Could P&H be Wholesale’s Monarch?
This has to be the most tumultuous year for wholesale in the UK in living memory. There is a real shake down going on.
- Nisa have agreed to sell out to the Co-op.
- McColl’s have moved their supply deal away from Nisa to Morrison’s. This looks like a precursor to a full on takeover down the line.
- Blakemore have been heavily rumored to be selling their loss-making wholesale division – officially denied.
- Bibby’s are actively looking to off load Costcutter and rumours abound about the likely buyers.
- P&H are fighting to save their business.
There’s no doubt that the Tesco/Booker merger has triggered this frantic activity and accelerated moves to consolidate. This week “Better Wholesaling” published some critical comments by Charles Wilson, CEO of Booker. He is reported to have said that too many wholesalers are backward, resistant to change and want to preserve their cosy existence. Tough talk but some of this resonates.
Let’s look at P&H as a case in point. How can a business with their billions of annual turnover be in such financial trouble? Just like Monarch the business model isn’t generating enough cash profit to make it self-sustaining. They are being supported by their suppliers (never a good place to be) and calling urgently for more cash this autumn. The shifting sands of the market are changing and P&H is struggling to respond with its tight margins and expensive infrastructure. It is exceptionally difficult to make a profit out of multi-drops to small businesses. Darwinian rules apply and it is clear that P&H is in a fight for its life.
Cash & carry and delivered wholesale is still the most efficient route to supplying the independent retail/catering universe for most brand owners. Many of the wholesale enterprises are family owned and are now facing into the issues of improving efficiency, operating at a profit or selling out. The pressure is on and streamlining must be actively embraced urgently. The industry needs successful and vibrant wholesalers and in my opinion it needs a healthy well-run P&H. If P&H goes down the ramifications will be profound and of course many good people will lose their jobs. And who will fill the vacuum created and ensure that small stores continue to receive the delivery service that they need?
I agree broadly with Charles Wilson’s industry view but I know of a significant number of forward-thinking and well-run smaller wholesalers around the country. They are profitable, agile, tech competent and offer goods and services that differentiate - in some cases better than Booker. This is good for retailers and caterers.
Make no mistake; Booker will use their scale and buying power to put extreme pressure on all competitors in the sector. After all this is what the merger is really all about. They will seriously test the mettle of all the players and some like P&H will buckle. Those well-run competitors will continue to flourish and dare I say take market share in their local markets from competitors including Booker.
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