The lines between retailing, wholesale and foodservice just got even more blurred with the recent controversial announcement of the proposed merger between the UK’s biggest retailer Tesco and one of the UK’s biggest wholesalers Booker. Opinions on the merger differ widely and depending on your view point, this could either be a big opportunity or a big threat.
A good many of the 120,000 Booker-supplied retail outlets are feeling somewhat betrayed right now and think the wholesaler is sleeping with the enemy. Some are feeling a little more reassured after promises from CEO Charles Wilson on his recent UK roadshow. He has argued that indies are set to benefit greatly from the deal including access to Tesco systems, support and advice. Wilson will also be hoping the merger acts as a recruitment catalyst, signing up new retailers in the wake of the announcement, just like they did when they acquired Londis and Budgens.
Understandably rival wholesalers will be feeling a lot less upbeat and no doubt many senior execs are having some sleepless nights. They’ll be concerned about what Tesco-Booker’s increased market dominance and buying power with suppliers will have on their own business models and price competitiveness in the future. They will of course be doing their level best to entice Booker-supplied retailers over to them through the suggestion that Booker is no longer a champion of the independent. But ultimately independent retailers will make up their own minds and only time will tell who they will back.
For suppliers there will certainly be winners and losers. For those who have not yet broken into the major multiples but have a strong cash and carry business, the news could be very welcome indeed. If they play their cards right and keep their relationship with Booker sweet, it could open up the doors into Tesco and perhaps in time other multiples too. But for those suppliers who already sell through Tesco and perhaps prop up lower margins in the mults through higher margins in the wholesale channel, they could be scrutinised and put under pressure to reduce. If Tesco-Booker does demand consistency of terms across trade channels, much like we saw with the Booker-Makro merger, then there is an awful lot of dosh at stake. Dare I say we may see some brands and businesses go under.
For consumers shopping online with Tesco this could be a game changer too. They are likely to see improvements in scale and speed of local delivery as well as an increase in click and collect points through potentially using the Premier, Happy Shopper, Londis and Budgens stores. This is an important and necessary move for Tesco particularly in light of competition from AmazonFresh and CollectPlus.
There is of course some way to go before ‘Besco’ becomes a reality. The £60 billion deal is subject to approval by both sets of shareholders and the UK competition authorities, a process that could take until the end of 2017 or even early 2018.
As the lines between retail, wholesale and foodservice have blurred, we’ve responded as an agency and are now ideally placed to help you maximise opportunities across all these trade channels. By introducing retail expertise alongside our existing foodservice specialism we can help you navigate the changing marketplace and deliver effective integrated campaigns cross channels.
To discuss any retail trade opportunities please don’t hesitate to contact Neil on firstname.lastname@example.org or call 01372 220814.