As reported by The Grocer, the level of independents buying from multiples this Christmas increased by an order of magnitude, encouraged by a very evident relaxation of any quantity restrictions in many stores.

One customer of mine purchased in excess of 300 litre bottles of spirits from multiples to re-sell. Another has listened to George Osborne and sustained his local economy in the run-up to Christmas by employing white van men to buy as many cases as possible of selected beers. By early December he had bought more than £20,000 of stock.

There is no question that the multiples are great at marketing themselves as cheap on everything, while maintaining net margins that are the envy of their peers in other countries. The independent sector has been very slow to respond and while both symbol groups and wholesaler ‘retail clubs’ have redressed the balance a little, we are fighting a long-established ‘truth’ in consumers’ minds.

A further dilemma for independents is that the profitability equation is different. Customers have become used to doing trolley shops in the multiples that allow ultra-low or even loss-leading deals at key times. In most cases, the shopper in an independent store will not pick up a wide enough selection of other goods to justify the same depth of promotions.

This situation always generates ‘interesting’ debates between suppliers and wholesalers about level playing fields. Over the past few years these debates have led to the adoption of a pack differentiation strategy. Broadly, this involves concentrating on different packs in different sectors - for example, promoting litres of spirits in multiples, with 70cl bottles being the pack for independents, or 160s of tea bags in superstores versus 40s or 80s in convenience. While this has not taken away the pain of all the price comparisons, it has helped to lessen the impact.

My question is whether this is a sustainable tactic any longer. Our sector is getting better and independents increasingly see the value in up-selling and want to feature large multipacks of beer and litre bottles of spirits. We should be encouraged by the entrepreneurial spirit of our customers, but I believe the era of pack differentiation is at an end - and conversations about future activity with suppliers can only become more ‘interesting’.

I’d certainly be fascinated to know whether suppliers, who have always sworn to us that they only pay promotional monies on the basis of EPoS data, are going to honour the multi-million pound claims for promotional redemption of wholesale quantities when they arrive.

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