8 minute read
Talking Point
Ready for reopening?
Industry leaders at a webinar titled ‘Wholesale – The Road to Recovery’, organised by Arena, considered the challenges facing the foodservice channel as lockdown is eased.
Stock, cashflow and credit are just three of the issues that wholesalers need to address as restaurants, pubs and other hospitality outlets open their doors after months of crippling restrictions.
How well the hospitality sector fares depends to a large extent on the weather, especially in the early days of reopening when serving consumers is restricted to the outdoors, but beyond that, there are still many unknowns, according to the speakers at Arena’s recent webinar.
Brakes has conducted an “unprecedented number” of pulse surveys to find out how its customers are feeling and to ensure that its response is insight-led. CEO Hugo Mahoney said: “Our customers are talking about four things: quality of products, availability, value and safety.
“We are working very hard with our suppliers to make sure we can maximise availability of our brilliant range of products and also make sure there is some flexibility in there as well. If there is fluctuating demand, we are going to need to have frozen alternatives and be creative with ambient products so that we do not create a big waste bomb.
“On value, we have a huge programme of support for our customers (page 6) – price holds, price cuts and service flexibility: everything to get our customers back on their feet as quickly as we can.
“On safety, contactless delivery and contactless payment are features that are important right now. Whether they will be as important in 12 months time we don’t know, but we have a dedicated responsibility to make sure that our deliveries are safe. When we come back as an industry, we want to make sure we come back for good this time.”
Coral Rose, managing director of Country Range Group, believes that the next couple of months are going to be “pretty critical” for wholesalers.
“One of the key issues is cash,” she said. “Caterers want 100% availability but they also want reduced minimum order quantities and more frequent deliveries – they haven’t got the cash to invest in stock, so they will be using their wholesaler as their storeroom. Wholesalers are having to invest in this additional stockholding.
“Customers are also going to be expecting extended credit and will want more time to pay off debts that may be outstanding from last year.”
Rose added: “Wholesalers maybe haven’t performed as well as they would have liked over the last 12 months, so in terms of getting credit availability from suppliers, the computer may say no but we would ask suppliers to look at the situation so that wholesalers are not squeezed further.”
Hugo Mahoney: ‘The £1 of foodservice spend will turn up in a different place.’ Consumers may want to work from a café or a pub instead of from home.
Rose questioned whether suppliers are geared up to give wholesalers the stock they need. “We don’t know how much of the market is going to open, what the demand will be like. Are our suppliers really ready?”
“Availability is going to be key,” agreed Andrew Selley, CEO of Bidcorp. “We have to be agile and we will need our supplier partners to be agile to respond to the fluctuations in demand. Certain products will take off more than we expect. There is a danger that we could be too cautious; we are hopeful that it is going to go absolutely crazy.”
He continued: “All of us have done a lot of planning and a lot of preparing, but none of us is going to get it 100% right. The key request I have is for understanding up and down the supply chain. We have to work with each other to maximise the opportunity that is there with the challenges that will come.”
The speakers at the webinar agreed that wholesalers’ customers are looking for insight and advice on a range of issues, including menus, safety and hygiene solutions, and targeting different groups of consumers, such as those working from home who perhaps want to work from a café or a pub instead.
“To a certain extent, people want to just get out again, but they are expecting a very high standard, something they can’t get at home,” pointed out Selley. “There is a desire to reduce waste up
Andrew Selley: ‘The request I have is for understanding in the supply chain.’
and down the supply chain so maybe customers will operate some element of limited menu or switch to more valueadded pre-prepared elements.
“Customers will buy quality, value and convenience and you have to be able to offer that across all tastes. Vegan, vegetarian and healthy options will feature very strongly – if you offer too limited a menu you won’t get the traction.
“Opening is the first challenge but when the operators are back up and running, we will be looking for more innovation from suppliers.”
Dawood Pervez, managing director of Bestway Wholesale, warned against banking on a full-scale return by consumers to foodservice outlets as soon as lockdown is lifted: “Only about 38% of outlets have outdoor space and they will be limited by their capacity to serve customers safely, so it won’t be like flicking a switch – it will be a gradual increase as people gain confidence.”
He added that the retail landscape will change, but it will take some months. “In the short term, alcohol sales will probably continue to be relatively strong in retail, especially with the timing of the Euros,” he said.
“As people start going to their high street, parks, towns and cities again, there will be a transition towards instantconsumption impulse sales, which by and large have been hit quite badly.
“Although there is cash in the banks that people have saved by not spending their money [during lockdown], there is quite a lot of anxiety generally in relation to economic wellbeing so I think value will be important,” he added.
Around 10-15% of foodservice outlets have gone through closure or administration during the COVID-19 crisis, and so the high street is going to look very different, at least in the short term, said Mahoney. “Consumers’ habits have changed – for example, they have been trying to replicate the ‘eat out’ experience in the home, and takeaways of various quality and creativity have become the norm.
“Like many others, we at Brakes took some painful decisions initially to make sure that the size of our organisation matches the market, but we are also creatively looking at where this £1 of foodservice spend is going to end up. Is it going to come back into the industry or is it going to float around in adjacent areas in the market? I happen to take the view that some of the changes will be forever changes while some will be temporary – a blip.”
Brakes’ large workplace customers are saying that they expect around a 60% return in the next 12 months, Mahoney noted. “We are going to get a hybrid [of people working from home and at the office] and I don’t think that’s unhealthy. The £1 of foodservice spend will just turn up in a different place.
“As ever, as wholesalers we need to be agile and listen to the market carefully, and we have to be ready to be extremely responsive in ensuring that we serve our customers really well.”
Selley said that he is “very hopeful” about workplace catering. “Workplaces used to be competing with all the hospitality outlets that were operating outside. Now some of those have disappeared, so there is an opportunity to capture that spend back in the workplace but only if you are offering quality, value and convenience. Innovation is a key part of driving that.”
He also commented on the changing nature of UK tourism in the short term: “Staycations won’t be a 100% replacement for overseas visitors – five-star hotels in cities that rely on international tourists may struggle as we may not necessarily want to pay those prices –but I think that, in terms of destinations, leisure and restaurants, the sector will be less affected than people may think.”
Rose concurred with the other speakers that wholesalers have to take note of changes in the marketplace, including the increasing use of ecommerce and B2C platforms, and the growth of food to go.
“I think we would be foolish just to carry on as normal,” she said. “We are looking at our business mix – the sectors our members supply – and our category management. There was a lot of stock written off during the pandemic, and it caused everybody to have a rethink about the products we’re stocking.
“We need to give our customers choice, so it’s not just about rationalising the range, it’s about making sure we have the right range and investing in categories as we get into trends – such as the growth of vegan.” CCM
In a survey of 1,200 consumers across the UK, TWC –the sponsor of the Arena webinar –found that there is a huge eagerness to return to hospitality outlets. Nevertheless, many people remain nervous and this will affect their behaviour, said development director Tom Fender.
The findings of the study, which will be published in a report later this month, include: a 39% will use hospitality outlets only after receiving two vaccinations. a 70% still have some concerns around the safety of eating out. a 60% are willing to pay a deposit to secure a table. a 69% find fixed-price menus appealing. a 73% want to support their local restaurants, pubs and eating out venues. a 41% of people who normally holiday abroad will this year take a holiday in the UK.
Dawood Pervez: ‘There is anxiety in relation to economic wellbeing.’
