Following Booker's merger with Iceland, questions are being asked about the long-term future of the cash & carry sector as we know it. Consultant Dave Turnbull explains Cash & carry operators come in two broad types ­ those that are two weeks away from going bust and those that are well-run, focused operations with a clear vision for their future. With a new generation of independent retailers demanding greater professionalism of supply sources, the C&C customer base is changing rapidly ­ not least with an explosion in the number of catering buyers. Glendinning's research suggests that habit and convenience are the main reason to buy from a cash & carry. Low-priced fast sellers are the motivator for independent retailers while range and service are key for caterers. Competitive prices are important, of course, but consistency of pricing and good value are of more interest than limited cheap offers ­ a hi-lo pricing strategy appeals only to the "cherry pickers". C&Cs compete with other traditional delivery based wholesalers and multiple grocers for the business of the independent retailer and caterer, so knowing the customer base can help a business focus on its key competitors. Delivered wholesalers such as Palmer and Harvey McLane, Bidvest, Brake Brothers and Cearns and Brown, for instance, put salespeople on the road, use telesales and reduce customer overheads by delivering and then invoicing retrospectively. So is Booker's recent merger with Iceland a last-ditch survival move or a strategic masterstroke? It could let Booker reach a vast number of independents via Iceland's logistics system. This includes not only the home delivery network but also the wholesale frozen food delivery business built up since 1997. Winners in this market are characterised by certain fundamentals. They have good leadership, vision and a "can-do" mentality. They have internal alignment between depot operations, buying and marketing. They understand categories, customers and competitors and they use supplier input to drive their business. Successful wholesalers have a clear vision based on opportunities within the market. They can rise above the day-to-day issues, align resources and inspire staff. To this end, they empower their employees, letting them contribute new ideas and executing all plans and agreements effectively. Buying, marketing and operations often jostle for position, but if employees have clear roles and responsibilities, duplication of effort can be minimised. Communication between head office and branches must be open and regular; there has to be full and clear understanding of the business priorities and correct alignment of initiatives. Winners know that they are competing for limited supplier resources and see supplier understanding of their role as critical. They share information rather than use it as a power tool. They also have formal supplier performance criteria in place, carry out joint working with the right suppliers in the right categories and have high levels of supplier penetration. Few cash & carry wholesalers consistently achieve this standard because most are too busy keeping their heads above water. Nevertheless, a growing number are doing the right things. Booker has introduced a new customer information system and can now share this with selected suppliers ­ Procter & Gamble used Booker's database of nursing homes to develop a promotional campaign for washing powder, for example. Hancocks is also initiating joint working programmes with suppliers. The challenge is to develop a business relationship with customers rather than just open the front door of the warehouse and put prices on the pallets. Perspective is fundamental. Often suppliers see wholesalers as a way of shifting volume instead of a cost-effective route to market with particular importance for impulse and out-of-home purchases. Many suppliers focus on the multiple grocers. Field forces have been replaced by account managers and category experts. Price/promotion negotiation at head offices sucks up time and resources. In the C&Cs, meanwhile, product stockpiles are undermining profit. Nowadays, however, leading-edge suppliers recognise the importance of helping retailers to grow categories through customer development programmes and direct sales calling on retailers and caterers. "Pull through" strategies are replacing "sell in" strategies. Coca-Cola, Walkers and Cadbury/Trebor are good examples of suppliers working effectively with wholesalers and their sustained market performance should come as no surprise. Dave Turnbull is director of consulting at Glendinning Management Consultants {{MANAGEMENT FEATURE }}

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