C&C Management In Focus June 20

pp.14-17 In Focus June 20_Ivan Durkin feature 1 real 23/05/2020 09:08 Page 1

Navigating choppy waters

[ IN FOCUS ]

Cash & Carry Management spoke to wholesalers on Guernsey, Shetland and the Isle of Man to find out how they have overcome the challenges they have faced during lockdown.

GUERNSEY VWT Wholesalers & Distributors has performed an impressive recovery, moving from a 70% decline in sales at the start of lockdown to a drop of just 10% by the time restrictions were eased on 16 May. Jason Langmead, managing director of the Guernsey-based business, explains: “We initially lost a huge chunk of business because of the closures in the hospitality sector – restaurants, bars, clubs, and beach kiosks. We also supply vending machines in leisure centres and offices, so those stopped taking money, and all the takeaway restaurants on Guernsey were shut too, which had a massive impact.

“We also used to get a lot of cruise ships stopping here, and they have obviously all been cancelled. The day trippers brought a lot of money into the economy.”

VWT has a retail website, Grapevine Guernsey, which previously focused on wine but was quickly adapted after lockdown to offer an extended range – with remarkable success. “The customer base has grown 100-fold,” reports Langmead. “We have been surprised by the amount of households that have bought catering products, and we also expanded into different categories, such as health & beauty, to meet demand.”

Another boost to the business came in the form of an online ordering app.

“We were a couple of weeks away from launch of the app when the lockdown

Jason Langmead: ‘Suppliers and NBC have done a brilliant job.’

was threatened and, with the help of SwiftCloud, we managed to get it out the day that lockdown began,” he says.

“The timing was brilliant, and customers have been very receptive – the feedback we are getting is how userfriendly it is.”

VWT’s turnover was previously split 85% wholesale, 15% retail (through the Grapevine Guernsey website), but this has swung round to 70% retail, 30% wholesale.

A total of 14 people are employed across VWT and Grapevine Guernsey, and Langmead has managed to keep them all in employment and on the same terms. “We did split the staff into two shifts [to ensure social distancing] but as of last week, we started bringing them back together. My team have been absolutely superb,” he adds.

VWT extended its retail offering to help it recover from an initial plummet in sales.

14

June 2020

www.cashandcarrymanagement.co.uk

Guernsey, which has a population of around 64,000 and its own government, had not had any new cases for 20 days as of 20 May. The island is now in phase 3, whereby lockdown has been relaxed, with takeaways allowed to open and people permitted to go to work if they can’t work at home. “I imagine that takeaways will be very popular for a good few weeks now!” says Langmead.

“Some of our customers who previously didn’t do takeaways have started to offer them, just to get some money coming in.”

When phase 4 happens – on 29 May – restaurants that can maintain social distancing will be allowed to reopen and VWT will reopen its own showroom. “At least there is some light at the end of the tunnel,” he remarks.

VWT is reliant on ferries, and the service has continued to run smoothly.

“We did have a little bit of disruption to supplies from food and drink suppliers because of the panic buying, but on the whole our suppliers have been fantastic,” says Langmead.

Community pulls together “Because of not being able to supply hospitality businesses, we had a lot of problem stock, but we are working through it. For example, we had pallets of Yazoo milkshake for schools.

FrieslandCampina were fantastic in giving us support to help us reduce the price, and some of the bigger supermarkets here have been taking stock into their stores. We wouldn’t normally supply the big boys but as a community everyone is pulling together to try to shift the stock and save waste. Mars, Walkers, Coca-Cola and Mondelez have also been really good in helping us to move stock.”

Langmead also praises suppliers for changing the approach to the handling of promotional bonuses. “A lot of them acted very quickly to remove retro claims and put the deals into the price, which saves us having to raise invoices at the end of the promotions,” he explains.

pp.14-17 In Focus June 20_Ivan Durkin feature 1 real 23/05/2020 09:08 Page 2

[ IN FOCUS ] What’s more, the payments of supplier terms this year are coming in a lot quicker than in previous years. VWT is a member of National Buying Consortium (NBC) and Langmead, who is deputy chairman, commends the group for that change: “NBC suggested it to suppliers and I don’t think any baulked at it. As soon as NBC gets the money from suppliers, it pays us, the members.”

The national distribution network run

by NBC has also been invaluable. “With losing 70% of our trade when lockdown started, we weren’t always able to make the suppliers’ minimum drops, so we have been able to use the national distribution service to buy products in smaller quantities and get them shipped that way,” he explains.

“We didn’t want to be losing products from our range, because although we have lost a lot of trade in the hospitality sector, business is booming with garage forecourts and convenience stores. Suppliers and NBC have done an absolutely brilliant job in keeping us going.”

Move to bigger packs Langmead highlights changes in consumer buying habits: “We are selling a lot more of the bigger bags and multipacks of crisps, and 1.5-litre and twolitre bottles of soft drinks are more popular than 500ml. We’re also doing massive amounts of biscuits, breakfast cereals and grocery lines like chopped tomatoes and Pot Noodles.”

Langmead admits he was shocked when he looked in detail at the sales figures and realised that the business is only down 10%. “It’s amazing!” he says.

“Then again, I know we’ve been busy.

I’m working seven days a week and sometimes 16 hours a day at the moment.

“What is particularly pleasing is the reaction to the Grapevine Guernsey website – people love the service. Even coming through phase 3, we are still seeing orders flood in, and we plan to expand the grocery range we offer.”

Concluding, Langmead says: “Our government have done a fantastic job in the way they have controlled the spread of COVID-19 on Guernsey and they will probably keep our borders closed for a while. We are hopeful that we will be able to live in the bubble of island life.”

Carl Cross: ‘It has been a real struggle getting the stock we need.’

SHETLAND Hughson Brothers has had great difficulty in obtaining stock, reports director Carl Cross. That’s entirely down to suppliers, as ferries carrying freight have been running as normal.

“It has been a real struggle getting the stock we need,” he comments. “I have had to buy product from wherever I can – from other Unitas members and even competitors – so that we can feed the islanders.

“We definitely had to modify our range because we couldn’t get a lot of the brand leaders. Heinz was particularly bad; they kept cancelling orders.

We felt that they were supplying the supermarkets first.

“Boris [Johnson] was telling everyone to stay at home and we were the perfect tool to keep people at home, because all our retail customers adapted to doing home deliveries.

However, some suppliers didn’t recognise this,” he adds.

Cross makes the point that consumers may not return to the brands they couldn’t get during lockdown: “The companies that failed to supply us should watch out because people have now tried other brands and have found them to be perfectly good and often cheaper; the big suppliers will need to promote to attract consumers back.”

Another move Cross would have liked to see was more suppliers honouring the price-mark pricing if they had to supply plain packs instead of PMPs. “It costs them the same to produce the plain packs as the PMPs so I don’t see why they couldn’t keep the pricing the same,” he says.

While some suppliers have fallen short in their service, others have gone above and beyond, according to Cross.

At the start of the lockdown, Kimberly-Clark cancelled orders and then said that orders had to be for a full trunker with single SKUs per pallet.

“That would have been nearly two years of stock for us!” he says. “Fair play to our rep Paul Fraser – he organised a mixed trunker for us and other wholesalers, including James Wilson (Orkney) and Sutherland Brothers in Wick.

“Premier Foods also adapted really well. Rather than crossing off products like Heinz did, they offered acceptable substitutes. Our rep Robert (Rab) Craven and his team must be under tremendous pressure but they did their best for us.”

Prior to the crisis, retail shops accounted for over 70% of Hughson Brothers’ turnover. The wholesaler

Hughson Brothers’ turnover in March and April was well up on last year.

www.cashandcarrymanagement.co.uk

June 2020

15

pp.14-17 In Focus June 20_Ivan Durkin feature 1 real 23/05/2020 09:08 Page 3

[ IN FOCUS ] has continued to supply care homes and schools that have been opening for children of key workers, but business generated from shipping, pubs, hotels and community halls stopped abruptly.

“We got in touch with the pubs and community halls we supply to say we would take back whatever stock they couldn’t use and we credited them for that. They will hopefully remember Hughson Brothers for what we have done,” says Cross.

“Luckily, because shops make up the biggest part of our turnover, our sales for March and April were well up on last year. However, that is flattening out a bit now and we know we will end up losing stock that goes out of date – like butter portions and catering packs of cheese.

The question is whether we will be busy enough going forward, and the answer is we just don’t know.”

Hughson Brothers usually employs around 20 people, but during lockdown it has had to manage with four less – including the foreman and a truck driver – because they have been furloughed due to underlying health conditions.

“Alex [Irskine, shipping manager] and I have been coming in on Saturdays for any customer desperate for stock,” says Cross. “We are kind of on call.”

As of 20 May, there had been no new COVID-19 cases for three weeks on Shetland, and issues with stock had settled down. “It is not the mad panic it was – every week there is a little bit more stock coming in, but the odd item is still being affected,” he notes.

“At the moment, we are having trouble getting hold of paracetamol and multipacks of alcohol – people aren’t going to pubs and are drinking more at home.”

ISLE OF MAN Being located on the Isle of Man has meant that wholesaler and retailer Robinson’s has suffered less than many operators on the UK mainland, believes managing director Janna Horsthuis.

“We have been very fortunate that the island was locked down on 23 March and we have had no new cases in the past week (as of 22 May),” she says. “We are now allowed to meet in groups of 10 people; restaurants and cafés with outdoor spaces can open; people are going back to work in offices; and schools will start a phased return on 17 June. Our Government has said it won’t rush to reopen the borders and I think the public are quite happy for them to be kept closed.”

Before lockdown, Robinson’s business was split 70:30 wholesale to retail

‘Wholesale is the most important supply mechanism to the islands’ Having listened to the concerns of the SWA chief executive Colin Smith Scottish Wholesale Association adds: “Certainly our members on the (SWA), Fergus Ewing MSP, cabinet islands have not been getting the quansecretary for rural economy and tities or the exact products they have tourism, wrote to the 60 main food been wanting. We have been working and drink suppliers in the UK, urging with them to understand where the them to ensure continuation of supply pinch points are and have taken that “across all corners of Scotland”. information back to Fergus Ewing.”

He said: “The wholesale sector is a vital element of the supply chain in Scotland. This is particularly true of our remote, rural and island communities who are heavily reliant on the convenience sector. In addition to the convenience sector, wholesalers service the needs of care homes and hospitals. It is therefore imperative that these supplies continue.

“I understand that due to COVID- Fergus Ewing MSP and Colin Smith of SWA. 19 there are pressures on networks which have resulted in changes to disSmith continues: “Business is boomtribution models to maximise efficiening for wholesalers that are retailcies. I would ask that smaller wholefocused, but operators that are mainly salers are not disadvantaged due to serving foodservice customers are on their scale. If larger minimum orders their knees. The prospects for these are required to make the consignment operators on the islands are probably viable I ask that you work with wholeworse than for wholesalers on the mainsalers to find a way forward, which land who can expand their geographical may include delivering consolidated reach to bring in new customers.” loads to more than one customer. I Early on in the COVID-19 crisis, the would encourage you to work with SWA conducted a survey among its wholesalers on these and other members to find out which wholesalers issues.” supply the islands, and that information

16

June 2020

www.cashandcarrymanagement.co.uk

was shared with the Scottish Government. “The wholesale channel is the most important supply mechanism to the islands because, other than on the larger islands, there are no supermarkets – instead they have convenience stores, as well as care homes and hospitals, all of which are supplied by wholesalers,” says Smith.

The Scottish Government had already set up an islands food resilience team, and the SWA ensured that it knew which wholesalers could be called upon to help solve any supply issues. For example, if the usual ferries had stopped running, the Scottish Government would have requisitioned other ferries to transport products, and the wholesalers supplying them would have been asked to engage with the replacement service.

“Luckily, although there was some ferry disruption there wasn’t a complete shutdown, but the work that has been done shows that a support network was put in place,” says Smith.

“The Scottish Government now has all the details of our members serving the islands, and if something like the COVID-19 crisis happens again, there are contingency plans to ensure that the islands continue to be supplied.”

pp.14-17 In Focus June 20_Ivan Durkin feature 1 real 23/05/2020 09:08 Page 4

[ IN FOCUS ]

Janna Horsthuis: ‘As a family business we can make changes very quickly.’

but now the proportions have switched around completely.

In normal times, the wholesale arm supplies schools, restaurants, hotels, hospitals, care homes and the island’s prison. Retail comprises two World Food Market outlets and a franchise for the fruit & veg departments in the 10 Shoprite stores on the Isle of Man. Robinson’s also has online businesses selling flowers (post-a-rose.com) and fish (paddysfish.co.uk).

“As part of Unitas, we are constantly talking to the other members and they were ahead in experiencing the impact of COVID-19 so I could see that our wholesale business would be hit,” says Horsthuis, who is on the Unitas board.

“We knew we needed to do something, so we introduced fruit & veg boxes, initially for the vulnerable who couldn’t get out. With our IT provider Sanderson, we quickly launched a new website (Robinsons.im/care) and used our existing warehouse, loading bay, staff and vehicles to deliver the service.”

There are now four boxes available – fruit, veg, meat and everyday essentials – and orders placed by 1pm are delivered the next day. “It took off brilliantly and, although the sales from this and our main delivery website are not close to compensating for our loss on the wholesale side, home delivery has been our saviour,” she says.

Robinson’s hit a peak of 893 home deliveries in one day; now, the daily average is 400. “We are getting return customers and lots of Instagram posts and new Twitter followers,” she reports.

“We plan to look at a whole new model of home delivery and to run this

as a separate business with a different website. We are also looking to modify a couple of vans to be more suitable to home delivery. The Isle of Man Government has been great in offering a business adaptation scheme, whereby it will give companies 50% of the costs – up to £100,000 – to adapt, so we are hoping they will help us with funding.”

In line with the rapidly expanding household customer base, Robinson’s has made significant changes to its range. “Unitas has been brilliant in giving us access to new suppliers, and we have joined Nisa for its retail products.

We have also linked up with a local bakehouse and a local butcher – the fresh bread and meat arrives each day at 5am,” Horsthuis reports.

More local products “We are encouraging more local producers and suppliers to list their products with us,” she adds. “Outside the island, suppliers have had their moments, with some prioritising the supermarkets, but the supply issues have generally levelled out now.”

Robinson’s has benefited from the structure of the retail marketplace on the island and the social distancing rule.

Horsthuis explains: “We only have one Tesco, one M&S and 10 small Co-op stores. People always used to go to Tesco, but the two-metre restriction has meant that more are going to Shoprite, which has obviously been good for us.”

The ferry service to the island has been cut from two sailings a day to one, with stock reaching Robinson’s at 5pm instead of early morning. As a result, the

company changed the staff rota so that replenishment is completed overnight, with the added bonus that there are fewer staff on the shopfloor when the doors open for customers.

As a consequence of the lockdown, Robinson’s has seen a 38% drop in turnover; without home deliveries, this figure would have been about 70% because of the closure of many of its foodservice customers. What’s more, the company’s debt has been reduced thanks to Government grants and loans that have helped the foodservice operators pay off some of their bills.

Reflecting on the past couple of months, Horsthuis says: “The scary thing is, if we hadn’t changed our business model so quickly, we would probably have had to lay off 60 people.” As it is, apart from five employees who isolated for health reasons, all 200 members of staff have been retained, with Robinson’s receiving aid from the Isle of Man’s salary support scheme – if a business is at least 25% down in turnover, the pay of employees who cannot work their usual hours is topped up.

“It’s a relief that we have been able to keep our staff on, even though business is down. They say to us they are so grateful to still have jobs – that’s when it hits home how bad it could have been.”

Robinson’s is family-run. Horsthuis’s husband Ross is retail director and her brother-in-law Matty Mathieson-Nelson is operations director. “As a family business, we can make changes very quickly but our success is down to our whole team. So a big thank you to them, as well as our suppliers, growers, and CCM customers – new and old.”

Robinson’s now delivers to an average of 400 households every day.

www.cashandcarrymanagement.co.uk

June 2020

17