strikes and you’re out. We have guidelines on best practice and core promotions but people are free to buy whatever they want to. So you will walk into a Lifestyle Express store and you’ll find Happy Shopper items, [just like you would in] a Premier store. As a rule, most of the better stores will stick to our guidelines because they know we know what we’re talking about. But when you get retailers who are clearly just awful, we do have the option to go to them and say “I’m sorry, we want to take our brand off your fascia”.Byline