The collapse of Palmer & Harvey yesterday has sent a shockwave through the convenience and wholesale channel. It is deeply distressing for the 2,500 employees whose jobs have been terminated with immediate effect and of course extremely worrying for the 90,000 outlets who rely on P&H deliveries for their very livelihoods. Sadly however the demise and failed rescue packages have been well documented, so the writing was on the wall. The final nail in the coffin was perhaps Tesco’s £3.7bn takeover of food wholesaler Booker which got the go-ahead from the competition authorities. This effectively gave the green light for Tesco Booker to take in house the valuable contracts that P&H held to supply Tesco and One Stop stores. Neil Brenson of Food and Drink Agency Jellybean Creative sums up the situation as he sees it.
Convenience and wholesale is ruthless but it is also extremely resilient. P&H’s loss will be the gain of other wholesalers, symbol groups and independent retailers themselves. I sincerely hope those loyal and valued P&H employees are well supported and find employment within the sector. I also feel confident that retailers will make the right choices for alternative wholesaler and supplier arrangements. Could we see independents return in their droves to cash and carry depots? Will they simply switch to an alternative delivered wholesale and if so, which one? Or will this be a tipping point for an unaffiliated retailer to join a symbol group?
Brands and manufacturers who had an over-reliance on P&H, P&H Snacks Direct and P&H Sweet Direct will be feeling quite exposed today, but I do think there are opportunities too. Brands need to ensure their distribution and availability through other routes to market is shored up to support retailers who are now switching. With convenience shoppers being so promiscuous, the supply chain must work hard and work together to ensure that their products are widely available throughout the independent retail trade. If retailers can’t get hold of their best-sellers then their shoppers will be disappointed and they will lose sales.
Already we have seen today that one of P&H’s biggest customers Costcutter Supermarkets Group (Costcutter, Mace, SuperShop, SimplyFresh and Kwik Save stores) has entered into an exclusive wholesaler supplier agreement with the Co-op, effective spring 2018. In the meantime these stores will be supplied by Co-op and other suppliers, according to Costcutter CEO Darcy Wilson-Rymer. This will be a welcome reassurance for retailers under these fascias and it is obviously a great move for Co-op which has also just received approval from Nisa members for its takeover of Nisa. The Co-op continues to be a force to be reckoned with in convenience and already looks to have done well out of the collapse of P&H.
There will be plenty more twists and turns in the wake of the collapse as wholesalers, symbol groups and convenience retailers jostle for position. All the while this is going on shoppers won’t really give two hoots about which group owns which stores or which route to market an independent retailer uses. What they care about is the “convenience” of convenience stores, ensuring their missions are met and of course that the products they love are in stock. Let’s do all we can as an industry to make sure that happens.
If you are a supplier or brand affected by the P&H collapse and you need help or advice to gain new listings, increase distribution and step-change your trade and shopper communications in convenience then please contact Neil Brenson, Group Account Director on 01372 220814 or email email@example.com
Keep reading! Why not read our blog on National Convenience Show 2019