Professional Documents
Culture Documents
ISBN 1-85765-881-7
Cash & Carry Outlets
3. Industry Background.................................................................... 11
4. Competitor Analysis..................................................................... 15
6. Buying Behaviour......................................................................... 29
9. Forecasts ...................................................................................... 40
Contents
Executive Summary 1
1. Market Definition 2
INTRODUCTION .......................................................................................................................2
MARKET POSITION .................................................................................................................2
Table 1: The UK Grocery Wholesaling Market by Type of Operators (£m and %),
1996 and 1997 ......................................................................................................................3
MARKET SECTORS.................................................................................................................3
Table 2: The UK Cash and Carry Market by Type of Operator
(% of total sales), 1997.........................................................................................................4
MARKET TRENDS....................................................................................................................4
Grocery Wholesale Trends ..................................................................................................4
Table 3: Index of Consumer Expenditure and Grocery Wholesaling Turnover
(index 1992=100), 1992-1997..............................................................................................5
Catering Sales ......................................................................................................................5
Delivered Trade ...................................................................................................................5
Table 4: The UK Grocery Wholesaling Market and Penetration by Delivered Trade
(£m and %), 1990-1997........................................................................................................6
2. Market Size 7
PRODUCT MIX..........................................................................................................................9
Table 8: Grocery Cash and Carry Product Mix (%), 1996 ..............................................10
3. Industry Background 11
4. Competitor Analysis 15
THE MARKETPLACE.............................................................................................................15
Table 10: Number of Depots of the Leading Cash and Carry Groups, 1997 ................15
Own Labels.........................................................................................................................16
Table 11: Selected Own-Label and Exclusive Label Brands of
Leading Cash and Carry Distribution, 1997...................................................................17
Own-Label Development...................................................................................................18
Today’s Group ....................................................................................................................18
Booker .................................................................................................................................18
MARKET LEADERS ...............................................................................................................19
Table 12: Turnover of Selected Leading Cash and Carry Companies
(£m), 1997/1998..................................................................................................................19
Cash and Carry Operators................................................................................................19
Booker PLC ........................................................................................................................19
Financial Results ...............................................................................................................20
Makro Self Service Wholesalers Ltd ................................................................................20
Financial Results ...............................................................................................................21
Watson & Philip PLC ........................................................................................................21
Financial Results ...............................................................................................................21
Batleys PLC........................................................................................................................21
Financial Results ...............................................................................................................22
Bestway Cash & Carry Ltd...............................................................................................22
Financial Results ...............................................................................................................22
AF Blakemore and Sons Ltd.............................................................................................22
Financial Results ...............................................................................................................23
STRENGTHS...........................................................................................................................27
WEAKNESSES .......................................................................................................................27
OPPORTUNITIES....................................................................................................................27
THREATS ................................................................................................................................28
6. Buying Behaviour 29
8. Current Issues 36
NEW OPENINGS.....................................................................................................................36
Costco ..................................................................................................................................36
Hyperama ...........................................................................................................................36
Big Red Shed ......................................................................................................................36
Wrights of Horwich............................................................................................................36
PACKAGING WASTE LEGISLATION ...................................................................................37
INFORMATION TECHNOLOGY.............................................................................................37
CORPORATE ACTIVITY ........................................................................................................38
Bellevue/BWG ....................................................................................................................38
Dhamecha Foods................................................................................................................38
AG Parfett and Sons..........................................................................................................38
Makro ..................................................................................................................................38
Booker .................................................................................................................................38
DUTY FRAUD..........................................................................................................................39
9. Forecasts 40
INTRODUCTION .....................................................................................................................43
DEFINITIONS ..........................................................................................................................43
FURTHER INFORMATION.....................................................................................................43
Batleys PLC........................................................................................................................44
Bestway Cash & Carry Ltd...............................................................................................45
Booker PLC ........................................................................................................................46
NISA-Today’s (Holdings) Ltd ...........................................................................................47
Makro Self Service Wholesalers Ltd ................................................................................48
Watson & Philip PLC ........................................................................................................49
Associations ........................................................................................................................50
Periodicals ..........................................................................................................................51
Directories ..........................................................................................................................52
General Sources .................................................................................................................52
HBI UK Information Sources .............................................................................................53
Government Publications..................................................................................................55
Other Sources .....................................................................................................................55
Executive Summary
The past few years have seen a dramatic concentration of the cash and
carry trade, with increase in corporate activity, especially among the
multiple depot companies. Booker’s acquisition of Nurdin and Peacock in
November 1996, created the largest cash and carry group in the UK.
Recently, Makro, the Dutch-owned wholesaling group, was also taken over
by the German group, Metro, for £1.7bn.
Overcapacity in the cash and carry trade, together with intense price
competition, has led to many operators moving into new markets, e.g.
catering or food service, or adopting a policy of range expansion by
widening their product range, e.g. into pet foods. Many have also
expanded their delivery service to servicing the independent retailers. On
the operational side, increased investment in centralised distribution
systems and information technology (IT), has enabled companies to
operate more effectively, efficiently and economically.
The future looks less optimistic for the cash and carry trade, with the
continued growth of the delivered sector, while increasing dominance of
the major grocery multiples, together with the impending economic
slowdown, suggest that the cash and carry operators will continue to
operate in a difficult and extremely competitive marketplace. Key Note
forecasts that the cash and carry sector will grow on average by 2.6%
year-on-year from 1998 to £10.7bn in the year 2002.
1. Market Definition
INTRODUCTION
Cash and carry is defined as wholesale depot operations from which retail
customers purchase goods and provide their own transport. Credit terms
are normally available, while a limited delivery service may be offered to
larger customers. Cash and carry operators buy goods in large quantities
from the manufacturer or buying group and then sell these goods to their
retail customers at prices only slightly above what they paid for them.
They accept low net profit margins, in return for high-volume sales, and
thus are able to keep costs to a minimum.
MARKET POSITION
The cash and carry trade forms an integral part of the UK wholesaling
industry, linking suppliers and smaller retailers in the grocery market.
The grocery wholesaling market was valued at £1.1bn in 1997; of this,
cash and carry represented the largest share, taking 63%, with sales
estimated at £9.51bn. The delivered trade took another 35.6%, with the
remaining 1.4% accounted for by mixed businesses. According to the
Institute of Grocery Distribution (IGD), the delivered trade is wholesalers
offering a full-range delivery service directly to the trade customer’s
premises, for which an additional fee is normally charged.
Mixed businesses are those wholesalers who provide both a cash and carry
and delivery service from the same depot, with approximately a 50/50
split of the business.
e
1996 1997
£m % £m %
MARKET SECTORS
The cash and carry trade can be categorised into three main types of
operators:
By far the largest sector comes from the multiple depot companies, of
which the top three are Booker (including Nurdin and Peacock), Makro
and Batleys. This sector accounted for a 54% value share in 1997. The
major multiples have their own distribution networks, which channel
suppliers’ deliveries from the UK and worldwide sources into regional
distribution centres, from which deliveries are made by in-house transport
to their customers, including the larger supermarkets and superstores.
Buying groups represent the fastest growing sector, their share increasing
to 44% by value in 1997. The smaller, unaffiliated independents tend to be
solo depot operators and they accounted for a declining 2% market share
in 1997.
Type of Operator
Multiple depot operators 54
Buying groups 44
Independents 2
Total 100
Source:Key Note
MARKET TRENDS
1997/1998 has seen increasing concentration of the cash and carry sector,
with the continued growth of the major multiple depot operators, e.g.
Booker, Batleys and Makro. The merger of Booker with Nurdin and
Peacock, created the largest cash and carry group in the UK.
Rationalisation has also taken place in the delivered trade sector. The
importance of national and regional food service contracts has meant that
many delivered wholesalers have needed to expand, whether by
acquisition or other forms of investment, e.g. Watson & Philip has
national capabilities following its purchase of smaller wholesalers, and
CJ Lang has widened its catchment area through the recent purchase of
Young and McMillan.
Catering Sales
With the shrinking of their core customer base, i.e. independent grocers,
and the tightening of margins caused by intense price competition, many
wholesalers have increasingly moved towards the catering or food service
sector. Sales to caterers have risen from 17% of the total market in 1991,
to around 38% in 1997, while the grocer’s share has fallen from 68% to
60% over the same period. NISA-Today’s has recently revamped its
Kitchen King catering range with new design, giving the own labels a
fresh and appealing identity.
Delivered Trade
Another important trend has been the continued shift towards the
delivered trade, which reflects the growth of larger independent retailers,
e.g. Symbol groups which generally source most of their stocks from the
groups approved wholesalers. The need for temperature-controlled
transport for the fast-growing chilled and frozen foods market, has also
favoured the delivered trade, whose share of the grocery wholesaling
market has risen from 26.4% in 1990, to an estimated 35.6% in 1997.
£m % Share
The benefits of delivered wholesale to the bigger retailers are that they
are able to exercise tighter control over their business and also to take
advantage of labour-saving developments such as IT-ordering links. Many
delivered wholesalers have also developed schemes which make using
their service more efficient, while others also offer financial benefits, e.g.
Palmer & Harvey McLane offer retailers a service whereby they can order
goods from other suppliers and have them charged to their Palmer &
Harvey account.
2. Market Size
Between 1992 and 1997, the cash and carry trade grew by 9.9%, compared
with 27% for the wholesaling sector as a whole.
£m Index (1992=100)
The cash and carry trade has seen major structural changes in recent
years. The marketplace remains extremely competitive, while changes in
the consumer base have forced many cash and carry operators to adopt a
strategy of range expansion by moving into new markets, e.g. catering or
food service, or expanding their product portfolio to attract new customers,
e.g. pet foods.
Wholesalers are not only competing against each other, but also face
increasing pressure from both the discounters and the mainstream
NUMBER OF DEPOTS
The number of depots in the cash and carry sector has progressively
declined since 1993, when it reached 544. The past few years have seen an
accelerated decline, mainly due to the increasing move towards
rationalisation and cost reductions in the trade. However, this is
compensated for by the increase in average sales per depot, which rose to
£18.06 in 1996. Key Note estimates that this figure will have reached
£19.21 in 1997.
Generally, depot size is partly dependent on the type of products that are
stocked by the wholesaler, and also on the company’s stock management
policy, i.e. some operators may require large warehouse space which would
inevitably increase costs within the supply chain.
Many of the larger cash and carry operators have been increasing their
depot size in recent years, reflecting the need for greater efficiency. It is
estimated that the average size of depots has doubled since 1990, from
around 40,000 square feet to an estimated 80,000 square feet in 1997.
Makro has the largest depots, with an average size of 128,600 square feet,
reflecting the diversified range of products stocked. Batleys also has
depots of an average size of 93,200 square feet.
Makro 128,600
†
Batleys 93,200
Bestway 86,000
†
Booker Cash and Carry 82,080
†
Nurdin and Peacock 82,079
Parfetts 81,250
Musgrave 81,000
Blakemore 61,700
Trademarket 39,500
Knox 19,600
† — 1995 figures
PRODUCT MIX
The growth of convenience foods has led cash and carry operators to stock
an increasing range of convenience lines, e.g. ready meals, snacks and
dairy products.
Total 100.0
3. Industry Background
RECENT HISTORY
The cash and carry trade is a relatively new sector, which started in the
1960s. It comprises mainly independent operators. One of the first cash
and carry companies was Batleys, which started in 1958, and was followed
in the early 1960s by Nurdin and Peacock.
The growth of the cash and carry sector in the 1960s and 1970s was
paralleled by the growth of the voluntary buying chains and the
independent retailer’s association.
The cash and carry sector has undergone massive development in recent
years, adapting to new market conditions in a number of ways. These
include an increasing emphasis on the catering or food service sector,
expansion of the product base, e.g. pet foods becoming more efficient and
marketing oriented, with information technology (IT) and
merchandising-driven improvements. Better management systems have
resulted in smaller, but more profitable depots, while the adoption of
integrated IT systems has played a crucial role in optimising stock
turnover and improving buying efficiency.
Many cash and carry operators have also improved their own-label lines
and developed store fascia for their retail customers in order to promote
brand and store loyalty.
As with the food industry, the wholesaling cash and carry trade is also
effected by European Union (EU) legalisation, the most recent being the
INDUSTRY CONCENTRATION
†
Total 4,485 100.0
Barriers to entry are high, due to the high capital costs of securing
suitable large premises, while trading volumes would also necessitate a
significant outlay in terms of stock and equipment.
The past few years have seen increasing concentration of the cash and
carry sector. Overcapacity has put intense pressure on the smaller
suppliers, and has also led to major restructuring and rationalisation by
the leading operators, e.g. Booker’s acquisition of Nurdin and Peacock in
November 1996 created the largest cash and carry group in the UK, with a
40.6% value share in 1997. Also, at the end of 1997, the Dutch group,
SHV, owners of the Makro cash and carry chain, sold its 60% stake in the
company to German group, Metro, for £1.7bn.
TRADE ASSOCIATIONS
The FWD also holds at least three annual conferences and produces a
yearbook, as well as two trade magazines for its members, Pro Wholesaler
and Catering Wholesaler.
4. Competitor Analysis
THE MARKETPLACE
Traditionally, the cash and carry trade has been highly fragmented, with
many small operators often serving local markets. However, with the
changing structure of the marketplace, there has been a move towards
greater concentration, with the continued growth of the multiple depot
operators.
Booker remains the dominant operator, with around 181 depots. Other
leading players include: Landmark Cash & Carry, with 83 depots; Makro
Self Service Wholesalers, with 27 depots; Batleys, with 14 depots; and
Bestway, with 16 depots.
Total 545
Source:Company information
Most of the independents and smaller chains are part of buying groups,
the two leading ones being NISA-Today’s and Landmark Cash & Carry,
while those unaffiliated operators tend to be specialists in particular
Own Labels
Own labels have become increasingly important in the cash and carry
trade, helping to build up consumer loyalty. Also, as they are generally
cheaper than the major brands, they give retailers a better profit margin.
AG Parfett
& Sons As in Landmark
Source:Company information
Own-Label Development
Today’s Group
Booker
Following the takeover of Nurdin and Peacock, Booker has retained the
Happy Shopper label in favour of Family Choice. Family Choice Value is
being used as the value line own-label offer.
MARKET LEADERS
Table 12 analyses the turnover of the leading cash and carry groups in the
UK.
£m Year End
The following section presents a brief analysis of the leading cash and
carry companies, including buying groups in the UK.
Booker PLC
Booker is the Mace symbol group wholesaler for England and Wales,
serving just under 400 Mace stores. The company has developed a variety
of fascias and formats for its cash and carry customers, e.g. Premier for
Booker recently completed the strategic review of its cash and carry
business under the Project Heartland programme, which aims to optimise
stock availability and minimise stock holdings through the creation of five
regional distribution centres. The integration process has resulted in the
closure of 32 branches, with 181 remaining. All the former Nurdin and
Peacock branches that have been retained feature new livery layouts and
advanced management systems.
• Financial Results
For the year ending 31st December 1997, turnover for Booker PLC rose by
18.5% to £5.27bn, while pre-tax profits also increased dramatically to
£71.4m, compared with £13m the previous year. The company’s latest
interim results to 10th September 1998, show group pre-tax profit and
exceptionals halved to £11m. Sales in Booker Cash and Carry were also
down by 4.9%, mainly due to the 14% reduction in selling space, as a
result of closing 33 cash and carries, but sales per square feet rose by 7%.
Operating profit in Booker’s Wholesale division was down 33% to £17.5m
and turnover also fell by 3.6% to £1.7bn. The company promised
improvements in the second half, as a result of the completion of the
Project Heartland centralised distribution system, and the integration of
the Nurdin and Peacock branches.
Makro Self Service Wholesalers Ltd is part of the Dutch company, SHV
Makro NV, which owns 60% of the business. In the UK, Makro operates 27
cash and carry depots, serving a wide variety of customers, of which 30%
are grocery retailers and 40% caterers. At the beginning of August 1997,
the company formed a trading alliance with Spar Landmark. Makro
stocks a total of some 35,000 lines, including grocery and non-foods.
Own-label lines account for more than 15% of the company’s product
range; the leading brands include Aro (general grocery) and Charles
House (drinks/tobacco).
At the end of 1997, Metro, the German group, which already owned 40% of
Makro, purchased the remaining 60% for £1.7bn. Makro’s 27 stores in the
UK will be added to Metro’s portfolio, which totalled 197 stores in 16
European countries.
• Financial Results
For the year ending 31st December 1997, turnover decreased to £905.7m,
while there was a pre-tax loss of £2.8m.
The Watson & Philip group comprises three main trading subsidiary
companies: Alldays Stores Ltd; W and P Foodservice Ltd; and
Trademarket Ltd; the largest of which is Alldays, the UK’s leading chain
of specialist convenience stores. W and P Foodservice is a leading
wholesale supplier to the catering industry and operates ten depots in the
UK, while Trademarket is engaged in grocery wholesaling, and operates
nine cash and carry outlets, mainly based in Scotland.
• Financial Results
For the year ending 2nd November 1997, pre-tax profits increased by
14.5% to £21.5m, on a turnover which rose by 10.6% to £637.5m. For
Trademarket, the year produced another solid performance, with turnover
of £132.2m, although operating profits were down by 8%, reflecting
competitive pressures. For the future, Trademarket will seek to increase
sales through innovative services to counteract the decline in the
traditional cash and carry customer base.
Batleys PLC
• Financial Results
For the year ending 2nd May 1998, turnover dropped from £538.7m to
£525.2m, although figures are for a 53-week period for 1997. Pre-tax profit
was up by 29% to £12.3m, although the results highlight the continued
problem of widespread bootleggling of tobacco and alcohol. Nevertheless,
there was a clear improvement in the financial performance of the group,
with its established warehouses providing another solid performance.
Established in 1976, Bestway Cash & Carry Ltd is the largest member of
the Landmark Cash & Carry group, with 16 branches. It has around
39,000 registered customers and employs 1,400 people. Although
primarily based in the South East, the company has pursued an
expansionary policy in recent years. Bestway targets trade customers
only, comprising 75% retailers, i.e. licensed grocers, convenience stores
and CTN operators, off-licences and 25% private caterers. Its leading own
label is Best-In, which includes some 500 grocery and non-grocery lines,
together with a range of exclusive wines, sprits and beers.
• Financial Results
For the year ending 30th June 1997, the company’s turnover increased by
1.2% to £454.2m, while pre-tax profit was also up by 9.9% to £10.9m.
This West Midlands-based cash and carry group operates seven wholesale
depots, of which six are cash and carry. The company is a member of the
Spar Landmark buying group, and is the registered supplier for 550 Spar
stores in the Midlands and East Anglia, of which 154 are co-owned Spar
stores. The company’s main customers are independent grocery retailers
which account for 56% of sales, and which also account for 93% of
delivered trade. Caterers, public houses and CTN retailers are becoming
increasingly important. Around 25% of cash and carry sales are own label,
totalling some 2,555 lines. The leading brands include Spar, Lifestyle,
Pricepoints and Caterers Kitchen.
• Financial Results
For the year ending 30th April 1997, the company’s turnover fell slightly
to £410.6, while there was a 18% rise in pre-tax profits to £3.9m.
AG Parfett & Sons Ltd a North West-based cash and carry group was
established in 1980, and currently operates five cash and carry depots
with total selling area of 365,000 square feet. The majority of its
customers are independent grocers, which account for just over 88% of
sales, with off-licences and forecourts taking the remaining 12%.
• Financial Results
For the year ending 30th June 1997, the company’s turnover increased by
3.3% to £159.5m, while pre-tax profits fell by 1.6% to £2.4m.
W Wing Yip PLC is one of UK’s leading specialist food importers from the
Far East, and represents one of the UK’s largest Chinese cash and carry
warehouse chains. From its humble beginnings in Digbeth, Birmingham,
the company has expanded to other major cities which have a strong
Chinese population. Today, the company operates four warehouses across
the UK, selling more than 2,500 oriental product lines and utensils, and
supplying up to 2,000 Chinese restaurants. Goods are sold from both cash
and carry, and delivered trade.
Recently, the company launched a £5m pagoda-style office complex for the
local Chinese community.
Buying Groups
The group also has a number of umbrella brands, which include Breakfast
Club (cereals), Bodyfine (health and beauty), Fun Factory (children’s
confectionery and drinks) and Premier (US cola, crisps and snacks).
Recent launches include the Heritage label for chilled foods and own-label
stationery under the Knightbridge and Pen Pushers names.
• Financial Results
In the year to 5th April 1997, turnover rose by 20.8% to £495.5m, while
pre-tax profit also increased, by 47.7% to £1.2m.
Landmark Cash & Carry Ltd is a wholesale-owned cash and carry group
with around 30 wholesale members operating 65 depots. Total
membership is over 100,000 independent customers. Following recent
restructuring, the group currently concentrates its activities on three
major areas: delivered wholesale catering; cash and carry; and
convenience stores. Landmark operates a strong own-label policy, the
range comprises over 400 retail products under the Lifestyle label and a
price fighting range under the Pricepoint brand, which incorporates
cigarettes. For the food service sector, there is also a range of products
under Caterers Kitchen.
During 1997, the company celebrated its 25th year of trading with a
launch of a £1.25m anniversary promotional programme comprising a
wide range of business, social and charitable events.
The main bulk of advertising expenditure by the cash and carry trade is
mainly concentrated on price and product-led promotions, and retailers’
promotions. The aim of both is to enable their customers, i.e. the
independent retailers, to compete on price with the major multiples and
discount retailers, and also to encourage customer loyalty by offering
discounted prices on products. Point-of-sale (POS) and other
merchandising materials, including posters, may also be provided for
specific lines, including own brands by buying groups, and cash and carry
labels.
The only cash and carry company listed in ACNielsen MEAL is market
leader, Booker, which spent some £479,100 on main media advertising for
the year to June 1998; while a further £437,000 was spent by the Symbol
group, Spar, on promoting its own labels.
Recent Promotions
Trademarket
Today’s Group
the featured lines changing every 2 weeks, e.g. buy two cases, get one case
free.
Booker Cash and Carry devised a guide to the World Cup for its
customers. The eight-page booklet gave hints on display and production
selection, while a range of wines and champagne were introduced with
France 1998 labels.
NISA-Today’s gave away World Cup Final tickets in its ‘Strike it Lucky’
promotion, which began on 1st June 1998. Based on a spot-the-ball theme,
the scheme featured 30 brands and retailers were allowed one attempt at
finding the ball for each promotional item purchased.
5. Strengths, Weaknesses,
Opportunities and Threats (SWOT)
STRENGTHS
• Cash and carry represents the largest sector in the UK grocery
wholesaling market, with sales reaching £9.51bn in 1997.
• The recent merger between Booker and Nurdin and Peacock will provide
serious challenge to the major grocery multiples.
WEAKNESSES
• The cash and carry trade has become increasingly concentrated, with a
shrinking customer base, thus limiting opportunities for organic growth.
OPPORTUNITIES
• There are tremendous marketing opportunities for UK cash and carry
companies to expand in continental Europe, especially the fast emerging
Eastern European countries where British expertise in wholesale
distribution would face little competition.
THREATS
• Cross-channel trade and illegal ‘bootlegging’ of alcohol and cigarettes
continues to pose a serious threat to the cash and carry trade.
• The smaller cash and carry independents and unaffiliated groups are
vulnerable to takeover from the major multiple depot operators.
6. Buying Behaviour
GENERAL TRENDS
The main customer of the cash and carry trade is the independent grocer.
A recent trade survey carried out by the trade magazine, Independent
Retail News, reveals that around 92% of independent grocers, off-licences,
confectioners, tobacconists and newsagents (CTNs), and convenience
retailers use a cash and carry, and more than half of them visit one at
least three times a week.
The other major customer group, caterers, accounted for a 36% share in
1996. Other customers include owners of CTNs, convenience stores and
petrol forecourts.
Since the beginning of the 1990s, there has been a progressive shift
towards caterers, who have been taking an increasing share of the market,
while grocery retailers have seen an erosion in their business.
1990 62 17 15
1992 66 29 5
1994 62 34 4
1996 61 36 3
1997e 60 38 2
GROCERY SALES
Although the total grocery market has increased in value by 40% since the
beginning of the 1990s, the share taken by the independent grocer has
shrunk from 10.3% in 1990 to 7% in 1997. This is mainly as a result of the
increasing dominance of the major grocery multiples, whose share has
grown from 79% to 83% over the same period.
e
1990 1992 1994 1995 1997
With the shortage of their core customer base, many smaller cash and
carry operators were forced to close, while the larger ones underwent a
period of restructuring and rationalisation in order to adapt to the new
market conditions. To compete with the major multiples, many of the
smaller independent retailers have banded into symbol groups or
voluntary buying groups. The largest is NISA-Today’s, which operates a
nationwide chain of cash and carry outlets, with competitive prices and an
extensive own-label range. Another major retailing group is Spar, the
leading convenience store symbol group in the UK, with around 2,665
stores. The product range of the symbol groups and independent retailers
are concentrated in three core grocery areas; food, alcohol and tobacco,
where sales of all these products have expanded rapidly in recent years.
Strong promotions were also seen as vital for retailers, who ranked them
second; but less important to caterers, who ranked promotions fifth. For
retailers, the range of services offered was ranked as the fifth most
important requirement; while this is found to be less important for
caterers and ranked ninth in their assessment.
The food service or catering sector has been one of the most dynamic
sectors of the leisure industry. The past decade (1988 to 1998) has seen a
noticeable shift in the percentage of consumer food spending towards food
service channels. This has come about as a result of social and
demographic changes, which have greatly influenced consumer lifestyles
and eating patterns. Increased pressure on time has led to many
consumers eating or purchasing more convenience foods outside the home.
This has been further encouraged by the continued popularity of fast foods
and the growth of foodcourts in non-traditional food service channels, such
as travel locations, e.g. airports, motorway service stations, shopping
malls and leisure venues. The emergence of a strong lunch market has
also boosted catering sales.
Whilst the larger catering companies tend to buy direct from the major
food suppliers, the independent caterer, restaurant and hotels favour a
delivery service from the cash and carry operators. The importance of this
lucrative sector has led to the greater development of own-label lines by
the leading cash and carry operators, with emphasis on quality,
e.g. NISA-Today’s Kitchen King range recently underwent a
comprehensive relaunch and design to give the own-label products a fresh
and appealing identity.
The increasing importance of catering sales can be seen in that most of the
multiple depot operators are biased towards that sector, e.g. 75% of
Booker Belmont Wholesale’s customers are caterers, while for Landmark,
the proportion is 60% and Makro 40%. It is likely that the proportion of
catering sales will increase in the future, as more cash and carry operators
move into this fast-growing sector.
Outside suppliers to the cash and carry trade mainly comprise the food,
drink and tobacco companies, which supply the bulk of stock going
through the depots. Other important suppliers include the
distribution/logistics companies, and those providing information
technology (IT) systems and computer software.
Suppliers of food, drink and tobacco to the cash and carry trade represents
some of the UK’s largest food manufacturers. The Cash and Carry Big
Book lists the major 50 suppliers, which includes Anchor Foods, Birds Eye,
United Biscuits, Dairy Crest Group, Coca-Cola Schweppes, Imperial
Tobacco, Mars Confectionery and Nestlé UK. In alcoholic drinks, there are
around 20 top suppliers, the leading names include Allied Domecq,
HP Bulmer, Carlsberg Tetley, Guinness Brewing GB, IDV UK, Matthew
Clark, Moet and Chandon, Seagram UK Ltd, United Distillers UK and
The Whitbread Beer Company. In addition to manufacturer brands, many
of the leading food companies supply own-label products.
DISTRIBUTION/LOGISTICS
Effective distribution and improved service levels are vital for cash and
carry operators. The leading suppliers are the distribution/logistics
companies, many of which are part of the international transport groups.
The leading companies include TDG Harris, Exel Logistics and Salvesen
Logistics.
8. Current Issues
NEW OPENINGS
Costco
Hyperama
Wrights of Horwich
INFORMATION TECHNOLOGY
CORPORATE ACTIVITY
Bellevue/BWG
Dhamecha Foods
Makro
At the end of 1997, the German group, Metro, purchased the remaining
60% of Makro, the Dutch-owned cash and carry group, for £1.7bn. Makro’s
27 stores will be added to Metro’s portfolio, which totalled 197 stores in 16
European countries. The move will have little impact on the operational
side of the business.
Booker
At the time of writing (October 1998), Budgens had decided to pull out of
merger talks with Booker, the troubled cash and carry group. This is the
second unsuccessful merger bid, following Somerfield, the supermarket
chain’s, attempted merger bid in July 1998, blaming concerns about the
DUTY FRAUD
9. Forecasts
The key trends in grocery retailing to the year 2002, together with the
impending economic slowdown, suggest that the cash and carry sector will
continue to operate in a difficult and extremely competitive marketplace.
Faced with a shrinking customer base, cash and carry operators will have
to look for new market opportunities, such as catering, or may even
compete with retailers by moving into warehouse-style trading, such as
Costco, in order to improve growth prospects. They will have to become
more efficient through improvements in customer services and further
investment in new products, e.g. fresh and chilled foods and processes.
Key Note forecasts that the cash and carry sector will grow on average by
2.6% year-on-year from 1998, to £10.7bn in 2002. Its share of the grocery
wholesale market will fall from 61% to 56% over the same period, while
that for the delivered trade will increase from 37% to 42%.
£m % Change Year-on-Year
Source:Key Note
PRODUCT DEVELOPMENTS
INFORMATION TECHNOLOGY
OVERSEAS EXPANSION
There is considerable potential for overseas expansion for the UK cash and
carry companies, especially in Europe and the Far East. The leading
players, e.g. Booker and Makro, already have a significant presence in
Europe. The future might see more partnership agreements and joint
ventures, e.g. Booker recently set up joint ventures with Sezginler in
Turkey and Inchcape in Thailand, and also formed a partnership with
Jeromimo Martins in Poland. An area which offers tremendous expansion
opportunities is Eastern Europe, where cash and carry distribution is
relatively unexplored.
CONCLUSIONS
While cash and carry will still remain in existence for the foreseeable
future, the key trend is towards multichannel supply chain systems, as
the grocery wholesaling and retailing sector is rapidly consolidating.
Flexibility will be the watchword for the future, as wholesalers need to
respond to the changing needs of their customers and the marketplace.
There are still enormous opportunities for expansion in the cash and carry
trade. However, its future success and survival will depend on a changing
of attitudes and becoming more customer focused, as well as building
closer supply relationships that would deliver the breadth of product
range, as well as competitive prices.
INTRODUCTION
The following section contains financial profiles of some of the principal
companies identified as operating within the market sector discussed in
this report. The financial results of some of the important names within
the sector may not be reported if:
• Their principal activities are so varied that their results are not
considered applicable to the survey
• They are no longer trading as separate companies
• Their financial data is very out of date
DEFINITIONS
A company which has a ‘Y’ consolidated value has filed consolidated
accounts for the relevant year.
† — denotes that the growth rate calculation is invalid, because the
figures either move from positive to negative or from negative to positive.
Turnover (Sales)
This includes all income derived from the principal activities of the firm,
net of VAT. It encompasses UK sales, exports and overseas and
intercompany sales.
Pre-Tax Profits
The net trading profit figure after deduction of all operating expenses,
including depreciation and finance charges but before deduction of tax,
dividends, subventions or group relief, and other appropriations. Where
applicable, it will include the share of profits and losses of associated
companies. Items described by the company as exceptional are included;
extraordinary items are excluded.
Profit Margin
Pre-tax profits expressed as a percentage of sales.
Average Remuneration
Total employee remuneration divided by the number of employees.
Sales per Employee
Sales divided by the number of employees.
FURTHER INFORMATION
For more detailed financial information telephone ICC Customer Services
on:0171-426 8511
BATLEYS PLC
Brand Information
The leading own brands are Best Buy and Batley’s Catering.
Recent Developments
The company opened its 15th cash and carry outlet in Nottingham in April
1997, while another is scheduled to open in Cardiff in October 1998.
Financial Profile
Year End 29/04/95 27/04/96 03/05/97 02/05/98
Weeks 52 52 53 52
Consolidated Y Y Y Y
Sales & Profits
Sales (£000) 475,509 488,422 538,709 525,219
Pre-tax Profits (£000) 6,008 6,513 9,529 12,294
Profit Margin (%) 1.26 1.33 1.77 2.34
Year-on-Year Growth
Sales (%) 1.9 2.7 8.2 -0.6
Pre-tax Profits (%) 4.7 8.4 43.5 31.5
Employees
No. of Employees 1,435 1,519 1,611 1,665
Average Remuneration (£) 10,601.4 10,577.4 10,695.0 11,550.2
Sales per Employee (£) 331,365.2 321,541.8 328,084.8 315,446.8
Brand Information
The company’s leading own brands include Best-In, K2, White Pearl, Best Vin
and Park Royal.
Recent Developments
In April 1997, the company launched a 3-week own-label promotion with the
slogan ‘You can’t get better than free’, offering free products on selected grocery
lines.
Financial Profile
Year End 30/06/94 30/06/95 30/06/96 30/06/97
Weeks 52 52 52 52
Consolidated N N N N
Sales & Profits
Sales (£000) 428,420 438,228 449,001 454,244
Pre-tax Profits (£000) 9,268 9,756 9,952 10,941
Profit Margin (%) 2.16 2.23 2.22 2.41
Year-on-Year Growth
Sales (%) -0.6 2.3 2.5 1.2
Pre-tax Profits (%) 13.2 5.3 2.0 9.9
Employees
No. of Employees 718 737 796 832
Average Remuneration (£) 16,149.0 15,594.3 14,427.1 16,308.9
Sales per Employee (£) 596,685.2 594,610.6 564,071.6 545,966.3
BOOKER PLC
Brand Information
Leading own brands include Happy Shopper and Family Choice in groceries,
Chef’s Larder in catering, Malt House Vintners in drinks, and Tuck Shop
confectionery.
Recent Developments
Booker recently completed the strategic review of its cash and carry operation
under the Project Heartland programme, which created five regional
distribution centres. Recently, the company’s cash and carry operation and food
service business was the subject of two unsuccessful bids from leading
supermarket chains, Somerfield and Budgens.
Financial Profile
Year End 31/12/94 30/12/95 28/12/96 27/12/97
Weeks 52 52 52 52
Consolidated Y Y Y Y
Sales & Profits
Sales (£000) 3,722,300 4,222,900 4,442,600 5,265,000
Pre-tax Profits (£000) 69,800 82,800 13,000 71,400
Profit Margin (%) 1.88 1.96 0.29 1.36
Year-on-Year Growth
Sales (%) 5.7 13.4 5.2 18.5
Pre-tax Profits (%) -18.1 18.6 -84.3 449.2
Employees
No. of Employees 21,049 22,191 22,160 24,404
Average Remuneration (£) 11,292.7 11,693.9 12,111.9 12,153.8
Sales per Employee (£) 176,839.8 190,297.9 200,478.3 215,743.3
Brand Information
The company’s leading brands include Today’s Price, Right Price, Premier Gold,
Fun Factory and Breakfast Club grocery lines. Kitchen King is the catering
brand, while Cellars International is the drinks brand.
Recent Developments
In early 1998, the company’s Wholesale division, Today’s, was relaunched as
the Today’s Group, complete with new logo and trading divisions. A major
feature of the launch was the development of an interchannel information
technology (IT) system linking retailers, wholesalers and central office.
Financial Profile
Year End 26/03/94 01/04/95 30/03/96 05/04/97
Weeks 52 53 52 53
Consolidated Y Y Y Y
Sales & Profits
Sales (£000) 345,360 384,117 410,193 495,452
Pre-tax Profits (£000) 250 552 793 1,171
Profit Margin (%) 0.07 0.14 0.19 0.24
Year-on-Year Growth
Sales (%) 10.4 9.1 8.8 18.5
Pre-tax Profits (%) -40.9 116.6 46.4 44.9
Employees
No. of Employees 111 116 122 135
Average Remuneration (£) 17,108.1 17,973.3 20,278.7 21,170.7
Sales per Employee (£) 3,111,351.0 3,248,875.0 3,362,238.0 3,600,769.0
Brand Information
The company’s leading brands are Aro, Charles House, Village Cross and Baltic
EB.
Recent Developments
At the end of 1997, the German group Metro, which already owned 40% of
Makro, purchased the remaining 60% for £1.7bn.
Financial Profile
Year End 31/12/94 31/12/95 31/12/96 31/12/97
Weeks 52 52 52 52
Consolidated N N N N
Sales & Profits
Sales (£000) 856,169 872,892 909,788 905,676
Pre-tax Profits (£000) 6,909 -6,370 -38,668 -2,843
Profit Margin (%) 0.81 -0.73 -4.25 -0.31
Year-on-Year Growth
Sales (%) 4.2 2.0 4.2 -0.5
Pre-tax Profits (%) 93.1 † -7.0 92.6
Employees
No. of Employees 8,858 8,177 8,545 8,313
Average Remuneration (£) 5,566.6 5,940.6 6,171.6 6,767.2
Sales per Employee (£) 96,654.9 106,749.7 106,470.2 108,947.0
Brand Information
As part of NISA-Today’s buying group, Watson & Philip utilises the group’s
own brand. Its leading catering own brand is Orchard Farm, which was
recently introduced into Trademarket cash and carry outlets.
Recent Developments
In June 1997, Trademarket launched Trademarket Plus, a promotional
initiative for its major retail customers. A new delivery service under the
Trademarket Select banner was also introduced, providing independent
retailers with a range of chilled, frozen and ambient products, including drinks
and tobacco.
Financial Profile
Year End 30/10/94 30/10/95 27/10/96 02/11/97
Weeks 52 52 52 53
Consolidated Y Y Y Y
Sales & Profits
Sales (£000) 440,570 497,836 576,602 637,506
Pre-tax Profits (£000) 10,644 18,468 18,763 21,477
Profit Margin (%) 2.42 3.71 3.25 3.37
Year-on-Year Growth
Sales (%) -23.2 13.0 15.8 8.5
Pre-tax Profits (%) -15.0 73.5 1.6 12.3
Employees
No. of Employees 5,968 6,400 7,246 6,676
Average Remuneration (£) 5,895.4 6,175.5 6,156.6 7,086.5
Sales per Employee (£) 73,822.1 77,786.9 79,575.2 93,690.5
or ACNielsen
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separate titles covering consumer, industrial and service sectors.
Title Edition Published Title Edition Published
Accountancy 3 1998 Cash & Carry Outlets 14 1998
Access Control 1 1998 Catering Equipment 4 1998
Adhesives 10 1992 CDs & Tapes 1 1997
Advertising Agencies 7 1998 CD-ROM 1 1992
Aerospace 10 1996 Charities 5 1997
After Dinner Drinks 8 1994 Chemical Industry 6 1997
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Biotechnology 4 1991 Computer Hardware 2 1997
Biscuits & Cakes 8 1996 Computer Services 4 1997
Book Publishing 13 1997 Computer Software 2 1998
Bookselling 9 1998 Confectionery 17 1998
Bottled Waters 3 1995 Consumer Magazines 9 1997
Bread Bakers 13 1997 Contract Catering 11 1998
Breakfast Cereals 9 1995 Contract Cleaning 13 1998
Breweries & the Contraceptives 1 1993
Beer Market 17 1998 Convenience Retailing 9 1996
Bricks & Tiles 11 1996 Corporate Giftware 1 1997
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Building Materials 8 1997 Courier &
Building Societies 10 1996 Express Services 9 1998
Business Press 9 1996 Credit & Other
Business Travel 7 1997 Finance Cards 11 1996
Bus & Coach Operators 3 1997 CTNs 7 1994
Cutlery 8 1991
Cable & Satellite TV 7 1998
Cabling & Wiring 1 1996 Dark Spirits
Cameras & Camcorders 2 1993 & Liqueurs 1 1997
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Car Dealers 12 1997 Defence Equipment 7 1998
Carpets & Department Stores 7 1990
Floorcoverings 13 1996 Design Consultancies 2 1996
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